Labour markets introduction

Read definitions of key terms on pp.1-5 of the Study Guide.

Demographic changes in the UK

Currently in the UK we have a falling birth rate and death rate leading to an aging population. A smaller working population and a larger retired population will lead to an increased dependency ratio.

This causes a problem for the government with pension provision and payments from current workers are not sufficient to pay for pension provision. The government can therefore aim to lessen its burden by...

Sectoral changes

Development can be measured by the size of the primary sector industry in an economy. In initial development economies move from primary production (agriculture) to secondary sector (industrial) then in further development to the tertiary sector (services).

All advanced economies are currently experiencing low unemployment and de-industrialisation (the decline of the manufacturing sector). This means many traditional industries are in decline. The UK, for example, has lost its comparative advantage in the production in areas such as ship building and coal mining. Those put out of work found it very hard to be retrained as they are occupationally immobile.

London is a major financial location globally and has seen some expansion as has low paid work such as distribution and restaurant work. However these industries face the threat of relocation where labour is cheaper, and costs of running the business cheaper. There is the increasing threat of relocation to economies like India.

Wage differentials

Where workers are paid different rates due to...

Unit cost

The cost of labour for a given output can be calculated as

Equations for productivity per worker and average cost per worker

So as productivity increases the labour cost per worker decreases.

These notes are from a lesson on 24/11/2004.

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