Labour Market and Trade Unions Flashcards
The labour market
refers to the market where the demand for and supply of labour determines wages.
demand for labour
depends on the demand for the goods and services that labour is used for producing. in other words, the demand for labour is not for its own sake, but to help in the production of other goods
supply of labour depends on a number of factors
- size of population- big countries hv higher supply of labour
- retirement age- if it is extended, supply of labour will increase
- minimum education qualification- if it is decreased supply of labour will increase
- working hrs- if increased, supply of labour increases
wage determination
wage rate is determined by the interactions between the demand for and the supply of labour.
if demand increases, wage rate increases
if the supply of labour decreases, wage rate increases
wage differentials
in most countries, there are workers who earn high wages and those who earn low wages. these differences in wages are known as wage differentials
difference between real wage and money wage
A nominal wage, also called a money wage, is the money you’re paid by an employer for your labor. A nominal wage is not adjusted for inflation. On the other hand, a real wage is a wage adjusted for inflation. If your nominal wage increases slower than the rate of inflation, then your purchasing power will decline.
wage differentials among different occupations
- educational qualification of the worker- lawyers will earn more than office clerks
- professional skills and computer literacy- a skilled bricklayer will earn more then general handymen who are unskilled. Jobs will pay higher more those who are computer literate.
- innate talent, especially musical and artistic talent
- nature of the job- like ceo’s long hours, a lot of responsibilites, risk factors involved
- satisfcation- people who go into jobs such as nursing or teaching do it more for satifaction than wages
wage differentials within the same occupation
- fringe benefits- benefits a worker inccurs for being employed to a particular company. for some jobs, fringe benefits can include, phones, cars or even housing. like an air hostess or people in the airline industry can fly to other countries for free
- length of service or experience- workers who have been working for the company for a longer time in the same occupation as those newly employed tend to be paid more. like teachers
- the company itself- the same job but in a well established company versus a newer smaller company, the person in the larger more profitable company will earn more
wage differentials between urban and rural areas
- cost of living- cost of living is higher in urban areas than in rural areas therefore their wage rate ahs to account fot that.
- job opportunties- there are fewer high paying jobs in rural countires and those in rural countries would rather work low paying jobs than be unempolyed. in urban areas, there are more high paying jobs for which those living in urban areas can demand a higher wage rate
What is a trade union?
is an association of workers with the main objective of demanding higher wages to improve its members’ living standards.
first trade uion was set up in the 18th century during the industrial rev due to capitalists’ expolitation of workers
aims of trade unions
- to demand higher wages and fringe benefits for its members
- to improve the working conditions of the workers- noise, ac
- to provide recreational facilities for the workers- trade uions may have buildings of their own with pools, tennis courts
- to provide training courses for personal development- computer classes, basic cooking classes parenting classes for married couples
types of trade unions
general unions- represent different types of workers, both skilled and unskilled in different industries- PSA public servants association in trinidad and tobago
industrial unions- represent workers in a particular industry like OWTU The Oilfield Workers Trade Union
Craft unions- small unions that reprsent people in the same occupation like TTUTA Trinidad and Tobago Unified Teachers Association
methods to raise wages
trade uions have to work on the market forces, the demand for labour and the supply of labour to influence wage rates. Increase demand or restrict supply of labour.
restrict supply of labour
- increase minimum working age- 18 to 21 decrease supply of labour
- reduce the retirement age
- shorten working hours
- increase the minimum required educational qualification
increase demand for labour
- support company’s advertising campaigns to increase sales- due to increased demand of the company’s goods and services the comapny may employ more workers
- increase labour productivity- trade union can offer training programmes to upgrade the skills of workers, which will enable to company to increase the wage rate and/or employ more workers
