IGCSE Economic Textbook Chapter 18 Workers PPT
- 1. By- Mannat & Meher 9A
- 2. There are three types of such factors ▪ Wage factors ▪ Non-wage factors ▪ Limiting factors
- 3. WAGES Some workers' pay varies based on how many hours they put in (a time rate system) or how much they produce (a piece rate system). Employers can easily estimate their labour costs due to the former, and workers can bargain collectively about the rate of pay. However, a time rate system does not honour diligence because it compensates both lazy and hardworking workers equally. OVERTIME PAY Workers who put in more hours than the typical workweek may be paid overtime. Usually, a higher rate is paid for it.Both employees and employers can gain from overtime. Young parents, for instance, are frequently eager to increase their pay and may be drawn to jobs that regularly offer overtime. Employers can respond to increased demand without hiring additional staff until they are certain that the increased demand will continue. If demand declines, it is simpler, less expensive, and less disruptive to cut back on overtime than to fire employees.
- 4. BONUSES An additional payment is a bonus. It can be given to employees who produce more than is expected, complete a project earlier than expected, land profitable contracts, or make other contributions that help the company make more money. Employees may be encouraged to produce high-quality work or to stay with a company by receiving bonuses. COMISSION Salespeople are frequently compensated with commission. They will receive a portion of the profits from the sales they generate. Sometimes this is paid in addition to a regular salary, and other times it is the entire sum.
- 5. JOB SATISFACTION Increasing people's health and instructing students can give nurses and teachers a significant sense of fulfilment. Naturally, there are some jobs that offer high pay along with a high level of job satisfaction.Top football players,TV hosts, and brain surgeons all have rewarding careers that are both interesting and challenging. TYPE OFWORK Most people prefer non-manual work to manual work. This is because it is typically more mentally stimulating and less physically taxing. Additionally, non-manual work frequently pays better. People also enjoy jobs with high status, and the majority of these are non-manual.
- 6. WORKING CONDITIONS An important deciding factor are the working conditions. People prefer to work in pleasant environments with enjoyable co-workers while taking regular breaks. WORKING HOURS The quantity and timing of the hours that employees are expected to put in varies by occupation. In comparison to shop workers, managers and senior officials frequently put in more overtime. Some jobs give employees the option to work a part-time schedule, such as 16 hours per week. Many of them also permit employees to change their hours from week to week due to flexible work schedules.
- 7. HOLIDAYS A minimum amount of time off for full- time employees is mandated by law in several countries. Even in these nations, the length of holidays varies. One profession that is well known for the long holidays it offers is teaching. PENSIONS Occupational pensions are having a big impact as people are living longer in most nations. The way that occupational pensions are provided differs.While some jobs offer generous pensions to their employees after retirement, others don't.
- 8. FRINGE BENEFITS Fringe benefits are additional perks offered by employers to employees. These could include social and recreational facilities,health programmes, and free or discounted meals. JOB SECURITY Jobs with a comparatively high level of job security draw in a large number of employees.Workers who have a high level of job security are less likely to be laid off. A situation like this is more likely to happen in jobs where there is a high demand for the product and long-term contracts are offered to employees.
- 9. CAREER PROSPECTS People are frequently willing to accept low pay at the beginning of their careers if they believe there is a good chance they will be promoted to a well-paying and interesting position. SIZE OF FIRMS Jobs in large companies and organisations frequently draw applicants.This is because larger businesses and organisations commonly pay more and provide better job security, career prospects, and accessory benefits (fringe benefits) than smaller ones.
- 10. LOCATION People may opt for a job that is close to where they live. As a result, they won't have to spend a lot of money or time getting to and from work.
- 11. OCCUPATIONAL CHOICE AND OPPORTUNITY COST Making a decision to pursue one career means passing on others. Employees must decide what is important to them.
