Employment

From Wikipedia, the free encyclopedia

Economics

  Economies by region [show]

General categories

Microeconomics · Macroeconomics
History of economic thought
Methodology · Heterodox
approaches

Techniques

Mathematical · Econometrics
Experimental · National accounting

Fields and subfields

Behavioral · Cultural · Evolutionary
Growth · Development · History
International · Economic systems
Monetary and Financial economics
Public and Welfare economics
Health · Education · Welfare
Population · Labour · Managerial
Business · Information · Game
theory
Industrial organization · Law
Agricultural · Natural resource
Environmental · Ecological
 Urban · Rural · Regional · Geograph
y

Lists

Journals · Publications
Categories · Topics · Economists
Economic ideologies [show]

The economy: concept and history

Business and Economics Portal

This box: view • talk • edit

This article is about work. For the Kaiser Chiefs album, see Employment (album).

This section has multiple issues. Please help improve it or discuss these

issues on the talk page.

 Its neutrality is disputed. Tagged since April 2010.

 Its factual accuracy is disputed. Tagged since April 2010.

Employment is a contract between two parties, one being the employer and the other

being the employee. An employee may be defined as: "A person in theservice of
another under any contract of hire, express or implied, oral or written, where the
employer has the power or right to control and direct the employee in thematerial
details of how the work is to be performed." Black's Law Dictionary page 471 (5th ed.
1979).

In a commercial setting, the employer conceives of a productive activity, generally with

the intention of generating a profit, and the employee contributes labour to
theenterprise, usually in return for payment of wages. Employment also exists in
the public, non-profit and household sectors.

Contents
 [hide]

1 Employer
2 Employee
 o 2.1 Becoming an employee
o 2.2 Organizing
o 2.3 Ending employment
3 Employment contract
o 3.1 Australia
o 3.2 Canada
o 3.3 Pakistan
o 3.4 India
o 3.5 Philippines
o 3.6 United States
o 3.7 Sweden
4 Culture and social considerations
o 4.1 The Depression era
o 4.2 World War 2
o 4.3 Post World War 2
o 4.4 Babyboom competition
o 4.5 Baby bust and echo
5 Models of the employment
relationship
6 Work as an economic component
o 6.1 Other "isms"
o 6.2 Value of labor
7 Alternatives
8 Globalization and employment
relations
9 See also
10 References
11 External links

[edit]Employer

An employer is a person or institution that hires employees or workers. There are

federal rules which determine whether an employee can be classified as exempt or non
exempt from over time. Once an employee has been properly classified as exempt or
not exempt, an Employer may offer hourly wages or a salary. It is important to note that
"salary" does not always mean "exempt from overtime requirements." A properly
classified, as exempt, salaried employee is typically not paid more for more hours
worked and employers may not deduct wages for items such as lack of work or because
the employee worked less hours due to no fault of their own.

Employees, that are not exempt, must be paid overtime. They are most often referred to
as "hourly employees." The federal rule for overtime for all hourly employees is: Hourly
employees that work more than 40 hours in a set and predetermined 24 hour and 7
consecutive day period must be paid 1.5 times their regular rate of pay for all hours over
40. Under no circumstance may either the employer or employee waive the over time
requirement. Additionally, many states have their own individual requirements about
when and how over time is to be paid. In general, when there are both federal and state
laws that apply to the same employment issue, such as Over Time, the law that treats
the employee the best or with most favor, is the law that governs.

Most employment in the U.S is what is known at AT Will. One state, Montana, is not At
Will. For all other states, this means that either the employer or the employee may end
the relationship "At Will" and with no notice. In the United States there are a growing
body of rules, regulations, and laws which affect the AT Will relationship. Therefore, At
Will for employers also means that they must not terminate or make an adverse
employment decision based on an "unlawful reason."

Employers include individuals hiring a babysitter to governments and businesses which

may hire many thousands of employees. In most western societies, governments are
the largest single employers but most of the work force is employed in small and
medium businesses in the private sector.

Although employees may contribute to an enterprise, the employer maintains control

over the productive base of land and capital, and is the entity named in contracts. The
employer typically maintains ownership of intellectual property created by an employee
within the scope of employment and as a function thereof. These inventions or creations
become the property of the employer based on a concept known as "works for hire".

An employers’ relative level of power over employees is dependent upon numerous

factors; the most influential being the nature of the employment relationship. The
relationship employers share with employees is affected by three significant factors –
interests, control and motivation. It is up to employers to effectively manage and
balance these factors to ensure a harmonious and productive working relationship.
Interests can be best described as monetary constraints and economic pressures
placed on organizations in their pursuit of profits. It covers facets such as labour
productivity, wages and the effect of financial markets on businesses.

Wood et al. (2004, p 355) describe control as being either output focused, focusing on
desired targets with managers defining, and using, their own methods for reaching
targets, or process controls, which specify the manner in which tasks will be achieved
(Ibid, p. 357). Employer and managerial control within an organization rests at many
levels and has important implications for staff and productivity alike, with control forming
the fundamental link between desired outcomes and actual processes. Employers must
balance interests such as decreasing wage constraints with a maximization of labour
productivity in order to achieve a profitable and productive employment relationship.

[edit]Employee

An employee contributes labor and expertise to an endeavour. Employees perform the

discrete activity of economic production. Of the three factors of production, employees
usually provide the labor.

Specifically, an employee is any person hired by an employer to do a specific "job". In

most modern economies, the term employee refers to a specific defined relationship
between an individual and a corporation, which differs from those of customer, or client.
[edit]Becoming an employee
Most individuals attain the status of employee after a job interview with a company. If
the individual is determined to be a satisfactory fit for the position, he or she is given an
official offer of employment within that company for a defined starting salary and
position. This individual then has all the rights and privileges of an employee, which may
include medical benefits and vacation days. The relationship between a corporation and
its employees is usually handled through the human resources department, which
handles the incorporation and onboarding of new hires, and the disbursement of any
benefits which the employee may be entitled, or any grievances that employee may
have.
[edit]Organizing
Employees can organize into trade unions or labor unions, who represent most of the
available work force in a single organization. They utilize their representative power to
collectively bargain with the management of companies in order to advance concerns
and demands of their membership.
[edit]Ending employment
An offer of employment, however, does not guarantee employment for any length of
time and each party may terminate the relationship at any time. This is referred to as at-
will employment. In some professions it is customary to offer two weeks notice when
resigning for a job, but that may not be legally enforceable. [1]

