LABOUR MARKET

This is the market in which price if Labour called wages are determined by the forces of demand and supply of Labour. It is the market in which workers and employers are brought imto contacts and conditions of work are decided. It is made up of people looking for jobs,trade union,employers and government.

Labour force can be defined as the total number of people who are employed and all those who are unemployed but are actively looking and willing to work. It is the working population of a country, it is made up of MEN and women between ages of 18yrs and 60yrs.

Factors Affecting the size of  Labour force or supply of Labour

Size of the population : The higher the population the higher the Labour force. For example, the Labour force in Nigeria is more than Ghana.

Age distribution of the population : If more people are within the active ages of 18 and 60yrs, then the higher the number of people in the labour force and vice versa.

Official school leaving age : If the official age is above 10yrs, then the size of the Labour force will be reduced.

Pursuit of higher education : If the number of people spending many years to pursue higher education is high, the size of the Labour force will reduce.

Immigration policy of a country : If the number of professionals leaving a

particular is high then the size of the Labour force will be reduced.

         Other factors are statutory entry and retirement age, role of women , number of disable or incapacitated people and number of people who are willing to work.

Efficiency of Labour

This is the ability of Labour to attain higher level of output without a reduction in the quality of output.  It is referred to as increase in productivity per labour employed. 

Factors determining efficiency of Labour

Education and training : The higher the level of education and training,  the more efficient labour will be. 

Provision  of welfare services: Provision of motivational services in form of welfare will boost the efficiency of Labour.

Improved working condition : If the working environment is pleasant and conducive,  It increases efficiency.

Higher wages and salaries : In  a situation where the workers are well remunerated,  the efficiency and productivity of Labour is increased.

Job security : When Labour is sure of the security of his job, he will want to perform efficiently.

Other factors are quality of other facilities technological improvement, availability of necessary equipment and tools, climate conditions, etc.

Mobility of Labour

This is the ease and willingness of Labour to move from one place to another and one occupation to another.

Types of mobility of Labour

Occupational mobility of labour : This is the ability of Labour to move between different occupations.  It depends on how specialized labour is.

The factors affecting occupational mobility of Labour are activities of trade union,  cost of length of training,  natural ability or  aptitude, ignorance on the part of workers,  personal reason , condition of service, etc. 

Geographical mobility of Labour : This is the movement of labour from one place to another. For examples a graduate can move from Lagos to Oyo.

Factors affecting geographical mobility of labour are social and cultural ties, climate conditions, cost of transportation,  policy of the government,  problem of accommodation,  languages barriers, etc.

Industrial mobility : This is the ease with which Labour moves from one industrial set up to another.  It is the movement of labour from one form to another e.g an accountant can move from Airtel to MTN.

Demand and Supply of Labour

Demand of labour : This is the quantity of human effort required by an organisation for carrying out productive activities. It is a derived demand.

Factors Infleluencing demand for Labour

Wages rate: Increase in wage rate will reduce demand for labour and vice versa.

Demand for goods and services : If the level of aggregate demand increase to meet producrion targets,  business organizations will demand for labour.

Productivity of Labour : If the efficiency and productivity is high,  the demand for it will increase.

Market size : If  the market size is large to accomadate large output then more Labour will be demanded.

Availability of other factors : If other factors of production are available in large quantity for production,  more Labour will be demanded. 

Supply of Labour : This is the quantity of human effort available for productive activities.  It can also be referred to as the number of workers that are available at the wage rate.

Factors Affecting Supply of Labour

Wages and salaries : An increase in the wage rate will attract more labourers and a reduction in wage rate will lead to reduction in supply of Labour. 

Incentive and working conditions: Good working conditions and incentives will attract both skilled and unskilled workers to an organisation,  thereby increasing the supply of Labour.

Population size: Increase in population will increase the number of people available for work.

Education and training system : The systems of education and training also influences supply of Labour. 

The working hours : Few hours of Labour will reduce supply of Labour and vice versa.


This is payment to owners of resources who supply the factor of production called labour.  It is calculated hourly,  daily,  weekly or monthly.  It is the price paid for labour.

Wage rate is determined by the forces of demand and supply of Labour in a competitive market.

Reasons for differences in wages between occupations

1. Cost of training

2. Risk of occupations

3. Stability of employment

4. Cost of performing the jobs

5. Length of employment

6. Cost of living in various areas

7. Labour union

Factors which influence the level of Wages

1. Productivity

2. Inflation

3. Condition of the economy

4. Labour quantity

5. Demand and Supply of Labour

                                          Typesof Wages

Nominal wages: This is the wages rate measured in monetary terms . It is also referred to money wage.It is also referred to as money wages.

Real wages: This is the purchasing power of Labour.It is the wages in terms of goods and service the money wages can buy.It falls when money wages rises;if the general price level is increasing.

                                         Wage Rate

This is the rate at which Labour is remunerated for services rendered for productive activities.The following are the methods of wage payments.

Time based (time rate): This is a method in which employees are paid on the basis of time engaged i.e. number of hours worked.

Formula= Hours worked × rate per hour

Piece rate: This is system of wage payment where the worker is paid according to the amount of work done.

Formulas= Unit produced × Rate per unit.

                                        Trade  Union

This is an association of employees formed for the purpose of collectively bargaining with employees. Examples are National Union of Teachers,Nigeria Medical Association and Academic Staff Union of Universities.

                                          Roles of Trade Union

To secure better working condition

To secure higher wages

Job security

To maintain industrial peace

Regulation of entry

To safeguard interest of members

                            Problems of Trade Union

Corruption and embezzlement

High rate of unemployment

Weak leadership

Insufficient fund

Political interference

Inactivity of interference

Inactivity of members

                             Weapons of bargaining by Trade Union

Collective bargaining : This is the process by which conditions of service are decided by negotiation between trade unions and management to agree on mutually acceptable wages and conditions of service.

Picketing: This is the process by which workers stay and demonstrates in the workplace and refuse to work.

Work to rule : Here,workers deliberately slow down the pace of work so as to reduce productivity.

Strike: This is the division taken by union not to work.  The workers stop working without resigning their appointment.

Threat to strike: The employers will be given ultimatum by the union to meet their demands. Failure to do so will result in strike action.

                             Employers Association

This is a body representing employees to negotiate collectively with the trade unions. It is aimed at ensuring increase in efficiency and productivity.

                             Weapons of bargaining

Black list: This means that the striking workers are dismissed by the organisation

Strike breakers: This is a strategy by which the employees make use of same workers to perform skeletal jobs as the strike lasts.

Lock out: This is a weapon used by employers in which workers are excluded from their place of work.