Workers, Wages and the Labour Market: Economics 0455 (Cambridge O Level / IGCSE)

Amara is a qualified veterinary nurse who has received job offers from two different animal clinics. Before deciding which offer to accept, she compares several features of each job.

Which of these features is a non-wage factor that could influence Amara's choice of occupation?

Rooftop solar panel installation firms in a country currently pay solar panel installers a wage of $28.00 per hour, at which 4000 installers are employed across the industry.

(a) State two factors, other than the wage rate itself, that could increase the market demand for labour among solar panel installation firms. [2]

(b) Using wage rate on the vertical axis and quantity of labour on the horizontal axis, describe in words the shape of the demand curve and the supply curve for solar panel installers, and explain what determines the equilibrium wage rate for this occupation. [3]

(c) A new government-funded training scheme greatly increases the number of people qualified to install solar panels. Describe, in words, how this changes the diagram for the market for solar panel installers, and explain the effect on the equilibrium wage rate and the quantity of labour employed. [3]

Warehouse packers at an online retailer's fulfilment centre currently earn the market equilibrium wage of $14.00 per hour, at which 900 packers are employed. The packers form a trade union, which negotiates a new wage of $17.00 per hour with the firm. At this new wage, 1050 people are willing to work as packers at the fulfilment centre, but the firm only wishes to employ 780.

(a) Calculate the amount of excess supply of labour (unemployment) that results among warehouse packers at the negotiated wage of $17.00 per hour. [1]

(b) Explain two factors that would increase the bargaining power of the warehouse packers' trade union when negotiating with the firm. [4]

(c) Using wage rate on the vertical axis and quantity of labour on the horizontal axis, describe in words how the trade union's negotiated wage would be shown on a demand and supply diagram for warehouse packers, and explain why it leads to unemployment in this occupation. [4]

Aircraft maintenance engineers at an airline earn a wage of $36.00 per hour, while baggage handlers at the same airline earn $16.00 per hour.

(a) Calculate the aircraft maintenance engineers' hourly wage as a percentage of the baggage handlers' hourly wage. [2]

(b) State two reasons, other than differences in the level of skill and training required, why wages might differ between different occupations. [2]

(c) Explain how differences in the level of skill and training required, and differences in trade union bargaining strength, could account for aircraft maintenance engineers earning a much higher wage than baggage handlers at the same airline. [4]

A small chocolate workshop reorganises its production process. Previously, each worker made a whole box of chocolates from start to finish, single-handedly tempering the chocolate, filling the moulds, adding the fillings and wrapping the finished chocolates. Under the new system, one worker only tempers the chocolate, another only fills the moulds, another only adds the fillings, and another only wraps the finished chocolates, an example of division of labour.

Which of the following is most likely to be a disadvantage for the workers themselves as a result of this change?

Long-haul truck drivers in a country currently earn the market equilibrium wage of $22.00 per hour, at which 5000 drivers are employed. The workforce of drivers is ageing, and stricter immigration rules mean fewer people from other countries can now take up driving jobs. As a result, at a wage of $22.00 per hour, only 4200 people are now willing to work as long-haul truck drivers, even though firms still wish to employ 5000 drivers at that wage.

(a) Calculate the size of the labour shortage (excess demand for labour) among long-haul truck drivers at the wage rate of $22.00 per hour. [1]

(b) State two factors, other than the wage rate, that could affect how many people are willing to supply their labour to a physically demanding occupation such as long-haul truck driving. [2]

(c) Using wage rate on the vertical axis and quantity of labour on the horizontal axis, describe in words how this labour shortage would be resolved in a free, unregulated labour market, and explain the resulting effect on the equilibrium wage rate and quantity of drivers employed compared with the original equilibrium. [3]

(d) Explain one way, other than raising the wage rate, that trucking firms might respond in the long run to a persistent shortage of drivers. [2]

Nurses at a hospital are represented by a trade union. As well as negotiating pay with hospital management, the union raises concerns about staffing levels on wards and the safety equipment provided to nurses.

Which of the following best describes an aim of the trade union in this example, other than negotiating a higher basic rate of pay for nurses?

Dr Nabila works full-time as a dentist at a government-run public health clinic, earning $26.00 per hour. Dr Owusu works full-time as a dentist at a private dental practice in the same city, earning $34.00 per hour. At that same private practice, Dr Farrow, who has identical qualifications and experience to Dr Owusu and treats a similar number of patients each week, is paid only $29.00 per hour.

(a) Identify two reasons, illustrated in the scenario, why the hourly pay of these three equally qualified dentists differs. [2]

(b) Explain how the difference between working in the public sector and working in the private sector could account for the gap between Dr Nabila's and Dr Owusu's hourly pay. [3]

(c) Explain why the wage gap between Dr Owusu and Dr Farrow cannot be justified on economic grounds. [3]

A coal mine closes, making 400 miners redundant. At the same time, a new solar farm 15 km away is advertising 150 vacancies for solar panel technicians, paying more than the miners used to earn. Most of the redundant miners do not have the electrical and technical qualifications needed for the technician roles. A small number of miners do have transferable skills that would qualify them for similar mining jobs, but these jobs are only available at a mine 300 km away, and most of these miners are unwilling to apply.

(a) State what economists mean by the "occupational mobility of labour". [1]

(b) Using the scenario, explain why most of the redundant coal miners are occupationally immobile, despite there being solar technician vacancies nearby. [2]

(c) State what economists mean by the "geographical mobility of labour", and, using the scenario, explain two reasons why miners with transferable skills might still be unwilling to take up the mining vacancies located 300 km away. [4]

A government introduces a national minimum wage of $9.00 per hour for retail shop assistants. Before this policy, the market equilibrium wage for shop assistants was already $11.00 per hour, with 3000 shop assistants employed.

What effect will this national minimum wage have on the market for shop assistants?