MODULE 2
2.1 Labour Economics
Labour in SA
Labour is the primary factor of production, it is the human input in the production
process.
Labour supply
The supply of Labour is determined by the size of the adult population and the
extent to which the adults are working or are prepared to offer their Labour for
wages.
Determinants of labour supply
Total population
Population growth rate
Work force participation rate
Working hours
Migration
Level of skills
Labour supply curve
Wages ( R) Number of workers
2000 300
2500 600
3000 900
3500 1200
4000 1500
4500 1800
5000 2100
Labour demand
Demand for Labour is the amount of Labour that an organization is willing to
employ are a given point in time to produce goods and services.
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Determinants of Labour demand
The price of the final product
The marginal income product (MIP) of Labour
State intervention in Labour matters
The state always needs to ensure that we have a strong economy with little
unemployment. For this to happen the government publishes Labour laws and
design programs to address unemployment.
Labour law/ legislation
See page 83 of Module 2
The Reconstruction and Development Program (RDP)
The government started the RDP to address unemployment. RDP seeks to organize
all our people and our country's resources towards building of a democratic, non-
racial and non-sexist future.
RDP can be grouped into five major policy programs :
Meeting basic needs
Developing our human resources
Building the economy
Democratizing the state and society
Implementing the RDP
Labour problems in SA
Unemployment
Strikes
Lack of skills/training
Migration
2.2 Trade unions in SA
Trade unions are the mouth piece of workers . An employee is allowed to join any
trade union; an employer is not allowed to fire an employee if he/she joins.
What is a trade union?
A trade union is an organized association of workers that protects and furthers the
rights of their members.
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Function of trade unions ( see page 83 )
Limitations of trade unions ( see page 84 )
If a trade union wishes to be registered, it's constitution must meet certain
requirements:
It must provide for a ballot of members before a strike or lock-out is called .
There must be no provisions that descriminate on the grounds of race or sex
It must be free from the influence or control of an employer or employer's
organisation
Collective bargaining
Collective bargaining is a method whereby trade unions try to maintain and
improve their member's terms and conditions of employment.
The management representatives and the trade union representatives jointly make
collective agreements .
The process of collective bargaining ( 5 steps)
1. Preparation
2. Discussion
3. Proposal
4. Bargaining
5. Final agreement
Instruments / types of collective bargaining
Conjunctive or distributive bargaining
Co-operative or integrative bargaining
Productivity bargaining
Composite bargaining
Institutions used to facilitate collective bargaining
Industrial council
Conciliation boards
Industrial courts
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2.3 Unemployment in SA
Lack of economic growth has resulted in a decline in job creation Unemployment
is a condition which people who are qualified to follow an occupation are willing
and able to work but are unable to obtain work at the current wage rate .
Types of unemployment
Frictional unemployment
Cyclical unemployment
Structural unemployment
Seasonal unemployment
Causes of unemployment
The period in-between school leaving and the time of employment causes
frictional unemployment. This is usually caused by students not knowing
where to look for jobs or those that are not guided on how to look for a job.
A decline in the economic activities
Workers who cannot adapt to changes
Seasonal workers who have no other training
A population growth rate that is higher than economic growth rate .
Workers that do not always ensure that their training a qualifications lead to
employment.
Consequences/results of unemployment
Personal pride and dignity negatively affected
Individual's standard of living declines
Increase in crime rate
Expensive skills are lost if they are not used
Country cannot realize its full potential in the production of goods and
services
Some factors of production are underused .
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Measurement of unemployment
Four methods to measure unemployment
The census method
The difference method (unemployed=economically active - people
employed)
The registration method
The sampling method
Measures to comfort unemployment
Economic growth
Job creation
Appropriate technology
Inward industrialization
Housing
Education
Population policy
Unemployment insurance
Wage subsidies
Informed sector
Job creation programs
2 .4 The wage structure in SA
What are wages ?
Wages are the payment that a person receives for the production of goods/ services
within an organization
In SA wages are determined according to :
Agreement between an employer and an employee
Collective bargaining
Involvement and influence of the state
Various forms of work participation
Money wages and real wages ( adjusted for inflation)
Money paid because of work done or service rendered.
Kinds of wage systems
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Time wage
Piece wage
Incentive wage
Inequality of wages
Extent of training (charted accountant)
Duration and cost involved in training (doctors)
Suitability for a certain job
Responsibility of the employee (Managers)
Availability of jobs
Demand and supply of Labour
Recap
1. Define labour
2. Define labour supply
3. Determinants labour supply
4. Define labour demand
5. Determinants of labour demand
6. Define RDP
7. Five major policy programmes (RDP )
8. Labour problems
9. Trade unions, functions and imitations
[Link] bargaining ( process instruments/ types )
[Link] to facilitate collective bargaining
[Link]
[Link] of unemployment
[Link] of unemployment
[Link] / measurements of unemployment
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