- 12. FIGURE 18.1 EXPLANATION A profession's pay is likely to be higher the higher the demand for and the lower the supply of workers in that field.The markets for doctors and cleaners are depicted in Figure 18.1. Doctors are in short supply in comparison to the demand for their services. Only a small number of people possess the necessary qualifications, as well as the willingness and capacity to engage in a significant period of difficult training to become doctors. Demand for skilled workers is high, whilst their supply is low. Skilled workers are highly productive and produce high quality output per hour. The supply of workers in the agricultural and manufacturing sectors varies. Some people like working in the public sector because of greater job security and better pensions.
- 13. In occupations where employees have significant bargaining power over employers, wages are likely to be higher. If most of the employees belong to a trade union or other professional organisation, this is more likely to occur. Employees in the public sector are more likely to be members of such a group than those in the private sector.
- 14. Government labour market policies have an immediate impact on salaries. A national minimum wage (NMW) is one of the most well-known. A wage-floor is imposed by such a policy, making it illegal to pay a wage rate below it. However, an NMW must be set higher than the market equilibrium wage rate to have any effect on wages.
- 15. In many ways, public opinion can affect wage rates. For instance, Scandinavian nations place a higher value on engineers than the UK does. Different nations have different perspectives on certain professions. A government may come under pressure from the public to increase the wages it pays to public sector employees.
- 16. When a group of employees are treated unfairly in terms of employment, pay, training opportunities, or promotions, that is considered discrimination. For instance, some employers might be reluctant to hire women. Governments are outlawing this type of discrimination more often, but even taking hourly wage rates into account, women are still paid less than men.
- 17. 18.3- WHY EARNINGS OF OCCUPATIONS CHANGE OVER TIME ▪ Changes in demand of labour ▪ Changes in supply of labour ▪ Changes in stages of production ▪ Changes in bargaining power ▪ Changes in government policies ▪ Changes in public opinion ▪ Changes in earnings of individuals over time
- 18. Earnings are likely to increase if the demand for labour rises.There may be an increase in bonuses and the wage rate.Additionally,there may be a greater availability of overtime and a higher pay rate for it. What can cause demand for labour to increase? There are three main causes: ▪ An increased demand for the product.Demand for labour is a derived demand. The higher the demand for products,the greater is the number of workers employed. ▪ A rise in labour productivity.Higher productivity increases the return fromhiring workers. ▪ A rise in the price of capital.In some occupations,it is possibleto substitute labour for capital in the production process.
- 19. CHANGES IN SUPPLY OF LABOUR A decrease in the supply of labour for a specific occupation or sector is expected to raise the wage rate. The factors that could cause a decrease in the supply of workers are: ▪ A fall in the labour force. If there are fewer workers, in general, it is likely that an individual business will find it more difficult to recruit workers. ▪ A rise in the qualificationsor length of training required to do the job. This will reduce the number of people eligible for the job. ▪ A reduction in the non-wage benefits of a job. If, for example, the working hoursor risksinvolved in doing a job increase, fewer people are likely to be willing to do it. ▪ A rise in the wage or non-wage benefitsin other jobs. Such a change would encourage some workers to switch from one occupation to another.
- 20. When compared to secondary and tertiary sector workers, the demand for primary sector workers typically declines as an economy grows.This is so because employees in the primary sector typically have lower skill levels and less training. The tertiary sector employs some of the best-paid workers. For instance, some judges and some surgeons receive very high wages.
- 21. Earnings can be affected by changes in union bargaining power or willingness to take industrial action. It would be expected that agricultural workers' wages would increase if, for instance, a government lifted a restriction on them organising into unions collectively. One explanation for the rise in pay among UK NHS employees in recent years is thought to be their increased willingness to threaten industrial action.
- 22. The pay of public sector workers is likely to rise if the government decides to expand the public sector. The other ways a governments can change wage rates are: ▪ Raising the national minimum wage will increase the pay of low-paid workers. ▪ Despite the rise in supply, improved education may raise the wages of skilled workers, as it may increase their demand more than the supply.This is because employing more skilled workers should reduce costs of production and increase international competitiveness. ▪ Making it easier for foreign people to live and work in the country should increase the supply of labour. If a country is short of, for example, ICT workers, giving more permits to foreign workers may increase the number of such workers working there.
