Labour market

Labour costs often represent

one of the most significant business costs

Labour costs can be lowered by

increase productivity of workers, reducing wages and salaries

Quality of labour

Skill level and expertise of the workforce

Quantity of Labour

Number of workers available to the business

Education

occurs in schools and universities and may be funded by the government or may be run by private educational firms

Training

undertaken by firms and can shape the skills and knowledge of human capital and quality of labour. More skilled workers can drive innovation.

Demand for labour is

derived demand, This means the level of labour demand depends on the demand for goods and services

- labour market is composed of sellers of labour (households) and buyers of labour (firms)

Workers supply their labour, and firms demand labour to produce an output

As wages rise

the quantity demanded of labour falls

Factors affecting demand for labour

- price of product being produced

- demand for final product

- ability to substitute capital (machinery) for labour

- productivity of labour

supply curve for labour

there is a positive relationship between supply of labour and wage rate.

Factors influencing supply of labour

- population size

- age distribution of population

- migration

- participation rate

- school-leaving age

- skills and qualifications

-mobility of labour

-retirement age

Labour market equilibrium occurs when

the demand for labour (DL) is equal to the supply of labour (SL)

a trade union

an organisation that represent the interests of its workers in negotiations with a firm's management or owners.

the interests of the worker include

-wage & non-wage benefits of employment

- health and safety in the work environment

- reduction of discrimination and worker exploitation

Trade unions are usually formed by members of

specific industries

if there is no specialist union for an industry most economies have

general unions. usually represent workers from public sector such as governments, education and health.

types of trade unions

- General Unions

- Industrial Unions

- Craft Unions

- White-collar Unions

Impacts of Trade unions

Trade union intervention changes the equilibrium wages and employment in the labour market

trade union effects

- Negotiating acceptable wage

- Negotiating inflation-linked pay rises

- Negotiating standard weekly working hours and overtime pay

- Negotiating higher wage when firm is making higher profit

- Negotiating improvements in working conditions and equipment

- Negotiates retention and redeployment of workers when capital replaces labour

- Negotiates settlement packages