Immobility of Labour - Background information regarding module topics PDF

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Background information regarding module topics...

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Labour immobility Geographical immobility  

Challenges in moving/traveling to work from one area to another Caused by; - Lack of awareness of available jobs - Desire to remain in one location - Lack of available/affordable housing (e.g. in London & SE)

Occupational immobility of labour  

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When workers are not able to transfer from one occupation to another Affected by; - Lack of appropriate skills/training - Lack of time to train/retrain This is likely to reduce in time, to some extent

Labour immobility & structural unemployment    

Particularly occupational immobility When a pattern of demand and production changes, workers will be left unemployed in markets where demand has shrunk The demand for labour is a derived demand This causes structural unemployment – workers may not be able to move into a different occupation/area when they are left unemployed/without a job due to the decline of their particular industry

Government policy aimed at reducing immobility   

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Governments will intervene to correct market failure – in this case labour immobility They can try to tackle both geographical and occupational immobility With geographical immobility; - Help with job centres and information about available jobs - Relocation subsidies and housing programmes e.g. key worker programme in SE - Relocating industry to areas of high unemployment, grants to firms - Regional policies Occupational immobility; - Education and training programmes Tax rates can also be cut

A UK skills crisis?     

UK has lower labour productivity than USA, France, Germany etc Thus, British output will be lower/British workers will have to work longer to achieve the same level of output One possible reason for this is Britain’s relative lack of skills in its labour force 16.4% of adults in England can be described as having “very poor literacy skills” – wouldn’t pass an English GCSE and are below the ability of an 11-year-old! Britain also lags behind in other skills and education attainment levels – at the same time, the skills demanded of an employee are rising

Education and training policies    

Reform of GCSES and A-levels, national curriculum Emphasis on transferable skills and vocational qualifications e.g. apprenticeships Numeracy and literacy strategies Free schools and Academies?

Improving Labour Market info   

Careers information at schools – required by law Employment services e.g. homes direct Government job centres

Regional Policies      

Targeted at areas of high unemployment and depression e.g. the North Grants for new investments, tax breaks for businesses etc Subsidies to encourage employment Spending on infrastructure Aimed at improving economic conditions in that area Gov. can make it harder for businesses to set up in areas where unemployment is low e.g. London & SE

Cutting marginal tax rates     

Belief that this will create a great incentive to work Supply of labour could be increased Reduces the replacement ratio Depending on the amount a cut in income tax stimulates more economic activity, the Gov. may not lose money – but this depends According to the Laffer Curve – it is possible that they could rise...