[edit]Employment contract
[edit]Australia
In Australia there is the controversial Australian Workplace Agreement. In March 2008 a
bill was passed in the Australian Senate that prevented new AWAs from being made,
and set up provisions for workers to be transferred from AWAs into intermediate
agreements [2]
[edit]Canada
In the Canadian province of Ontario, formal complaints can be brought to the Ministry of
Labour (Ontario). In the province of Quebec, grievances can be filed with
the Commission des normes du travail.
[edit]Pakistan
Pakistan has Contract Labour, Minimum Wage and Provident Funds Acts. Contract
labour in Pakistan must be paid minimum wage and certain facilities are to be provided
to labour. However, a lot of work has yet to be done to fully implement the Acts.
[edit]India
India has Contract Labour, Minimum Wage and Provident Funds Acts. Contract labour
in India must be paid minimum wage and certain facilities are to be provided to labour.
However, a lot of work has yet to be done to fully implement the Act.
[edit]Philippines
In the Philippines, Private employment is regulated under the Labor Code of the
Philippines by the Department of Labor and Employment.
[edit]United States
In the United States, the standard employment relationship is considered to be at-
will meaning that the employer and employee are both free to terminate the employment
at any time and for any cause, or for no cause at all. However, if a termination of
employment[3] by the employer is deemed unjust by the employee, there can be legal
recourse to challenge such a termination. Unjust termination may include termination
due to discrimination because of an individual's race, national origin, sex or gender,
pregnancy, age, physical or mental disability, religion, or military status. Additional
protections apply in some states, for instance in California unjust termination reasons
include marital status, ancestry, sexual orientation or medical condition. Despite
whatever agreement an employer makes with an employee for the employee's wages,
an employee is entitled to certain minimum wages set by the federal government. The
states may set their own minimum wage that is higher than the federal government's to
ensure a higher standard of living or living wage for their residents. Under the Equal Pay
Act of 1963 an employer may not give different wages based on sex alone. [4]

Employees are often contrasted with independent contractors, especially when there is

dispute as to the worker's entitlement to have matching taxes paid, workers
compensation, and unemployment insurance benefits. However, in September 2009,
the court case of Brown v. J. Kaz, Inc. ruled that independent contractors are regarded
as employees for the purpose of discrimination laws if they work for the employer on a
regular basis, and said employer directs the time, place, and manner of employment. [5]

In non-union work environments, in the United States, unjust termination complaints can
be brought to the United States Department of Labor.

Trade Unions in the United States

In unionized work environments in particular, employees who are receiving discipline,

up to and including termination of employment can ask for assistance by their shop
steward to advocate on behalf of the employee. If an informal negotiation between the
shop steward and the company does not resolve the issue, the shop steward may file
a grievance, which can result in a resolution within the company,
or mediation or arbitration, which are typically funded equally both by the union and the
company.
[edit]Sweden
According to Swedish law there are three types of employments.

 Test employment. The employer hires a person for a test period of max 6 months. The
employment can be ended at any time without giving any reason. This type of employment
can be offered only once per employer and employee. Usually a time limited or normal
employment is offered after a test employment.
 Time limited employment. The employer hires a person for a specified time. Usually they
are extended for a new period.
 Normal employment, which has no time limit (except for retirement etc.).

There are no laws about minimum salary in Sweden. Instead there are agreements
between employer organisations and trade unions about minimum salaries, and other
employment conditions.

[edit]Culture and social considerations

Ideological shifts in demographic eras:
This section does not cite any references or sources.
Please help improve this article by adding citations to reliable sources.
Unsourced material may be challenged and removed. (June 2009)

The examples and perspective in this section may not represent

a worldwide view of the subject. Please improve this article and
discuss the issue on the talk page. (July 2010)

[edit]The Depression era

The Depression placed great emphasis on work when it was so scarce that to not work
literally meant to starve. Families were separated as men went looking for work
wherever it could be found, whatever it was, no matter how menial. Life expectancy in
the 1930s was also not as long as the current (2008) expectancies, so the option for a
family to "move back in with parents" wasn't worthwhile, as parents either weren't alive,
or didn't have the investment environment to have had a "nest egg" to depend on.
[edit]World War 2
World War 2 dramatically flipped the supply and demand of both work and labour.
Manufacturing of war supplies created plenty of work, but the absence of men due to
recruitment opened the floodgates for labour demand that would be met by women and
those who could not enlist and fight.
[edit]Post World War 2
In the post-World War 2 period, the workplace had changed as women who had
reported for work during the war to replace the men who had gone overseas to fight
remained in the workplace to a significant extent. While the demand for manufacturing
wasn't as high once the war ended, the new optimism and new social phenomena
including urban sprawl created new demands for supply that would create new jobs in
road-building, real estate development, etc. Work remained high in social value.
[edit]Babyboom competition
As the baby boomers left school and started working in the 1970s, the oil crisis and
economic lag slowed their engagement in consumerism. As the 1980s dawned, the
largest generation were now in their peak employment years, peaking in terms of
income, and were now fully engaged in buying, whether homes, or vehicles, or
investments for the future.

The sheer number of people in the workforce during this period created heightened
competition for work, so that corporations who supplied jobs could be increasingly
selective and demanding, and workers would do more and more to keep the job they
had. As such, commitment to work became sacrificial, as having a good job and the
social status it provided became all-consuming for many. This was the era marked most
significantly by the standard introduction of "so, what do you do?"
[edit]Baby bust and echo
The baby bust generation, or Generation X, is the smallest of the last 50 years. As baby
boomers retire, there is not as much supply of workers to replace them, so corporations
have had to become more accommodating in order to attract the best from this cohort,
who have enjoyed less competition and more flexibility than previous generations.
Terms like "work life balance", "telecommuting and work from home" and flexible
benefits packages have developed in part to offer more attractive options for a
generation that has more choice[citation needed].

