Minimum wage has gained an important place in the brain of politicians to reduce social gaps and inequality. Governments intervene on the market to allocate a better wage towards workers than the one offer by the market equilibrium. This controversial measure raises lots of debate on whether raising the minimum wage results in workers becoming jobless. Government intervention on minimum wage has one main goals: increase the demand by an increasing of wage. The main reason against minimum wage is that it creates unemployment among low skilled workers; on top of that it can be argued that the redistribution effect is not going to the target people of the measure.
However, in the long run these will have an effect on unemployment that will rise up and getting even worse. Moreover, most people are unlikely to be happy to accept higher taxes as it reduces disposable income and the level of consumption. A reduction of government spending may result in less people will support the government. Demand side policies will bring down the price level (reduce inflation), but they will result in lower national output and rise in unemployment. Therefore, government could use supply side policies to deal with the unemployment situation such as in interventionist supply-side policies will increase the levels of human capital of an economy by support education and training institutions with subsidies or tax benefits and for market-based supply-side policies will reduce trade union power.
With a declining population, the government’s economy will, too, decline due to the little occupations/participations, low amount of taxes, henceforth increasing the taxes for each individuals (however, mentioned previously, this may be a better solution). And lastly, the possibility of local residents traveling far to apply for the occupation in which one wishes for very likely due to the fall of employment (government.nl). This is what worries most governments, however, there more factors in which should be taken into consideration. Stated previously, taxes are more likely to increase for individuals in Germany due to increase of dependency ratio. Henceforth, individuals born in a year where the population has an uneven number of children, working age group, and retired people, they have the responsibility to pay more taxes for the abundance of retired elders.
The per capita cost declines with the number of taxpayers (Alesina & Spolaore, 2005). Country size will directly affect the output and growth of a country. The share of government expenditure over GDP is decreasing in population and size also represents the income and purchase power that interact in the market. Immigration of high-skilled people imposes costs on their countries of origin such as the cost of education has been heavily subsidized by the countries. People leaving the country it may lead to the reduction of the working population and production and trade and then the economic growth will slow down (Newland, 2003).
Population aging is set to be increasing by 2050. Many countries will be suffering a decline of GDP, growth rate and others from this aging population. The main factors of this process are low and declining fertility rate and increasing life expectancy. As the cost of living increases, people tend to have a smaller family to reduce cost of living. While the health care system is improving, people become healthier and it helps to increase the life expectancy.
Trade union membership worldwide has been decline due to structural factors that is smaller public sector, smaller manufacturing sector and fewer large firms. The labor market has become more volatile, with workers mobility, part time work, and lastly flexible work arrangements. Moreover, enlightened managements and mobility of capital as well as diversity of work force and workplace have reduced benefits of joining trade unions, impaired trade unions bargaining power and increased the cost of organizing. These developments have adversely affect trade union worldwide. This essay is based on the decline in trade union membership and the advantages and disadvantages of trade unions.
This is because it would increase the unemployment rate, harm worker health and step up living expense. Minimum wage law tends to have a worse effect on the employment rate. In fact, 90% of the company in Hong Kong is small and medium enterprises and their daily operation is already difficult. By setting up the SMW, those companies are required to follow the law but most of them are not able to afford the extra expenses from pay rise. According to Schmitt (2013), the minimum wage has slight or even no noticeable effect on the employment rate in that the cost generated by minimum wage is large relative to most of the firms.
Unemployment is defined as a situation where in a country, citizens who had reach a working age is unable to get employed even though he/she is actively searching for jobs. Unemployment rate is usually used as a measure of the health of the country economy and is measure by the number of unemployed people, divided by the total population of the work force. In general, a country with a lower unemployment rate has a better economy compared to a country with high unemployment rate. When a country faces high unemployment rate, it affects the overall economy, creating a cyclical problem. When people have lesser money to spend because of unemployment, companies suffer from decrease in revenue.
Introduction: Unemployment generally defined as the number of persons who are willing to work for the current wage rates in society but not employed currently. Unemployment reduces the long run growth potential of the economy. When the situation arises where there are more other resources for the production and no man power leads to wastage of economic resources and lost output of goods and services and this has a great impact on government expenditure directly (Clark, 2003). High unemployment causes less consumption of goods and services and less tax payments results in higher government borrowing requirements. The impact of the unemployment is seen with the individuals and household curtailing the consumption drastically to meet financial
A very important issue that plays a crucial role in development of the economies is the underutilization of its human capital or in other words unemployment. Unemployment happens when an individual is available and willing to work but currently without work. Those who have skills and the will to do work, but there’s lack of opportunities to get job are in the category of unemployed.When unemployment is high resources are wasted, people’s income are depressed. (Economic survey of Pakistan, 2010-11). The excessive rate of unemployment negatively impacts on economy which causes unstable economic conditions.