LABOUR MARKET

Types of labour market

In any capitalist economy where there is a greater degree of freedom of choice, a labour market exists that bring together the buyers and sellers of labour services. The buyers of labour services are productive firms that need workers to produce goods and services. Workers are individuals who can sell their labour services. Labour services are the kind of work or task that workers are asked to perform. Examples of work include brick laying, loading and offloading a truck, transporting goods, and so on. These kind of labour services are called manual labour. But labour services can also be in the form of teaching, provision of accounting services, provision of legal advice, treatment of patients, writing columns in newspapers. These kind of labour services can be called intellectual labour.

Job Search and Types of Labour Market

• Local labour market: Job search that takes place at the local level by both employers and employees occurs in the local labiur market. Examples: petrol station attendants, loaders, bricklayers.
• National labour market: Job search that takes place at the national level by both enployers and employees. Examples: accountants, lawyers, medical doctors, professors.
• Primary lanour market: Jobs in the primary market involve stable relationships and high wages: Examples: lawyers, profesors, accountants.
• Secondary labour market: Jobs in the secondary market are characterised by unstable employer-employee relationship and low wages. Examples: loaders, bricklayers, petrol station attendants.
• Internal labour market: Firms use promotion to move workers to a new level rather than hiring someone from outside. Aim: retain workers, increase morale and productivity.
• Virtual labour market: The internet has become the platform used by potential employees to search for jobs and for firms to search for workers and even hire them through the same platform.
• Global labour market: Multinational firms such as Shell and Procter and Gamble and international organizations such as the African Development Bank and the World Bank search for certain categories of workers, globally. Examples: high-level executives, those with specialsied skills such as software developers.

Decision Makers in the Labour Market

There are three key decision makers in the labour market. These are:

• Individuals or workers
• Firms or employers
• Government

Individuals

Individuals can decide:

• To work or not to work. An individual can decide to have more leisure than work.
• Who to work for and who to work with
• Where to work. That is, which city or region of a country to work.
• To accept or reject a wage offer.
• To migrate to another country.
• To join a union or not.
• To work full or part time.

Firms

Firms can decide:

• To hire or fire workers.
• The wages to pay
• Hours of work.
• The conditions of work.
• To allow or not to allow unions.
• To offer full or part-time jobs.

Government

Government can decide to:

• Make laws that regulate the labour market.
• Create and implement labour market policies
• Mediate between workers and employers when conflicts arise.
• Create judicial institutions such as the Industrial Court in Nigeira to settle conflicts between workers and their employers.
• Accept or reject international labour conventions.
• Allow or disallow labour migrations
• To intervene in wage determination such as the minimum wage law.

Labour Markett Outcomes

Price of labour services:

• Wages are the price of labour services. They can be paid hourly, daily, weekly or monthly
• The price outcomes, that is, whether wages are high or low depend on demand and supply
• At other times wages are determined by law, such as the minumum wage law.
• Wages are also affected by whether a union exists or not. Unions often agitate for higher wages
• The presence of monopsony can also affect wages. A single firm in a aprticular location can decide what wages to pay if it is the only buyer of labour services in that location.
• Free mobility of labour can affect wages.

Quantity of labour services:

• The quantity of labour services refers to the amount of employment offered by firms and supplied by workers
• The qauntity of labour employed then depends on demand and supply
• Quantity is also affected by whether a union exists or not. Unions can restrict the number of workers that enter the labour market at particular point in time.
• Restriction on labour migration can limit the number of workers that enter a labour market.