[edit]Models of the employment relationship

Scholars conceptualize the employment relationship in various ways. [6] A key
assumption is the extent to which the employment relationship necessarily includes
conflicts of interests between employers and employees, and the form of such conflicts.
[7]
 In economic theorizing, the labor market mediates all such conflicts such that
employers and employees who enter into an employment relationship are assumed to
find this arrangement in their own self-interest. In human resource management
theorizing, employers and employees are assumed to have shared interests (or a unity
of interests, hence the label “unitarism”). Any conflicts that exist are seen as a
manifestation of poor human resource management policies or interpersonal clashes
such as personality conflicts, both of which can and should be managed away. From the
perspective of pluralist industrial relations, the employment relationship is characterized
by a plurality of stakeholders with legitimate interests (hence the label “pluralism), and
some conflicts of interests are seen as inherent in the employment relationship (e.g.,
wages v. profits). Lastly, the critical paradigm emphasizes antagonistic conflicts of
interests between various groups (e.g., the competing capitalist and working classes in
a Marxist framework) that are part of a deeper social conflict of unequal power relations.
As a result, there are four common models of employment: [8]

1. Mainstream economics: employment is seen as a mutually advantageous transaction in

a free market between self-interested legal and economic equals
2. Human resource management (unitarism): employment is a long-term partnership of
employees and employers with common interests
3. Pluralist industrial relations: employment is a bargained exchange between stakeholders
with some common and some competing economic interests and unequal bargaining
power due to imperfect labor markets
4. Critical industrial relations: employment is an unequal power relation between competing
groups that is embedded in and inseparable from systemic inequalities throughout the
socio-politico-economic system.

These models are important because they help reveal why individuals hold differing
perspectives on human resource management policies, labor unions, and employment
regulation.[9] For example, human resource management policies are seen as dictated
by the market in the first view, as essential mechanisms for aligning the interests of
employees and employers and thereby creating profitable companies in the second
view, as insufficient for looking out for workers’ interests in the third view, and as
manipulative managerial tools for shaping the ideology and structure of the workplace in
the fourth view.[10]

[edit]Work as an economic component

Capitalism demarcates "work" as something that is supplied by "owners" and demanded
by "non owners" to a great degree. In this viewpoint, the risk associated with owning
and operating a business is seen as fairly rewarding the risk-taker with the lion's share
of profits, even though in reality the lion's share of the "work" to provide the good or
service is provided at the worker level. Unsafe and unfair work conditions and a lack of
profit-share are among the key factors that contributed to the establishment of unions.
Unions The purpose of a union is a written contract between the employer and the
employee, specifying the rights and duties of each.

Prior to the existence of unions, very few labor contracts existed, allowing the employer
to re-define the job any time, occasionally to the detriment of the employee.

In the purest sense, a union leverages the collective strength of a group of workers to
force owners and management to increase their compensation.

Opponents of capitalism Opponents of capitalism, such as Marxists oppose the

capitalist employment system, considering it to be unfair that the people who contribute
the majority of work to an organization, regardless of their level of financial risk, do not
receive a proportionate share of the profit and that full employment is rarely reached
under capitalism.
[edit]Other "isms"
Marxist communism reorders the hierarchy to suggest that all citizens of a society,
regardless of individual differences, are equal owners and are thus entitled to equal
share of the wealth of the society.
[edit]Value of labor
The value of work is also informed by the economic system in which it functions.

Capitalism allows, or purports to allow, the marketplace to determine the value of a

good or service based on demand, rather than impose a value on a good or service. In
a communistic environment, the state determines the value a job may have, and may
also open or close avenues to those jobs, creating less of a sense of freedom as to who
may occupy those jobs.

Socio-psychological concepts of freedom, self-actualization, motivation and aspiration

are thus tested in a society where a person is not taught "you can do whatever you
want", or "you don't have to work hard to get by okay". The capitalist system suggests
that success is unlimited or directly proportional to how much an individual wants to
work at it, while opponents of communism suggest that imposing value takes away the
motivation for someone to be better at their job than the next guy who isn't working as
hard but the value in what they do is fixed regardless of performance.

While the debate rages, and different countries subscribe to and build their society on
different approaches, clearly "work" plays a great role in the definition of a society and
the culture of government that will be in place to administer its functioning.
The Surrealists and the Situationists were among the few groups to
actually oppose work, and during the partially surrealist-influenced events of May
1968 the walls of the Sorbonne were covered with anti-work graffiti. Bob Black is an
anarchist author who is well known for exploring the ideas of opposition to work in the
essay The Abolition of Work, published in 1985.

[edit]Alternatives

A developing model of employment, as practiced by such companies as Semco,

Google, DaVita, Freys Hotels and Linden Labs, seeks to set aside the "master-servant
relationship" implicit in the traditional employment contract. The concommitant
employment practices are often grouped under the heading Workplace democracy, and
are characterised by high levels of employee engagement; principles-based rather than
rules-based work relations; and a problem-solving approach to workplace conflict. In
this model management (including its employment function) effectively becomes a
domain shared between managers and staff. The resurgent New Unionism movement
promotes this employment model, and seeks to extend it.

When an individual entirely owns the business for which he or she labours, this is
known as self-employment. Self-employment often leads to incorporation. Incorporation
offers certain protections of one's personal assets. Laws of incorporation vary from state
to state with Delaware having the most incorporated businesses of any state in the U.S.

Workers who are not paid wages, such as volunteers, are generally not considered as
being employed. One exception to this is an internship, an employment situation in
which the worker receives training or experience (and possibly college credit) as the
chief form of compensation.

Those who work under obligation for the purpose of fulfilling a debt, such as
an indentured servant, or as property of the person or entity they work for, such as
a slave, do not receive pay for their services and are not considered employed. Some
historians suggest that slavery is older than employment, but both arrangements have
existed for all recorded history.

[edit]Globalization and employment relations

The balance of economic efficiency and social equity is the ultimate debate in the field
of employment relations.[11] By meeting the needs of the employer; generating profits to
establish and maintain economic efficiency; whilst maintaining a balance with the
employee and creating social equity that benefits the worker so that he/she can fund
and enjoy healthy living; proves to be a continuous revolving issue in westernized
societies.

