labour markets

Performance related pay

Performance related pay

Performance related pay is a system where employers pay employees depending on the quality of their work. In it simplest form, performance related pay is payment by ‘piece meal’. For example, a worker gets paid £1.00 per Kg of potatoes that they pick. This piece meal payment is an effective way to give workers an incentive to work harder and pick as many potatoes as they can. From the employers point of view it is relatively easy to measure the marginal product of each worker and pay accordingly. The employer…

Impact of increase in female labour market participation

Impact of increase in female labour market participation

A look at the economic impact of an increase in the supply of female workers in labour markets. In Summary: Increased female labour market participation, will lead to increase in supply of labour, and in theory, could lead to lower wages. However, a gradual increase in female labour market participation is often in response to rising demand for certain jobs, and is consistent with rising real wages. The increase in female labour market participation can also increase labour market flexibility and impact on income distribution with society. History – Female labour market…

Minimum Wage for 16-18 Year olds

The minimum wage for workers 18-20 is currently £5.30 (May 2016)   Readers Question: What are the minimum wage rates for 16, 17 and 18 year olds. Should the minimum wage be increased?  Should there be a minimum wage rate for children under 16? Minimum Wage Rates from April 2016 £7.20  –  25 and over £6.70 – Age 21-24 £5.30 – Age 18-20 £3.87 – Under 18 £3.30 – Apprentice rate.   An apprentice means the firm has to devote a certain time to training the worker. Traditionally apprentices get lower pay…

Growth in self-employed contractors

Growth in self-employed contractors

In recent years, the UK has seen a more flexible labour market. One phenomena is the growth in self-employed contractors. This category of workers have different rights to employees. Self-employment can be attractive to workers seeking greater flexibility. But, there is also concern firms are using the categorisation of  self-employment as a bogus method to pay their workers lower wages, reduce rights to sick pay and avoid the need to employ for fixed numbers of hours per week. Levels of self-employment in UK

Zero hour contracts

Zero hour contracts

Zero hour contracts means that workers are employed without any guarantee about the amount of work they will gain. In the past decade, the numbers working on zero hour contracts has significantly increased from 100,000 in 2000 to over 700,000 in 2015. This now accounts for approx. 2.4% of the workforce. 41% of people on a zero hour contract job – wish to gain a replacement job, additional job or more hours in current job. This compares to just 12% of people not on a zero hour contract. (Source: ONS…

Factors that explain wage inequality

Factors that explain wage inequality

A look at factors that explain wage inequality – including classical economic theory and labour market imperfections. Readers Question: Idealized free market theory argues that it is automatic for each worker to receive just what he or she is worth; otherwise, an “underpaid” worker could just look elsewhere to bid a higher salary.  Could established theories of the limitations of the free market – unfulfilled requirements and lack of competition – help explain wage inequality? Brief overview of wage inequality Classical theory of labour…

Reasons for net migration into the UK

Reasons for net migration into the UK

The latest stats for UK net migration show an annual net migration of 260,000 (June 2014). This is roughly split between EU and non-EU migrants 142,000 from EU 44,000 of the EU are from the EU8 (most recent EU countries – Poland, Hungary, the Czech Republic, Slovenia, Slovakia, Estonia, Lithuania, and Latvia) 168,000 from non-EU (of which Commonwealth countries account for 62,000) According to data by the ONS, the biggest reason…

Why am I worse off?

Why am I worse off?

Readers Question: Why do the costs of living keep going up and our wages do not match it? In recent years, many people have seen the cost of living rising faster than wages. This has led to a fall in real wages – wages increased less than inflation. This effectively means a fall in the amount of money consumers have to spend on goods and services, leading to a decline in living standards. The cost of living measures the price of goods and services that we typically buy. This…