Labour Market – SS2 Economics Lesson Note (Second Term)

A labour market is a market in which workers and employers are brought into contact and conditions of work are decided. It is made up of people who are looking for jobs, employers and the government.

Behavioural objectives

By the end of the lesson, students should be able to:

• define the labour market and the labour force;
• state the factors that affect the supply of labour;
• explain mobility of labour and describe its types;
• list the causes of mobility of labour;
• define efficiency of labour and state the factors that determine it.

What is the labour force?

The labour force is the total number of people of working age in a country who are gainfully employed, together with those who are within the legal working age, capable and willing to work, but have no work to do at a particular period.

The labour force is the working population. It comprises all persons who have jobs and those who are seeking jobs in the labour market. They are between 18 and 60 years of age. The working population varies from one country to another.

What factors affect the supply of labour?

These factors determine the size of the labour force (the working population).

1. Size of population: The higher the size of the population, the higher the working population, and vice versa.
2. Official school leaving age: If the school leaving age is low, the proportion of the labour force will be high, and vice versa.
3. Official age of retirement: If the age of retirement is raised, the supply of labour will tend to increase because more people will be available for work.
4. Level of remuneration or wage rate: The extent of salaries, wages and other remuneration paid to workers determines the number of people who may be willing to work.
5. Migration: Immigration will increase the supply of labour and emigration will decrease it.

What is mobility of labour?

Mobility of labour refers to the ease with which workers can move from one occupation to another or from one geographical area to another.

Types of labour mobility

1. Occupational mobility of labour: This refers to the ease with which workers can move from one job to another. For instance, a messenger can easily change to become a cleaner or a farmer.
2. Geographical mobility of labour: This refers to the ease with which workers can move from one geographical location to another, for example from Port Harcourt to Jos.
3. Industrial mobility of labour: This refers to the ease with which workers can move within the same industry or from one industry to another.

Aspects of industrial mobility of labour

Industrial mobility of labour has two aspects: vertical and horizontal.

• Vertical mobility usually takes the form of promotion within the same industry. For example, the Vice-Principal of a school could be promoted to Principal.
• Horizontal or lateral mobility takes place when a worker moves from one industry to another but still performs the same task and occupies the same rank. For example, an accountant can leave the Star Beer factory at Aba for the textile mills.

What causes mobility of labour?

The following factors influence the mobility of labour:

1. Unfavourable working conditions.
2. Marriage.
3. Irregular payment of salaries.
4. Promotion.
5. Bad management.
6. Climate.
7. Lack of job security.
8. Lack of social amenities.
9. Accommodation problems.
10. Political instability.
11. Personal reasons.

What is efficiency of labour?

The efficiency of labour is the extent or degree to which labour can be combined with other factors of production to yield maximum output.

In other words, efficiency of labour is the ability of labour to attain a higher level of output without a reduction in the quality of output.

What factors determine the efficiency of labour?

1. Education and training.
2. General working conditions.
3. Health of workers and availability of improved health facilities.
4. The amount of incentives or remuneration given to workers.
5. Efficiency of other factors of production.
6. Degree of specialisation and division of labour.
7. Welfare services and state of mind of the worker.
8. Weather conditions.

Evaluation

1. What is a labour market?
2. Define the labour force.
3. State any three factors that affect the supply of labour.
4. Distinguish between vertical and horizontal mobility of labour, with one example each.
5. List any four factors that determine the efficiency of labour.

Assignment

1. Explain any three causes of mobility of labour.
2. Describe the three types of labour mobility.