Globalization has effected these issues by creating certain economic factors that
disallow or allow various employment issues. Economist Edward Lee (1996) studies the
effects of globalization and summarizes the four major points of concern that affect
employment relations:

1. International competition, from the newly industrialized countries, will cause

unemployment growth and increased wage disparity for unskilled workers in
industrialized countries. Imports from low-wage countries exert pressure on the
manufacturing sector in industrialized countries and foreign direct investment (FDI) is
attracted away from the industrialized nations, towards low-waged countries.
2. Economic liberalization will result in unemployment and wage inequality in developing
countries. This happens as job losses in un-competitive industries outstrip job
opportunities in new industries.
3. Workers will be forced to accept worsening wages and conditions, as a global labour
market results in a “race to the bottom”. Increased international competition creates a
pressure to reduce the wages and conditions of workers.
4. Globalization reduces the autonomy of the nation state. Capital is increasingly mobile
and the ability of the state to regulate economic activity is reduced.

What also results from Lee’s (1996) findings is that in industrialized countries an
average of almost 70 per cent of workers are employed in the service sector, most of
which consists of non-tradable activities. As a result, workers are forced to become
more skilled and develop sought after trades, or find other means of survival. Ultimately
this is a result of changes and trends of employment, an evolving workforce, and
globalization that is represented by a more skilled and increasing highly diverse labour
force, that are growing in non standard forms of employment (Markey, R. et al. 2006).

[edit]See also
 Basic income
 Colin Clark's Sector Model
 Dangerous jobs
 Employer branding
 Employment gap
 Employment rate
 Employment Research Institute
 Employment website
 Equal Opportunity Employment
 Full Employment
 Industrial relations
 Job analysis
 Job fair
 Jobless recovery
 Job (role)
 Labour economics
Social Partnership
From Wikipedia, the free encyclopedia
This article does not cite any references or sources.
Please help improve this article by adding citations to reliable sources.
Unsourced material may be challenged and removed. (August 2010)

Social partnership[1] (Irish: Pairtíocht sóisialta) is the term used for the tripartite,

triennial national pay agreements reached in Ireland.

The process was initiated in 1987, following a period of high inflation and weak
economic growth which led to increased emigration and unsustainable government
borrowing and national debt. Strike and wage moderation have been important
outcomes of the agreements and this has been seen as a significant contributor to
the Celtic Tiger. Prior to this agreement bargaining had been on a local level since
1981; in the previous decade national employer-union deals and 'National
Understandings' were the norm but came under increased pressure.

The corporatist 'social partnership' agreements are agreed between the Government,
main employer groups Irish Business and Employers Confederation (IBEC) and
the Construction Industry Federation) and the trade unions (members of the Irish
Congress of Trades Unions); since 1997 voluntary/community organisations have taken
part in the general policy discussions but not in the key wage bargaining element. The
corporatist core has been a trade-off of modest wage increases in exchange for a lighter
income tax burden. There are also sectoral reforms negotiated and public service pay
reviews under the rubric of 'benchmarking' with private sector pay scales.

Contents
 [hide]

1 Past agreements
o 1.1 Sustaining
Progress
2 Towards 2016
 3 Partnership collapse
4 External links
5 See also
6 References

[edit]Past agreements
The current agreement, that has been in place since 2005, is Towards 2016 (T2016),
the past agreements are:

 1987-1990 - Programme for National Recovery (PNR)

 1991-1994 - Programme for Economic and Social Progress (PESP)
 1994-1996 - Programme for Competitiveness and Work (PCW)
 1997-2000 - Partnership 2000, for Inclusion, Employment and
Competitiveness (P2000)
 2000-2003 - Programme for Prosperity and Fairness (PPF)
 2003-2005 - Sustaining Progress (SP)
[edit]Sustaining Progress
Sustaining Progress operated from January 2003 to December 2005, setting
centralised, national wage increases, and providing for policy agreements over welfare,
education, health and employment issues. It was the sixth of the series of neo-
corporatist agreements since 1987 with the national wage agreement details negotiated
in two separate tranches broadly covering 2003-4 and 2005-6.

Its core participants were: (1) the Government through the Department of the

Taoiseach (Prime Minister's Office); (2) the main employers' unions which are the Irish
Business and Employers Confederation (IBEC) and the Construction Industry
Federation (CIF); and (3) the Irish Congress of Trade Unions (ICTU) which is the
umbrella body for over 40 trades unions representing around 550,000 members. They
account for about one-third of the number of employees in the state.

[edit]Towards 2016
The seventh social partnership agreement, titled Towards 2016 was concluded in June
2006 with pay terms due to run to early 2008. These provide for cumulative wage
increases set at 10.4pc over a 27-month period with minor adjustments for those
earning less that €400 a week. The pay and policy pact also includes increased
enforcement measures for employment protection and compliance with established
labour standards. Its aspirational social and welfare provisions are built around a loose
ten-year social democractic-style commitment towards improved provision of welfare
and state services.

The trades unions, through the Irish Congress of Trades Unions, voted in early
September 2006, by 242 to 84 votes, to accept the agreement with its largest nursing
(INO) and retail (Mandate)unions opting not to participate in the vote. On the same day
the IBEC employers' union also announced its acceptance of "Towards 2016".

The second stage of "Towards 2016" pay terms were agreed in September 2008 and
accepted in an ICTU delegate ballot by 305 votes in favour to 36 against in November.
Unions which had previously opposed or abstained from the pay agreements adopted a
much more supportive stance in the face of rapidly rising unemployment and
deteriorating public finances. Unite, the British-based amalgamation of the ATGWU and
Amicus trades unions, provided the main opposition.

The second stage pay terms provided a 6% pay increase over a 21-month period,
payable in two stages, following a three-month pay freeze in the private sector and an
11-month pay freeze in the public service. The terms were accepted by IBEC, the main
employers' union, on the same day but the Construction Industry
Federation(CIF)withheld consent as it had sought a 12-month pay freeze for employees
in construction.

The terms also include an additional 0.5% wage rise for those earning less than €11 an
hour and maintains the inability-to-pay provisions for companies in financial or trading
difficulties.

[edit]Partnership collapse
Concern at exchequer deficits of over €20 billion, resulting from the collapse of the
construction speculative bubble, dominated political discourse and over two decades of
social corporatism was continuously questioned during 2009. Increasing unemployment
- rising from 4% to 12% - in two years fueled questioning of comparative pay rates in the
public sector and its allied security of employment compared to pay freezes and
increased redundancies experienced in the private sector.

The second stage pay terms, described as a 'transition agreement', effectively collapsed
at the end of 2009 when the Government imposed income cuts of between 5% and 8%
for about 315,000 public servants in its Budget. Belated attempts by the ICTU public
service committee to offer efficiencies and flexibility in public service work practices,
allied to a vague proposal for 12 days unpaid leave to be taken by all public servants
during 2010, failed to secure either political or public support or prevent the income
reductions.