- 23. A few other ways a governments can change wage rates are: ▪ Anti-discrimination laws may help to increase the career prospects and wages of disadvantaged groups. Such legislation works, in part, by changing public opinion. In many countries attitudes to working women have become more favourable. This, combined with a rise in the educational performance of women has raised women's wages. ▪ Advances in technology can alter wage rates. In some cases, it can put downward pressure on wage rates by reducing demand for workers' services. For example, introduction of technology in the banking industry has made workers redundant. In other cases, however, new technology can increase wages, such as in the case of demand of delivery drivers due to the increase in online shopping in recent years.
- 24. Over time, how occupations and those who undertake them are viewed can change. In Saudi Arabia, where social attitudes toward women working are changing, the pay and job opportunities for women are rising.Journalists' relative pay has fallen in recent years in the United States because they are not regarded as professionals in the same way that doctors or accountants are.
- 25. Most people's earnings fluctuate throughout their working lives. For most workers, income rises with age. However, there is a chance that earnings will decline over time. Some older workers may choose to stop working overtime, while others may choose to switch to less physically demanding jobs.
- 26. The magnitude of the change in the wage rate due to a change in demand for, or supply of, labour is influenced by several factors,including size and elasticity of the labour market.Figure 18.7 shows demand for labour increasing by the same amount in both cases,but the impact on the wage rates is much greater in the first case where both the demand for and supply of labour are inelastic..
- 27. ▪ The proportion of labour costs in total costs- If labour costs form a large proportion of total costs, a change in wages would have a significant impact on costs and hence demand would be elastic. ▪ The ease with which labour can be substituted by capital- If it is easy to replace workers with machines, demand would be elastic. ▪ The elasticity of demand for the product produced- A rise in wages leads to a fall in demand for the goods and services that are produced. The more elastic the demand for a product, the less demand for labour is required to produce it, hence making demand for labour elastic. ▪ The time period- Demand for labour is usually more elastic in the long run as there is more time for firms to change their methods of production.
- 28. ▪ The qualificationsand skills required- A large increase in the wage paid to brain surgeons will not have much effect on the supply of labour, as it will take years to gain the required qualifications and experience. The more qualifications and skills needed; the more inelastic supply of workers will be. ▪ The lengthof trainingperiod- A long period of training may put some people off the occupation, and it could lead to a shortage of skilled workers. Both effects make the supply of labour inelastic. ▪ The level of employment- If most workers are employed already, the supply of labour to any particular occupation is likely to be inelastic. An employer may have to raise the wage rate quite significantly to attract more workers and encourage the workers employed in other occupations to switch jobs.
- 29. ▪ The mobilityof labour- The easier workers find it to change jobs, or to move from one area to another, the easier it will be for an employer to recruit more labour by raising the wage rate. Thus, higher mobility makes the supply elastic. ▪ The degree of vocation- ▪ The stronger the attachment of workers to their jobs, the more inelastic supply tends to be in case of a decrease in wage rate. ▪ The time period- As with demand, supply of labour tends to become more elastic over time. This is because it gives workers more time to notice wage changes and to gain any qualifications or undertake any training needed for a new job.
- 30. Factory workers who specialise can concentrate on one task and get very good at it; as the saying goes, "practise makes perfect." Additionally, there is a chance that specialisation will increase unit costs because workers will grow weary of performing the same tasks repeatedly. Specialized workers have the potential to become highly skilled and, if their skills are in high demand, can earn high salaries.Workers may be able to pursue their particular interests by focusing on a specific task or job. For instance, medical professionals interested in brain diseases and injuries might pursue a neuroscience specialisation. Focusing on less demanding work can ease the strain on employees. Some factory workers may be able to perform a task almost without thinking if they have been doing it for some time.