Factors Influencing Labour Demand and Supply

Productivity of labour

Higher productivity increases demand for labour as it boosts output per worker

Cost of labour

If wages increase, demand for labour may fall due to higher costs

Availability of capital

Businesses may substitute labour with machinery, reducing demand

Consumer demand

More demand for goods and services increases derived demand for labour

Education and skills

Higher levels of education/skills increase labour supply and employability

Working conditions

Better conditions attract more people to supply labour

Geographic mobility

The willingness of workers to move regions for employment

Occupational mobility

The ability of workers to move between different jobs and industries

Remuneration

The total rewards received for work (wages + non-wage benefits), affecting labour supply

Demographic factors

Ageing population, migration, and gender participation influence supply

Government policy

Policies such as training subsidies or welfare impact labour market participation