Nine months earlier (March 2009)the Fianna Fail/Green Party coalition government had
imposed a 5% 'pension levy' on public service earnings to 'compensate' for the
earnings-related defined benefit pensions enjoyed by public service employees. In June
2009 the government and IBEC failed to secure agreement with ICTU to amend the
transition pay terms to reflect the impact of an economic depression and deflation in
consumer prices.

At the end of December 2009 the main employer body, IBEC, formally withdrew from
the terms of the transition agreement having failed to agree a suspension of the pay
terms with ICTU. It stated that "we are entering a period of enterprise level bargaining in
unionised employments". [Industrial Relations News, issue No.1, January 2010, page
3].

Following 23 years of social partnership the Irish trades unions (ICTU)entered the new
decade seriously weakened and with union employee density down to 31% compared
to a density highpoint of 62% in the early 1980s preceding the series of seven
corporatist social pacts. [1] Union penetration is highly imbalanced with a density
approaching 80% in the public sector and around 20% in the larger private sector.
Union members are now more likely to be over 45, married with children, Irish-born with
third-level qualifications and working in semi-professional occupations, especially in the
health, education or public administration sectors, rather than the traditional image of
being lower-paid vulnerable, low-skill workers. [2]

Instead of reviving the Christian-democratic form of corporatism which dominated

Ireland's social partnership, ICTU leaders renewed their proposals for a social-
democratic arrangement modeled on some Nordic states welfare systems. The trades
unions lack the political influence to develop a social-democratic political force while the
current Irish government is suggesting a form of 'social dialogue' to replace the more
rigid 'social partnership' arrangements.

In March 2010, under the banner of 'social dialogue', the ICTU public service unions
and the Government negotiated a three-year pay-freeze and the potential claw-back of
some of the imposed pay-cuts in return for verified efficiencies and increased flexible
working rosters and mobility of up to 45km between workplaces. It also included an
accord on reviewing any decisions to outsource some aspects of public services to
ensure value-for-money. Unlike earlier 'social partnership'procedures the main private
sector employer bodies were not involved and the negotiations were facilitated by the
state [Labour Relations Commission](LRC).

Industrial Relations Defines Many Issues

Between Management And Workers:

industrial relations is a broad term that describes any relationships between a company, its
workers, the government and, in particular, workers who are members of a union. Dealings
between a company’s management and the union as a group, is referred to as labour relations,
which is actually a sub-set of industrial relations. And while it may be sub-set, labour relations
represents the major portion of industrial relations activities. There are some differences as to
how these activities are classified; depending upon what country you are in. In Australia, for
example, industrial relations have slowly given way to being called ‘workplace relations’ which
seems a fair description. By any name, it actually describes the study and practice of trade
unionism, labour-management relations and collective bargaining as we view them
today.  (Wikipedia, 2007).
Industrial relations came into being during 1912, when then US President Taft was appointed to
be the guiding force of an investigative committee called “The Commission on Industrial
Relations.’ The CIR was charged with looking into the reasons for widespread and violent
conflicts between labour and management and then to find solutions that would promote
meaningful cooperation between the employees and their employer. In the beginning of the
1920’s, universities set about to form industrial relations centres with programs for conducting
research into the subject and educating students in employer-employee relations. Larger, well-
established businesses also began to add departments to handle both ‘industrial relations’ and
‘human relations (personnel)’ issues.
The next thirty years saw both a sharp growth in industrialization and organized labour unions
with more aggressive methods, which peaked in the 1950s. Union power began to decline in the
late 1960’s as a result of the dramatically- increased actions of government by enacting new
legislation governing civil rights, race, gender, age, discrimination, physical disability and sexual
orientation. More recently, both federal and state governments have passed many new laws
regarding pensions, family and medical leaves, the portability of health insurance coverage and
minimum wages, all of which served to cause union declines in the 1980’s and 90’s. Such
changes now affect employer-employee relations in other industrialized nations and are not
limited to the United States. (Answers.com “Industrial Relations” (2000).
The present trend in managing human resources and labour relations is to place much stronger
emphasis on harmonious relationships between management and employees by increasing
employee involvement in the processes and the mechanisms. The significant pressure brought
about by globalization and heavy competition has demanded that firms be more flexible through
the addition of new technology and a wider range of skills within their employee structure. This
permits companies to adapt more readily to changes in their markets. Process and product
innovation is also improved. Union influences are still present, but organizational ability and
trust between management and labour reigns supreme in industrial relations. (International
Labour Organisation, UK, 1998).
Earlier assumptions that business efficiency was achieved primarily from managerial control,
technology and allocation of resources has now been replaced by the belief that true efficiency
results from greater employee involvement in their assigned tasks, teamwork and enterprise.
These ‘changes’ in the way companies deal with people in an enterprise are happening because
modern industrial relations has had to embrace social sciences that include organizational
psychology and behaviour. It seems safe to conclude that industrial relations will continue to
evolve as globalization and new technologies expand.
 

Labour economics
From Wikipedia, the free encyclopedia

Economics

  Economies by region [show]

General categories
Microeconomics · Macroeconomics
History of economic thought
Methodology · Heterodox
approaches

Techniques

Mathematical · Econometrics
Experimental · National accounting

Fields and subfields

Behavioral · Cultural · Evolutionary
Growth · Development · History
International · Economic systems
Monetary and Financial economics
Public and Welfare economics
Health · Education · Welfare
Population · Labour · Managerial
Business · Information · Game
theory
Industrial organization · Law
Agricultural · Natural resource
Environmental · Ecological
Urban · Rural · Regional · Geograph
y

Lists

Journals · Publications
Categories · Topics · Economists
Economic ideologies [show]

The economy: concept and history

Business and Economics Portal

This box: view • talk • edit

Part of a series on

 Organized labour

The labour movement[show]

Labour rights[show]

Trade unions[show]

Strike actions[show]

Academic disciplines[show]

v • d • e

Labour economics seeks to understand the functioning and dynamics of the market for

labour. Labour markets function through the interaction of workers and employers.
Labour economics looks at the suppliers of labour services (workers), the demanders of
labour services (employers), and attempts to understand the resulting pattern of wages,
employment, and income.

