Why do you need the labour market. The modern labor market and its features

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2020-05-24 12:20:23

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One of the fundamental parts of the modern economy in all countries is the labor market. It is difficult to underestimate the importance of this mechanism, because its meaning lies in the fact that billions of people, who sell their labor, receive funds to exist, and millions of organizations - they need for the functioning of the staff. That's why we need labour market in the first place. That's why to know its essence, value and features not only need economists and owners of large companies, but also all people.

why we need labour market

The Concept of the labor market

The labor Market is a platform where you meet and sign a contract of employment the employer and the applicant. It's kind of a system of mutually beneficial relationships, social and economic, between the two entities.

One side of the contract of employment is a person in the workplace. Another is, as a rule, a legal or natural person, who is in need of professional staff or the labour force and which is able to employ the applicant.

Like on any other market, here is your product is work. People looking for work, acts as a seller of their knowledge, time, abilities, and skills. And he wants to get the item reward in the form of wages.

Features of the market

labor market supply and demand in the labour market

Elements are:

  • Applicant and the employer;
  • Supply and demand, and their relationship;
  • Laws governing the mechanism of action of the market;
  • Organization of employment service;
  • Services of vocational guidance, enterprises to improve the qualifications of employees;
  • Organizations on temporary employment (seasonal work, home work, etc.);
  • The system of state financial support for citizens who lose their jobs to reduce transferred to another place of work or simply unemployed.

Applicant and the employer as the subjects of the market

In the labour market applicants are the following groups of able-bodied citizens:

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The Entrepreneurial activity of the citizen – is undertaken at your own risk and independent activity, which aims to systematically profit through the sale of works, goods, services, use of the property. The citizen engaged in such activities, ...

  • Citizens who do not have workplace and want to find a job; perhaps those who already have registered in the employment center, or simply looking for self-employment;
  • People working, but wishing to change his place of work for any reason, searching the other post;
  • Able-bodied citizens who are on the brink of dismissal.

The Employer in this market can be:

  • Different forms of enterprises and organizations (legal entities);
  • Individual entrepreneurs (physical persons).

Economics job market

Market Functions

Why do you need the labour market - is easy to understand, having considered its main objective and its functions. So, the main purpose of this mechanism is to organize full employment, with the needs of wage workers in enterprises and organizations.

The Market, it achieves this by using the following functions:

  • Organization of meetings between representatives of companies and candidates;
  • Promote healthy competition among market participants;
  • Establishing ravnovesnykh wage rates.

The market is in the process of negotiating and signing of the contract of purchase and sale of human labor on mutually advantageous conditions. A well-oiled mechanism facilitates the maximum beneficial use of the labour potential of people, and thus, at the macro level in the black it turns out the economy. The labour market Therefore, performs the function of regulation.

supply and demand on the labour market

Having more the labor market, the concept and function of it, you can ask the question about what contributes to its appearance in the countries and the status of his condition to date.

Economic prerequisites for the formation of the labor market

To understand what is needed in the labour market, you need to know that it is formed in any country, first and foremost, with the advent of economic conditions. These are:

  • The Liberalization of all sectors of the economy. it is all right to private property, the means of production and land in private ownership.
  • The Recognition of a person's freedom of choice in professional employment plan. so everyone can decide where and how to work, at what cost and whether to work at all. The country prohibits forced labour, with the exception attributed to punishment by law.
  • Free enterprise as work. Every person in the state on their own or with a group of people has the right freely to open his own business.

Thus, the creation and functioning of the labour market affects the economy. The labour market cannot be formed out of it.

Social preconditions of formation of the market

For the formation of the labor market, in addition to the economic aspects and sociological implications, which are education inequality in terms of income, experience of work, level of health and level of education among people. And also the difference in intelligence and personal qualities (endurance, physical strength, charisma, etc.).

This kind ofsocial inequalities must be balanced by the state authorities with the Federal and municipal programs to protect the population from unemployment, due to the nature of pension payments, subsidies for poor families and medical insurance.

