3.3 - Workers Flashcards
What are wage factors?
Wage factors are financial payments that workers receive for their labour
What are non wage factors?
Non wage factors are factors other than wages or money that influence a persons decision on a job
What wage factors that influence occupational choices?
Wages:
An agreed amount of money/hour & is calculated directly from the number of hours worked
Salary: Employment contracts often state the agreed annual salary the employee will receive
This is then divided by 12 & paid monthly The hours worked monthly may vary but the pay received is always the same
Commission: Often used as payment to sales people
It is typically a percentage of the value of the transaction involved This can motivate employees to maximise sales
Bonus: Money paid in addition to a salary & is usually single annual payment
Often paid when the company earns high levels of profits, or as a reward for exceptional worker performance
What are non-wage factors?
Length of training or level of education required: The longer the time period required to study/train for a job, the fewer the number of people who seek employment in that occupation
Job security: Employment contracts in different industries have different time periods attached to them. Some contracts are one to four years in length, so provide high security
Job satisfaction: Finding fulfilment in a job role & enjoying work is a significant part of generating job satisfaction. Workers will often change their jobs/careers so as to improve their job satisfaction
Career prospects: Jobs with a defined pathway for promotion (& salary increases) are often more desirable
Level of challenge: Many workers step into an occupation due to the challenge of the role
What are the factors that influence the demand for labour?
Demand for labour: Labour is a derived demand when an economy is booming then demand for most goods services will be high
Conversely when an economy is in a recession demand for most goods and services will be lower lower demand for labour
Productivity of labour labour cost a percentage of total cost it is a derived demand so it depends on the demand for the product they are producing it productivity increases this will lower average cost and they will demand more labour
Price of product being produced - If the selling price of the product increases, then the firm will e incentivised to supply more firms demand for labour increasing
Supply of labour: Those willing and able to supply their labour for a wage
What factors influence the supply of labour?
Training periods - Long training periods (& their cost) act as a barrier to entry & exclude many households from offering labour in certain markets
Wages in other occupations - Comparative wage rates in substitute labour markets strongly influence the supply of labour
Changes in migration policy - Policies that increase the net migration rate increase the supply of labour
Income tax levels - At a certain level, income taxes become a disincentive to households offering their labour. The assumption is that as income tax increases, labour supply decreases - and vice versa
Working conditions - The working conditions & non-wage benefits can act as strong incentive in certain industries
Level of welfare benefits - The higher the level of welfare benefits, the lower the incentive for low-skilled labour to offer their labour - and vice versa
What is wage differentials?
Difference in wage rates.
These include reasons like;
Gender pay differences
Industrial sector pay differences
Private and public sector pay differences
Differences in pay between skilled and unskilled workers
What are the reasons for the wage differentials in the private sector?
Salaries can be extremely high, especially if the value of goods or services offered is high & the workers are productive
Some salaries can also be very low as firms seek to cut costs & maximise profits
Many wage benefits tend to be better than those provided by the public sector e.g. bonuses or share options
What are the reasons for the wage differentials in the public sector?
Wages will reach a maximum ceiling that is often below what the private sector may offer
Wages often do not fall as low as some private sector jobs as many public sector workers belong to trade unions
Job security is high resulting in long careers with defined pathways for promotion
Pensions are often very good, but are limited in comparison to private sector pensions
What are the reasons for wage differentials between skilled and unskilled workers?
Many economies have a high supply of unskilled labour. This means that employers can push wages down as there is always someone willing to work for less
To become skilled takes time & money which means that there is a more limited supply of specific skillsets. In recognition of these factors, wages for skilled workers are higher
What is division of labour?
The division of labour is when a task is broken up into several component tasks
This allows workers to specialise by focusing on one (or a few) of the components that make up the production process & thereby gain significant skill in doing it
This results in higher output per worker & so increases productivity
What are the advantages and disadvantages of division of labour and specialisation for Workers?
Workers can acquire the single skill required relatively quickly
Workers gain recognition & status for performing their skill well
The work can be repetitive & boring
There is limited opportunity to gain additional skills
If the firm replaces labour with capital, the worker may find it difficult to find employment elsewhere due to their limited skill base
What are the advantages and disadvantages of division of labour and specialisation for Firms?
Time spent training new workers is relatively short
Increased output allows firms to generate more sales & profit
Higher labour productivity lowers cost/unit for firms, which makes their goods more competitive internationally (exports)
Worker productivity can fall due to the boredom/ decreased motivation experienced
Staff turnover may be high as workers seek new, interesting opportunities elsewhere
Entire industries may close leading to structural unemploymen
What are the advantages and disadvantages of division of labour and specialisation for the economy?
Increased exports can result in economic growth for the nation
Economic growth usually leads to higher income and a better standard of living
Income gained from exports can be used to purchase other goods from around the world (imports). This increases the variety of goods available in a country
Specialisation may create over-dependency on other countries’ resources. This may cause problems if conflict arises (E.g, Europe’s reliance on Russian natural gas during the Ukraine crisis)
Specialisation using a country’s own resources will lead to resource depletion. Specialisation increases the rate of resource depletion
