SECTION 2WORK
Starter…
• What percentage of gross pay has been deducted from W. A. McGonagle’s wages?
SECTION 2WORK
How labour markets determine pay
GCSE ECONOMICS: UNIT 11
SECTION 2WORK
Aims of today’s lesson …
• Identify factors which affect the supply and demand for labour
• Understand how the demand for labour is derived demand
SECTION 2WORK The Supply of labour
• The supply of labour refers to the amount of work each employee is willing to perform
• Each employee has a decision about whether or not to work
• In effect, each employee can decide how to split their time between work and leisure
SECTION 2WORK
Factors which affect the Supply of labour
• The supply of labour is affected by both monetary (money) and non-monetary factors
• The main factor which determines the supply of labour is the level of wages offered
• The higher the wage or salary, the more willing an employee will be to supply their labour
• This is because each hour worked becomes more valuable to the employee and as a result it becomes more tempting to work
SECTION 2WORK
Factors which affect the Supply of labour
• In addition to the wage rate, there are various non-monetary factors that influence how much an employee wants to work
• Gender: traditionally women were less willing to enter the labour force than men, but this trend has changed
• Why have increasingly more women entered the labour force?
SECTION 2WORK
Factors which affect the Supply of labour
• Ethnic origin: traditionally workers of non-white origin were less likely to be employed; but this trend has changed over the last two decades
• Taxation: Income tax reduced the amount of a wage or salary an employee is allowed to keep; if reduced people with have a greater incentive to work and therefore the supply of labour will increase
• State benefits: benefits are provided in the UK for those looking for work but currently unemployed; if they are sufficiently low people will be more willing to supply their labour, than if they were higher
SECTION 2WORK The Demand for labour
• The demand for labour comes from businesses that need employees to produce their goods and services
• However, the demand for labour is unlike the demand for most goods and services
SECTION 2WORK The Demand for labour
• Derived demand– Businesses don’t demand workers
for their own sake but because they need them to produce goods and services for the firm to sell
– This is known as derived demand; where the demand for labour (i.e. workers) is a derived demand!
SECTION 2WORK
Government influence and the Demand for labour
• The UK government will indirectly affect the demand for labour
• This is because it will influence through legislation how much a business must spend on an employee in addition to paying their wages
• These influences include;– Right to paid holiday – Maternity/paternity pay
SECTION 2WORK Over to you….
• Open and complete the activities on the following document
“Factors which affect pay”
SECTION 2WORK
Reasons for differences in pay….
• Open and make notes on the following information…
“Pages”
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