Legal prerequisites for the formation of the labor market

The legal preconditions, through which is formed the labor market and the mechanism for its functioning, include the laws and orders of the government, able to protect the population economically and socially focused on the rights and freedoms of the individual. In Russia, for example, these are:

  • The Constitution of the Russian Federation, article 7, which States that the Russian Federation is a social state whose goal is the creation of the conditions providing worthy life and free development of people.
  • Labor code of the Russian Federation, which listed and explained the rules of control and regulation of labour relations.
  • The Civil code, which defines the legal form of the business.
  • FZ № 10321 "About population employment in the Russian Federation”, the Federal law № 207-FZ «About collective agreements and agreements" of the Federal law № 10-FZ “On trade unions, their rights and guarantees of their activity” and others.

Supply and Demand in the labour market

the labour market the concept and function of

From the definition of the labour market and description of its subjects, it becomes clear that this mechanism is based on such economic concepts as supply and demand. The demand is the availability of vacancies, it displays the capacity of the market. And offer is the number of individuals ready to sell their labor to the employer. What country would be organised and whatever the labor market, supply and demand in the labour market are always there. They change depending on external and internal factors.

Thus, the demand on the labour market depends primarily on wage levels. His tie in normal circumstances, when perfect competition is inversely proportional to the price of labor. Also on the level of demand is affected by other economic facts, such as, for example, the demand for manufactured products, the level of technological equipment or cost of capital of the company.

The Proposal work, on the contrary, directly proportional to wages. That is, if increasing wages increases the number of people willing and able to sell their professional skills to this value.

The supply of labor in addition to wage levels, affect in different degrees the number of working-age population, the number of hours devoted to work per day, week, year, professional-qualification characteristics of the working masses.

Supply and Demand in the labor market form the market. It is, in their different proportions, can be as follows:

  • Labor shortage (the market is experiencing a labor shortage);
  • With labour surplus (the market is full of offers of employment);
  • Balanced (supply and demand equilibrium).

Subjective and objective impact on the functioning of the labor market

Undoubtedly, the state is able to regulate the functioning of the labour market. This action can be rendered at different levels of government:

  • Federal laws (for regulation at the level of whole country);
  • At the regional or local (for regulation of local labour markets according to their specificity).

The effect on the labour market can provide public organizations such as trade unions.

labour market and causes of unemployment

But not only on the subjective regulation of questions of employment and unemployment depends, as will be functioning labour market. Supply and demand in the labor market, of course, also play a significant role in this process. Moreover, the influence of their will independent of the will and opinions of people, as it will be based on economic laws. That is, to be objective.

Model of the labor market

What is the labour market? Classification of markets can be as follows:

  • Depending on the degree of competition (a fully competitive market, monopsony market);
  • Depending on state characteristics (the Japanese model, the US model, the Swedish model).

A Fully competitive labor market, which involves a large number of companies and organizations competing, as well as a lot of workers who come into confrontation with each other. In this model of the labor market neither companies nor employees can dictate their own terms.

Monopsony is a labor market which is monopoly by one of the buyers of labor. In this model, virtually all employees engaged in the same enterprise without the opportunity of choice. Therefore, the company dictates its own rules, including their salaries. This model is typical for small communities, where there is one large factory or organization.

The Japanese labour market model is characterized by a system of lifetime employment, i.e. the employee works at the same place until retirement age. However, his salary and social benefits are directly dependent on seniority. Training and career development is carried out strictly according to plan. If the organization needs to downsize, the workers not fired, but simply transferred to the short working day.

The modelthe US labor market inherent decentralization of the legislation in terms of employment and the unemployed. Each state adopts its own rules. In organizations there is strict discipline and disloyalty to employees. Career growth is not from within, but by leaving for another company. The unemployment rate, compared to other countries, America is very high. This is in the U.S. labor market, and the causes of unemployment are derived from its features.

The Swedish labour market model is characterized by a large influence of the state on employment of the population. Here the minimum level of unemployment at the expense of preventing it.

The Specifics of the labor market

It is Worth noting that the modern labour market and its specifics in each state in each region and even each village are different. But a key feature of all markets is that the subject of sale is labor. The fact that the seller and the goods cannot be separated from each other, and also that the product itself is not possible to store when not needed.

The Specificity of all these markets is the inability to establish wages below the specified state.

labour market classification of markets

Why do you need the labour market - is easy to understand by considering its definition, goals, models and backgrounds. In General we can say that it is the basis of the market economy. And therefore able to dictate its own laws.


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Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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