Choosing an occupation
Workers supply labour to firms in return for wages. When choosing a job, people weigh wage factors such as pay and bonuses against non-wage factors such as job satisfaction, working hours, promotion chances, holidays and how safe the work is.
Key idea
Wages are set by the demand for labour and the supply of labour. Where demand is high and supply is low, wages tend to be high; where supply is plentiful, wages tend to be lower.
Why wages differ
- Skills and training: jobs needing long training, such as surgery, pay more because supply is limited.
- Danger and difficulty: risky or unpleasant work may pay a premium.
- Demand for the product: if a firm's goods sell well, it can afford higher wages.
Example
Few people can perform heart surgery, so the supply of surgeons is small while demand is high, which pushes their wages well above those of unskilled work.
Trade unions
A trade union is an organisation of workers that acts to protect and improve members' pay and conditions. Its main method is collective bargaining, where the union negotiates with employers on behalf of all members, giving workers more power than if they bargained alone. Unions may also improve safety, training and job security. A union is stronger when it represents a large share of workers and when the firm is doing well and can afford higher pay.
Remember
- Wages depend on the demand for and supply of labour.
- Collective bargaining gives workers more power than bargaining alone.
- Non-wage factors such as job satisfaction also affect job choice.