1. SECTION 2 WORK Starter… What percentage of gross pay has been deducted from W. A. McGonagle’s wages?

2. SECTION 2 WORK How labour markets determine pay GCSE ECONOMICS: UNIT 11

3. SECTION 2 WORK Aims of today’s lesson … Identify factors which affect the supply and demand for labour Understand how the demand for labour is derived demand

4. SECTION 2 WORK The Supply of labour The supply of labour refers to the amount of work each employee is willing to perform Each employee has a decision about whether or not to work In effect, each employee can decide how to split their time between work and leisure

5. SECTION 2 WORK Factors which affect the Supply of labour The supply of labour is affected by both monetary (money) and non-monetary factors The main factor which determines the supply of labour is the level of wages offered The higher the wage or salary, the more willing an employee will be to supply their labour This is because each hour worked becomes more valuable to the employee and as a result it becomes more tempting to work

6. SECTION 2 WORK Factors which affect the Supply of labour In addition to the wage rate, there are various non- monetary factors that influence how much an employee wants to work Gender: traditionally women were less willing to enter the labour force than men, but this trend has changed Why have increasingly more women entered the labour force?

7. SECTION 2 WORK Factors which affect the Supply of labour Ethnic origin: traditionally workers of non-white origin were less likely to be employed; but this trend has changed over the last two decades Taxation: Income tax reduced the amount of a wage or salary an employee is allowed to keep; if reduced people with have a greater incentive to work and therefore the supply of labour will increase State benefits: benefits are provided in the UK for those looking for work but currently unemployed; if they are sufficiently low people will be more willing to supply their labour, than if they were higher

8. SECTION 2 WORK The Demand for labour The demand for labour comes from businesses that need employees to produce their goods and services However, the demand for labour is unlike the demand for most goods and services

9. SECTION 2 WORK The Demand for labour Derived demand – Businesses don’t demand workers for their own sake but because they need them to produce goods and services for the firm to sell – This is known as derived demand; where the demand for labour (i.e. workers) is a derived demand!

10. SECTION 2 WORK Government influence and the Demand for labour The UK government will indirectly affect the demand for labour This is because it will influence through legislation how much a business must spend on an employee in addition to paying their wages These influences include; – Right to paid holiday – Maternity/paternity pay

11. SECTION 2 WORK Over to you…. Open and complete the activities on the following document “Factors which affect pay”

12. SECTION 2 WORK Reasons for differences in pay…. Open and make notes on the following information… “Pages”