Factors influencing demand for labour
- Created by: tdpandi
- Created on: 07-10-20 23:13
View mindmap
- Factors affecting Demand for Labour
- Macroeconomic factors
- Changes in the total level of economic activity
- Increased level of economic activities leads to increased demand for labour, fall in unemployment and labour shortages
- Decreased level of economic activities leads to decreased demand for labour rise in unemployment and labour surpluses
- Increased level of economic activities leads to increased demand for labour, fall in unemployment and labour shortages
- The productivity of labour
- Increased productivity in the economy leads to increased demand for labour
- Decreased productivity in the economy leads to decreased demand for labour
- Increased productivity in the economy leads to increased demand for labour
- The general wage rate
- If wage rates are lower than capital cost, employers will substitute labour for capital by hiring more workers
- If wage rates rise, employers may substitute capital for labour by hiring less workers
- If wage rates are lower than capital cost, employers will substitute labour for capital by hiring more workers
- Government industrial relations policies
- Government policies to create employment opportunities will increase demand for labour
- Level of industrial disputation
- Disputes such as strikes and lockouts can affect labour demand
- Increased levels of industrial disputes may cause employers to hire less workers
- Decreased levels of industrial disputes will improve employers expectations and o hire more workers
- Increased levels of industrial disputes may cause employers to hire less workers
- Disputes such as strikes and lockouts can affect labour demand
- Changes in the total level of economic activity
- Microeconomic factors
- Nature and Size of the Industry
- The nature of a firm/industry's output will whether professional, skilled, semi-skilled or unskilled labour is needed.
- Large labour intensive industries (i.e. retailing, wholesaling, finance and banking are likely to be large employers of labour whereas smaller more capital intensive industries (i.e. mining and manufacturing) tend to demand less labour
- The nature of a firm/industry's output will whether professional, skilled, semi-skilled or unskilled labour is needed.
- The pattern of consumer demand and output
- Since the demand for labour is derived from the demand for final goods and services, a change in the pattern of consumer demand will affect the demand for labour
- The wage rate and conditions of employment offered
- More profitable industries with higher prospects for growth are more able to attract more labour by offering higher wage rates
- Less profitable industries facing stagnant or declining market demand may only offer minimum wage rate therefore attracting less labour.
- More profitable industries with higher prospects for growth are more able to attract more labour by offering higher wage rates
- The productivity of labour
- Productivity of labour is the output per unit of labour and influences decisions by employers to hire workers
- Increased productivity leads to increased demand for labour as employers tend to hire more productive workers to increase output at a reduced cost
- Ifmay hire less productivity is low, firms workers
- Increased productivity leads to increased demand for labour as employers tend to hire more productive workers to increase output at a reduced cost
- Productivity of labour is the output per unit of labour and influences decisions by employers to hire workers
- The rate of capital/labour substitution
- The relative cost of labour to capital will influence the labour/capital mix in production and the demand for labour and capital resources.
- The rate of structural change and entrepreneurial expectations
- If entrepreneurs expect consumer demand to increase in the future leading to a bigger market for that product, they may increase their demand for labour
- Nature and Size of the Industry
- Macroeconomic factors
Similar Economics resources:
Teacher recommended
Teacher recommended
Comments
No comments have yet been made