Entries Tagged 'labour markets' ↓

Readers Question: The three factors which can explain the wage differentials in the South East and the North ? (1,living cost 2, MRP theory , 3 ??), can I say that trade union power in the South East is more strong ? I just guess and dont know whether that is an acceptable answer ?

If you said trades unions could explain wage differentials between south east and north, it probably would be accepted. I would say:

Higher wages in the south east could be explained by a higher trade unions presence in the south east - There is greater membership, higher density and more power. Therefore, the unions could help to bargain for higher wages.

However for evaluation I would say:

• The unions might be more successful in the south east because unemployment is lower. In the north unemployment rates are higher therefore, the bargaining power of unions is diminished because firms could more easily replace striking workers with unemployed workers.
• Trades unions in the UK have declined as a political and economic force. These days in an era of service sector based economy they struggle to have much impact on increasing wages. In the south east, many of the industries have very low union density. Therefore it is unlikely that higher wages in the south east are due to trade union power.

So it is fine to say trades unions could explain differences in pay. I don’t think it is a particularly good point, but, that doesn’t matter. It actually makes the evaluation easier.

What Explains wage differentials

Why Women are paid less than men

Readers Question - what on earth is the black market and how does the immigrant have an impact on that?

The Black Market refers to economic activity that is not regulated by the government. It involves economic activity where people don’t declare tax returns or pay VAT e.t.c. It sometimes may be referred to as the ‘underground economy’ or ‘black economy’. The black market may involve illegal activity such as drug dealing or it may involve typical jobs such as paying a builder in cash - this becomes black market activity. Note it is a legal requirement to declare income to the inland revenue. But, it can be hard to trace and track down. Continue reading →

Readers Question ‘Evaluate two policies which the government might adopt to reduce the male inactivity rate’

Inactivity rates implies that people have left the labour market and are not able or are unwilling to seek employment. Inactivity rates can be caused by:

• Demotivation
• Sickness

Two Policies To Reduce Inactivity Rates

1. Make It more difficult to gain sickness / long term disability benefits. It is argued that it has become too easy for the long term unemployed to be given sickness benefits. The government could introduce a scheme where those on benefits are revaluated every 12 months and given the option to take on light work. This could help reintegrate them into the labour market. Continue reading →

Readers Question: Examine whether an extension of the national minimum wage to 16-18 year olds would affect their participation in the labour market. (10)

In theory extending the minimum wage to 16-18 year olds would increase the incentive to join the labour market because work will become more attractive compared to studying at school and not earning.

However, the minimum wage for 16-18 year olds is still relatively low. It is £3.40 for people under 18. Therefore, the benefit of working on the minimum wage may still seem insignificant compared to the benefits from studying and getting qualifications which will enable higher life time earnings.

Also many 16-18 year olds probably live rent free therefore there is not an economic necessity to go out and get a job.

With a minimum wage of £3.40 how many jobs for 16-18 year olds would pay significantly more than without a minimum wage.

Personally, I think the effect of a minimum wage for 16-18 year olds is relatively insignficant, I can’t think of many students who would give up A levels just so that they could go and work in McDonalds for £3.40 an hour.

What is most likely is that there will be an increase in the participation of young workers doing part time jobs in addition to studying full time.

• The minimum wage was introduced in the UK in 1999 at £3.30.
• As of October 2007 the minimum wage for adult workers is £5.52. (It will rise to £5.73 by end of 2008)
• There is a development rate for workers 18-21 of £4.60
• For people under 18 (not of compulsory school age) the rate is £3.40
• Source: National Minimum wage HMRC

In this period 1999 - 2008, ILO  unemployment has fallen from 1,822,000  to 1.61 million or 5.25%. Claimant count method is even lower at less than 800,000
Readers Question and Essay:

• Why does a Minimum Wage not cause Unemployment? - Several reasons including monoposony, economic growth and increased productivity
• Case for Regional Minimum Wage

Readers Question: Assess the effectiveness of government policies to increase labour market flexibility in the UK.

It is difficult for the government to effectively increase labour market flexibility. However, this essay offers a few policies and evaluation of how successful they have been 

Policies Include:

1. Subsidised childcare provision - increase incentive for women to work.
2. Increased spending on education and training
3. Reducing power of trades unions and minimum wages
4. Making it easier to hire and fire workers.
5. New Deal

It is argued that the UK labour market has become more flexible than European counterparts such as France, Germany and Spain. Economists argue that this increased labour market flexibility is a reason why UK unemployment is lower and that the government can make a difference

I want to know what topics to study for unit 5 Edexcel economics? Which are the important ones?

If you are doing unit 5A Labour Markets the most important topics are:

• Determination of wages
• Impact of Trades Unions / minimum wages on labour markets
• Monopsony
• Flexible Labour Markets
• Government Intervention in Labour markets
• Unemployment in labour markets Continue reading →

The government has announced that the National Minimum wage will rise to £5.73 for workers over 21 - by the end of 2008. This means for a worker on a 40 hour week, their take home pay will be £229 per week. This also attracts top up benefits from the government in the form of family tax credits.

Trades Unions had suggested that the Minimum wage should rise to £6.75 a rate, a rate which would lift workers out of needing government benefits. Employers, predictably, were happy that minimum wages have only increased in line with inflation.

Continue reading →