Chap23

• Demand for labour


  Not likely to remain constant over a long period of time, as it is a derived demand - if there is an increase in demand for a particular product, the demand for workers in that industry will increase (shift to the right)
• Supply of labour


  One of the main driving forces of growth has been global population growth. In some countries, such as Greece, the retirement age has been increased from 60 to 67, leading to an increase in the supply of labour (shift to the right), which causes wages to fall while the number of people employed rises. However, due to inflation, wages rarely fall - it's their real value that falls.
• Trade unions


  Organisations that represent employees to protect their rights
• Trade unions in Cyprus

  • Cyprus Bank Employees Union "ETYK", Cyprus Workers Confederation "SEK", Pancyprian Greek Teachers Association "POED", Pancyprian Labour Federation "PEO", Cyprus Democratic Labour Federation "DEOK"
• Key roles of trade unions

  • Protect and improve living standards of their members by negotiating wages
  • Protect workers against unfair dismissal (legal protection - represent in court)
  • Promote working conditions, workload & health and safety issues
  • Provide workplace training and education, and put pressure on government
• Trade union membership in the UK has become less popular nowadays
• Around 6.5 million employees in the UK were trade union members in 2013, versus 13 million in 1979
• 26% of people in work in the UK were members of a trade union in 2013, versus 32% in 1995
• In the 1980s, the UK government passed legislation to limit the power of trade unions
• A strong trade union can force wages up


  As it can put pressure on employers
• Trade union insisted that wages of W2 are paid to workers

  New SL curve (perfectly elastic at W2 - horizontal), all employees up to Q3 must be paid W2, if the firm needs workers beyond Q3 wages will rise further
• Due to higher wage W2 from W1

  Number of workers has decreased from Q1 to Q2 - drop of employment (inverse relationship of DL & wages)
• Job losses may be avoided if: (a) labour productivity rises at the same time, (b) employers are able to pass wage increase on prices, (c) profit margins have reduced due to less employees now in the firm