Workers

• What are wage factors?

  Financial rewards that workers receive in return for labour services
• Wage factors:

  • Wages
  • Salaries
  • Piece Rate
  • Commission
  • Bonus
  • Profit-related pay
  • Share options
  • Fringe benefits/perks
• What are non-wage factors?

  Factors that influence a job's attractiveness other than money
• Non-wage factors:

  • Level of challenge
  • Level of education
  • Level of experience
  • Career prospects
  • Recognition in job
  • Level of danger
  • Length of training
  • Personal satisfaction gained
• What does demand for labour refer to?

  Number of workers firms are willing and able to employ at a given wage rate
• What does supply for labour refer to?

  Everyone in the economy who is of working age and is both willing and able to work at different wage rates
• Factors influencing demand for labour:

  • Level of total demand in economy
  • Productivity of labour
  • Cost of labour
• Factors influencing supply for labour:

  • Labour force participation
  • Availability and level of welfare benefits
  • Changing social altitudes
  • Geographical mobility
  • Occupational mobility
• The equilibrium wage rate is determined when the wage rate workers are willing to work for equals the wage rate that firms are prepared to pay.
• Relative bargaining power:

  • Trade unions
  • Age and experience
  • Level of education
• A national minimum wage (NMW) is the lowest legal amount any firm can pay its workers and is set by the government
• Advantages of NMW:

  • Workers receive liveable wage and are not exploited
  • Unemployed people have incentive to work as rewards are more attractive than welfare payments
  • Low income earners have more money to spend, thus a rise in consumption in economy and eases fear that high wages lead to unemployment
• Disadvantages of NMW:

  • Workers earning more than NMW may request a higher wage to maintain the wage differential between workers who earn less
  • Unemployment may increase because firms face higher costs and reduce demand
• Reasons for differences in earnings:

  • Differences between skilled and unskilled workers
  • Differences between primary, secondary and tertiary sector workers
  • Differences between male and female workers
  • Differences between private and public sector workers
• What is specialisation of labour?

  Refers to workers being experts in a particular profession
• What is division of labour?

  Refers to workers being experts in a particular production process
• Advantages of division and specialisation of labour:

  • Increases motivation, productivity, output and competitiveness for firms
  • Workers become experts in their field so productivity and efficiency rises
  • Quality of product/service increases
  • Workers can become very skillful, so earning potential may increase
• Disadvantages of division and specialisation of labour

  • Work may be repetitive and boring
  • Workers may be alienated
  • Production process may be overspecialised
  • Workers may be deskilled in other area