In economics, labour is a measure of the work done by human beings. It is

conventionally contrasted with such other factors of production as land and capital.
There are theories which have developed a concept called human capital (referring to
the skills that workers possess, not necessarily their actual work), although there are
also counter posing macro-economic system theories that think human capital is a
contradiction in terms.

Contents
 [hide]

1 Compensation and measurement

 2 Demand for labour and wage determination
3 Two ways of analysing labour markets
4 The macroeconomics of labour markets
5 Neoclassical microeconomics of labour markets
o 5.1 Neoclassical microeconomic model —
Supply
o 5.2 Neoclassical microeconomic model —
Demand
o 5.3 Neoclassical microeconomic model —
Equilibrium
6 Information Approaches
7 Search models
8 Criticisms of labour economics and recent research
9 See also
10 Notes
11 References
12 External links

[edit]Compensation and measurement

Wage is a basic compensation for paid labour, and the compensation for labour per
period of time is referred to as the wage rate. Other frequently used terms include:

 wage = payment per unit of time (typically an hour)

 earnings = payment accrued over a period (typically a week, a month, or a year)
 total compensation = earnings + other benefits for labour
 income = total compensation + unearned income
 economic rent = total compensation - opportunity cost

Economists measure labour in terms of hours worked, total wages, or efficiency.

 total cost = fixed cost + variable cost

[edit]Demand for labour and wage determination
Labour demand is a derived demand, in other words the employer's cost of production
is the wage, in which the business or firm benefits from an increased output or revenue.
The determinants of employing the addition to labour depend on the Marginal Revenue
Product (MRP) of the worker. The MRP is calculated by multiplying the price of the end
product or service by the Marginal Physical Product of the worker. If the MRP is greater
than a firm's Marginal Cost, then the firm will employ the worker. The firm only employs
however up to the point where MRP=MC, not lower, in economic theory.

Wage differences exist, particularly in mixed and fully/partly flexible labour markets. For
example, the wages of a doctor and a port cleaner, both employed by the NHS, differ
greatly. But why? There are many factors concerning this issue. This includes the MRP
(see above) of the worker. A doctor's MRP is far greater than that of the port cleaner. In
addition, the barriers to becoming a doctor are far greater than that of becoming a port
cleaner. For example to become a doctor takes a lot of education and training which is
costly, and only those who are socially and intellectually advantaged can succeed in
such a demanding profession. The port cleaner however requires minimal training. The
supply of doctors therefore would be much more inelastic than the supply of port
cleaners. The demand would also be inelastic as there is a high demand for doctors, so
the NHS will pay higher wage rates to attract the profession.

The MRP of the worker is affected by other inputs to production with which the worker
can work (e.g. machinery), often aggregated under the term "capital". It is typical in
economic models for greater availability of capital for a firm to increase the MRP of the
worker, all else equal. The education and training noted in the last paragraph are
counted as "human capital". Since the amount of physical capital affects MRP, and
since financial capital flows can affect the amount of physical capital available, MRP
and thus wages can be affected by financial capital flows within and between countries,
and the degree of capital mobility within and between countries. [1]

[edit]Two ways of analysing labour markets

There are two sides to labour economics. Labour economics can generally be seen as
the application of microeconomic or macroeconomic techniques to the labour market.
Microeconomic techniques study the role of individuals and individual firms in the labour
market. Macroeconomic techniques look at the interrelations between the labour
market, the goods market, the money market, and the foreign trade market. It looks at
how these interactions influence macro variables such as employment levels,
participation rates, aggregate income and Gross Domestic Product. (Morendy Octora)

[edit]The macroeconomics of labour markets

The labour force is defined as the number of individuals age 16 and over, excluding
those in the military, who are either employed or actively looking for work.
The participation rate is the number of people in the labour force divided by the size of
the adult civilian noninstitutional population (or by the population of working age that is
not institutionalised). The nonlabour force includes those who are not looking for work,
those who are institutionalised such as in prisons or psychiatric wards, stay-at home
spouses, children, and those serving in the military. The unemployment level is
defined as the labour force minus the number of people currently employed.
The unemployment rate is defined as the level of unemployment divided by the labour
force. The employment rate is defined as the number of people currently employed
divided by the adult population (or by the population of working age). In these statistics,
self-employed people are counted as employed.

Variables like employment level, unemployment level, labour force, and unfilled
vacancies are called stock variables because they measure a quantity at a point in
time. They can be contrasted withflow variables which measure a quantity over a
duration of time. Changes in the labour force are due to flow variables such as natural
population growth, net immigration, new entrants, and retirements from the labour force.
Changes in unemployment depend on: inflows made up of non-employed people
starting to look for jobs and of employed people who lose their jobs and look for new
ones; and outflows of people who find new employment and of people who stop looking
for employment. When looking at the overall macroeconomy, several types of
unemployment have been identified, including:

 Frictional unemployment — This reflects the fact that it takes time for people to find
and settle into new jobs. If 12 individuals each take one month before they start a new job,
the aggregate unemployment statistics will record this as a single unemployed worker.
Technological advancement often reduces frictional unemployment, for example: internet
search engines have reduced the cost and time associated with locating employment.
 Structural unemployment — This reflects a mismatch between the skills and other
attributes of the labour force and those demanded by employers. If 4 workers each take six
months off to re-train before they start a new job, the aggregate unemployment statistics will
record this as two unemployed workers. Technological change often increases structural
unemployment, for example: technological implementation might require workers to re-train
to adapt to the new technology. The effects of globalisation have ensured that some
 domestic industries have expanded whilst others contract which contributes to this factor of
unemployment.
 Natural rate of unemployment — This is the summation of frictional and structural
unemployment, that excludes cyclical contributions of unemployment e.g. recession's. It is
the lowest rate of unemployment that a stable economy can expect to achieve, seeing as
some frictional and structural unemployment is inevitable. Economists do not agree on the
natural rate, with estimates ranging from 1% to 5%, or on its meaning — some associate it
with "non-accelerating inflation". The estimated rate varies from country to country and from
time to time.
 Demand deficient unemployment — In Keynesian economics, any level of
unemployment beyond the natural rate is most likely due to insufficient demand in the
overall economy. During a recession, aggregate expenditure is deficient causing the
underutilisation of inputs (including labour). Aggregate expenditure (AE) can be increased,
according to Keynes, by increasing consumption spending (C), increasing investment
spending (I), increasing government spending (G), or increasing the net of exports minus
imports (X−M).
{AE = C + I + G + (X−M)}

(Morendy Octoras)

[edit]Neoclassical microeconomics of labour markets

Neo-classical economists view the labour market as similar to other markets in that the
forces of supply and demand jointly determine price (in this case the wage rate) and
quantity (in this case the number of people employed).

