labour markets

Policies to deal with the free movement of labour

Policies to deal with the free movement of labour

In this recent post we saw some of the economic and political challenges of allowing free movement of labour within an economic block, such as the EU28. To what extent can the government / EU mitigate these negative impacts, whilst retaining free movement of labour? 1. Funding related to number of people. One issue of free movement of labour is that certain areas can see a sudden influx of migrants, which places a stress on social services, housing and possibly wages. If government spending was more flexible, higher public funds…

Problems of free movement of labour

Problems of free movement of labour

In a recent post, we looked at the advantages of free movement of labour. But, what about the problems which might arise from free movement of labour? Firstly, free movement of labour depends on the area in question. To make an easy contrast, initially, the EU was free movement of workers between 12 / 15 countries in Western Europe. These countries had relatively similar wage rates, and we didn’t see any dramatic shift in workers between EU member states In recent years, the EU has expanded to 28 (27 post…

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Fiscal impact of immigration

If you are interested in fiscal impact of net migration, this study “Fiscal effects of immigration to the UK” is worth reading. Some highlights EU migrants cost the UK government £408.12 per second in public expenditures, and contribute £463.35 per second in revenue. Of all EU migrants, nearly nine in ten are of working age. According to long-term international migration data collected by the ONS, around 48.9 % of EU migrants that came to the UK in 2013 were between the ages of 15 and 24. Meanwhile, 40.9%…

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…