However, the labour market differs from other markets (like the markets for goods or the
money market) in several ways. Perhaps the most important of these differences is the
function of supply and demand in setting price and quantity. In markets for goods, if the
price is high there is a tendency in the long run for more goods to be produced until the
demand is satisfied. With labour, overall supply cannot effectively be manufactured
because people have a limited amount of time in the day, and people are not
manufactured. The income effect suggests a rise in overall wages will, in many
situations, not result in more supply of labour: it may result in less supply of labour as
workers take more time off to spend their increased wages. The substitution effect of a
higher wage might cause people to work more, as the opportunity cost to work less is
greater than it was prior to the increase. While available empirical evidence is mixed,
some analysts suggest the income and substitution effects cancel each other out,
resulting in no supply increase. Within the overall labour market, particular segments
are thought to be subject to more normal rules of supply and demand as workers are
likely to change job types in response to differing wage rates.

The labour market also acts as a non-clearing market. Whereas most markets have a
point of equilibrium without excess surplus or demand, the labour market is expected to
have a persistent level of unemployment. Contrasting the labour market to other
markets also reveals persistent compensating differentials among similar workers.

Many economists have thought that, in the absence of laws or organisations such as
unions or large multinational corporations, labour markets can be close to perfectly
competitive in the economic sense.[citation needed] The competitive assumption leads to clear
conclusions — workers earn their marginal product of labour.

[edit]

Neoclassical microeconomic model — Supply

See also Labour supply

Households are suppliers of labour. In microeconomics theory, people are assumed to

be rational and seeking to maximize their utility function. In this labour market model,
their utility function is determined by the choice between income and leisure. However,
they are constrained by the waking hours available to them.

Let w denote hourly wage. Let k denote total waking hours. Let L denote working hours.
Let π denote other incomes or benefits. Let A denote leisure hours.

The utility function and budget constraint can be expressed as following:

max U(w L + π, A) such that L + A ≤ k.

This can be shown in a graph that illustrates the trade-off between allocating your
time between leisure activities and income generating activities. The linear
constraint line indicates that there are only 24 hours in a day, and individuals must
choose how much of this time to allocate to leisure activities and how much to
working. (If multiple days are being considered the maximum number of hours that
could be allocated towards leisure or work is about 16 due to the necessity of
sleep) This allocation decision is informed by the curved indifference curve labelled
IC. The curve indicates the combinations of leisure and work that will give the
individual a specific level of utility. The point where the highest indifference curve is
just tangent to the constraint line (point A), illustrates the short-run equilibrium for
this supplier of labour services.

The Income/Leisure trade-off in the short run

If the preference for consumption is measured by the value of income obtained,

rather than work hours, this diagram can be used to show a variety of interesting
effects. This is because the slope of the budget constraint becomes the wage rate.
The point of optimization (point A) reflects the equivalency between the wage rate
and the marginal rate of substitution, leisure for income (the slope of the
indifference curve). Because the marginal rate of substitution, leisure for income, is
also the ratio of the marginal utility of leisure (MU L) to the marginal utility of income
(MUY), one can conclude:
 Effects of a wage increase

If wages increase, this individual's constraint line pivots up from X,Y 1 to X,Y2.
He/she can now purchase more goods and services. His/her utility will
increase from point A on IC1 to point B on IC2. To understand what effect this
might have on the decision of how many hours to work, you must look at
the income effect and substitution effect.

The wage increase shown in the previous diagram can be decompiled into two
separate effects. The pure income effect is shown as the movement from point
A to point C in the next diagram. Consumption increases from Y A to YC and —
assuming leisure is a normal good — leisure time increases from XA to
XC (employment time decreases by the same amount; X A to XC).
 The Income and Substitution effects of a wage increase

But that is only part of the picture. As the wage rate rises, the worker will
substitute work hours for leisure hours, that is, will work more hours to take
advantage of the higher wage rate, or in other words substitute away from
leisure because of its higher opportunity cost. This substitution effect is
represented by the shift from point C to point B. The net impact of these two
effects is shown by the shift from point A to point B. The relative magnitude of
the two effects depends on the circumstances. In some cases the substitution
effect is greater than the income effect (in which case more time will be
allocated to working), but in other cases the income effect will be greater than
the substitution effect (in which case less time is allocated to working). The
intuition behind this latter case is that the worker has reached the point where
his marginal utility of leisure outweighs his marginal utility of income. To put it
in less formal (and less accurate) terms: there is no point in earning more
money if you don't have the time to spend it.
 The Labour Supply curve

If the substitution effect is greater than the income effect, the labour supply
curve (diagram to the left) will slope upwards to the right, as it does at point E
for example. This individual will continue to increase his supply of labour
services as the wage rate increases up to point F where he is working H F hours
(each period of time). Beyond this point he will start to reduce the amount of
labour hours he supplies (for example at point G he has reduced his work
hours to HG). Where the supply curve is sloping upwards to the right (positive
wage elasticity of labour supply), the substitution effect is greater than the
income effect. Where it slopes upwards to the left (negative elasticity), the
income effect is greater than the substitution effect. The direction of slope may
change more than once for some individuals, and the labour supply curve is
likely to be different for different individuals.

Other variables that affect this decision include taxation, welfare, and work
environment.
[edit]Neoclassical microeconomic model — Demand
This article has examined the labour supply curve which illustrates at every
wage rate the maximum quantity of hours a worker will be willing to supply to
the economy per period of time. Economists also need to know the maximum
quantity of hours an employer will demand at every wage rate. To understand
the quantity of hours demanded per period of time it is necessary to look at
 product production. That is, labour demand is a derived demand: it is derived
from the output levels in the goods market.

A firm's labour demand is based on its marginal physical product of labour

(MPL). This is defined as the additional output (or physical product) that results
from an increase of one unit of labour (or from an infinitesimally small increase
in labour). If you are not familiar with these concepts, you might want to look
at production theory basics before continuing with this article.

The Marginal Physical Product of Labour

In most industries, and over the relevant range of outputs, the marginal
physical product of labour is declining. That is, as more and more units of
labour are employed, their additional output begins to decline. This is reflected
by the slope of the MPPL curve in the diagram to the right. If the marginal
physical product of labour is multiplied by the value of the output that it
produces, we obtain the Value of marginal physical product of labour:

MPPL * PQ = VMPPL

The value of marginal physical product of labour (VMPP L) is the value of

the additional output produced by an additional unit of labour. This is
illustrated in the diagram by the VMPPL curve that is above the MPPL.

In competitive industries, the VMPPL is in identity with the marginal

revenue product of labour (MRPL). This is because in competitive markets
price is equal to marginal revenue, and marginal revenue product is
defined as the marginal physical product times the marginal revenue from
the output (MRP = MPP * MR).
 A Firm's Labour Demand in the Short Run

The marginal revenue product of labour can be used as the demand for
labour curve for this firm in the short run. In competitive markets, a firm
faces a perfectly elastic supply of labour which corresponds with the wage
rate and the marginal resource cost of labour (W = S L = MFCL). In
imperfect markets, the diagram would have to be adjusted because
MFCL would then be equal to the wage rate divided by marginal costs.
Because optimum resource allocation requires that marginal factor costs
equal marginal revenue product, this firm would demand L units of labour
as shown in the diagram.
[edit]Neoclassical microeconomic model —
Equilibrium
The demand for labour of this firm can be summed with the demand for
labour of all other firms in the economy to obtain the aggregate demand
for labour. Likewise, the supply curves of all the individual workers
(mentioned above) can be summed to obtain the aggregate supply of
labour. These supply and demand curves can be analysed in the same
way as any other industry demand and supply curves to determine
equilibrium wage and employment levels. (Morendy Octora)

[edit]Information Approaches
Since the 1970s some attention has shifted to
the information characteristics of the labour market.[citation needed]
In the classical model it is assumed that both sides know how much work
effort and marginal product the employee contributes.

In many real-life situations this is far from the case. The firm does not
necessarily know how hard a worker is working or how productive they
are. This provides an incentive for workers to shirk from providing their full
effort — since it is difficult for the employer to identify the hard-working
and the shirking employees, there is no incentive to work hard and
productivity falls overall.

The methods used to overcome this type of problem have been studied by
modern labour economists.[citation needed]

One solution used recently (stock options) grants employees the chance
to benefit directly from the firm's success. However, this solution has
attracted criticism as executives with large stock option packages have
been suspected of acting to over-inflate share values to the detriment of
the long-run welfare of the firm.

Another aspect of uncertainty results from the firm's imperfect knowledge

about worker ability. If a firm is unsure about a worker's ability, it pays a
wage assuming that the worker's ability is the average of similar workers.
This wage undercompenstates high ability workers and may drive them
away from the labour market. Such phenomenon is called adverse
selection and can sometimes lead to market collapse.

There are many ways to overcome adverse selection in labour market.

One important mechanism is called signalling, pioneered by Michael
Spence. In his classical paper on job signalling, Spence showed that even
if education does not increase productivity, high ability workers may still
acquire it just to signal their abilities. Employers can then use education as
a signal to infer worker ability and pay higher wages to better educated
workers.

[edit]Search models
Main articles: Search theory and Matching theory (macroeconomics)

One of the major research achievements of the last 20 years has been the
development of a framework with dynamic search, matching, and
bargaining. Work started in the early 1980s with contributions from Peter
A. Diamond, Dale T. Mortensen and others which characterised
equilibrium in such model economies. Later, this framework was tailored
to the labour market. More recently, Mortensen and Christopher A.
Pissarides have extended the framework to include labour market
institutions such as unemployment insurance and employment protection.

[edit]Criticisms of labour economics and recent

research
One critique of standard economic analysis of labour markets is that it
does not account for the importance of social networks in the employment
process. This view holds that personal connections are key for both
workers and employees. Hence, employees are more likely to apply for
jobs where they have a personal connection, and are more likely to be
hired if they apply. In response to this issue, a large literature has recently
evolved that attempts to identify statistical discrimination in hiring, looking
at whether group membership, most notably race, influences firms' hiring
decisions.[citation needed]

More generally, sociologists and political economists claim that labour

economics tends to lose sight of the complexity of individual employment
decisions.[citation needed] These decisions, particularly on the supply side, are
often loaded with considerable emotional baggage and a purely numerical
analysis can miss important dimensions of the process.

Also missing from most labour market analyses is the role of unpaid
labour. Even though this type of labour is unpaid it can nevertheless play
an important part in society. The most dramatic example is child raising.
However, over the past 25 years an increasing literature, usually
designated as the economics of the family, has sought to study within
household decision making, including joint labour supply, fertility, child
raising, as well as other areas of what is generally referred to as home
production. [2]
Dual labour market
From Wikipedia, the free encyclopedia

This article does not cite any references or sources.

Please help improve this article by adding citations to reliable sources.
Unsourced material may be challenged and removed. (March 2010)

The dual labour market theory divides the economy into two parts, called the "primary"
and "secondary" sectors. The distinction may also be drawn between formal/informal
sectors or sectors with high/low value-added.

The secondary sector is characterized by short-term employment relationships, little or

no prospect of internal promotion, and the determination of wages primarily by market
forces. In terms of occupations, it consists primarily of low or unskilled jobs, whether
they are blue-collar (manual labour), white-collar (e.g. filing clerks), or service
industry (e.g. waiters). These jobs are linked by the fact that they are characterized by
"low skill levels, low earnings, easy entry, job impermanence, and low returns to
education or experience."[citation needed]

The informal economy consists of labour that is often "pay-under-the-table". This market

tends to attract the poor and a disproportionate number of minority group members.

The dual labour market theory generally ignores the micro-level decisions such as an
individual’s cost-benefit analysis. Instead, it focuses on immigration as a “natural
consequence of economic globalisation and market penetration across national
boundaries” (Massey, et.al., 1993, p.432). In whole, it is not concerned with individual
decisions to migrate but focuses on what pulls them, as a collective group, to migrate. It
argues that international migration starts from the labour demands of modern
civilisations.