GCSE Yr 10 Econ NS section 2 Work

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Section 2 Work This section looks at Why people choose to work How specialisation and interdependence occurs in the workplace How the nature of work is changing The various ways in which people are paid The supply of labour The demand for labour Why wages differ The influence of the government on pay and working conditions The costs of unemployment to the individual How government deals with unemployment of varying duration

Work: 

Work Don’t look in your text books yet Have a look at the case study in front of you See if you can answer the questions Underline what you think are the key words see if you can guess their definition (without looking in the book) – write in your note books

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Learning Objectives At the end of this section you will Understand what is meant by work Understand the reasons people choose to work or not work Understand what is meant by specialisation Understand how the nature of work has changed through ICT and homeworking

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Why people work and the nature of work Work refers to paid work – where people perform jobs in exchange for money and other benefits The person working is referred to as the employee The business employing the worker is the employer Unless someone is working for themselves and they are known as self-employed

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Why people work There are a number of reasons why someone will chose to work including pay and job satisfaction Many people will work full time The money received will allow them to purchase goods and services and to pay family members who do not work Pay is probably the main motivation factor Many people work part time for example women with children, students etc Students often take temporary work or seasonal work to supplement their student loans Full-time – a worker who works the maximum number of hours required in the normal working week Motivation – the reason that somebody does something Part time – a worker who only works a fraction of the working week Temporary employment – work that only lasts for a specific period of time e.g. 2 weeks Seasonal employment – work that is only required during a a particular period of time e.g. agricultural worker during the summer Exam tip – don’t confuse the motivation for working with what motivates someone that is currently working – they could be different

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Job Satisfaction Some people choose to work even when they do not obviously need the income This could be because of The social aspect of the job (e.g. the after work sporting activities with colleagues) The enjoyment of the job (e.g. the job satisfaction achieved by being successful at work)

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Why people may not work A large proportion of the UK adult population currently do not work http://www.bbc.co.uk/news/10604117 The personal life cycle Students may choose to remain in education rather than work Either parent may stay at home to raise children Workers retire

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Why people may not work - Education An increasing number of people now remain in full-time education until well into their early 20s The number of older people choosing to attend university is also increasing By 2013 young people in the UK will be expected to stay in school, training or workplace training until they are 18 years old Assess the case for raising the school leaving age to 18 Think about it from the viewpoints of different groups (e.g. business views)

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Memory Challenge Money / Work

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Several key terms will appear They will disappear after 30 seconds (do not write anything in this time) Your task: (1)List the terms + (2) Define them (8 mins to get as many as possible)

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Debt Competition Interest rate Seasonal employment Market price Job satisfaction demand unemployment APR resources Borrow Supply Overdraft

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Over to you!

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Why people may not work – Child care and Retirement People (usually women but increasingly men) may choose not to work so that they can raise their children This is more likely to be the case if the parent is a lone parent or if the child carer’s partner earns enough from his or her own job to provide for the whole family People may not work because they have officially retired Some retire early Others chose to work for longer because their pension is insufficient to fund their lifestyle The number of househusbands rose between 1993 and 2007 by 83% Examiner tip – don’t refer to those who are not working as being unemployed; they may be unemployed but they may also be economically inactive

Write up of research activity: 

Write up of research activity Research Activity Should the UK government raise the school leaving age to 18 Think about the argument for and against and try to think about it from different perspectives - the young people that will have to stay at school, the government (who look after the economy) and businesses. Make notes ready to discuss next lesson We will write it up when we have discussed it together.

Assessment of 2.1a: 

Assessment of 2.1a Define Full time employment (1 mark) Part time employment (1 mark) Explain why someone would continue to work even though they are past the retirement age (3 marks) Explain 2 other reasons why people may choose not to work (4 marks) Long question – Should the UK government raise the school leaving age to 18? Discuss both sides of the argument and give your opinion

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Growth in services What do these pie charts show us?

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Growth in services As modern economies develop there is a gradual shift in employment patterns Employment in manufacturing and other secondary industries declines Employment in the service sector grows particularly the financial services In the UK, many of the manufactured goods that were previously manufactured are now being imported There is less need for manufacturing jobs

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Tiny box activity

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Tiny box activity - Specialisation What you have been doing is an example of specialisation Each worker concentrates on only one small aspect of the entire production process As a result workers become interdependent – they depend on each other for completing the production process What are the benefits? Workers become more skilled at their task Output can be produced more quickly Businesses can produce output at lower cost due to faster and more skilled workers Workers can concentrate on the tasks they are most skilled at

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Specialisation limitations/drawbacks Workers become interdependent – if one area of production fails there will be problems Jobs become boring Morale may fall as jobs become repetitive and absenteeism and labour turnover may rise If a worker is absent it may be hard to arrange cover for their section Workers will become less flexible and it will be harder to adapt if new types of goods need to be produced Think about the different ways specialisation occurs in a fast food outlet such as a burger bar

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Homework/Classwork State which sector is declining in the UK economy (1 mark) State which sector is growing in the UK (1 mark) The Little Cake Factory is a factory in the UK that makes different types of cakes. They have decided to introduce specialisation (division of labour) into their factory. Do you think this is a good idea? (9 marks)

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Information Communications Technology (ICT) and work Advances in technology especially ICT have had a big effect on those in work The internet has changed how businesses operate The growth in online retailing removes the need for people to be employed in shops and other business outlets However technology does not just destroy jobs – it has created new ones particularly in the IT Sector Machines need people to operate them and maintain them Machines may never replace the human decision maker There is a constant need for new technology Email has changed how we communicate at work reducing the need for telephone calls or letters Do you think there are any disadvantages to having an increasing reliance on ICT in the workplace? UK consumers spent £108 million online on Christmas day in 2008

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Homeworking The ability to use email and the internet as well as being able to access work servers from home has led to a large increase in the people who work from home in the UK In 2005 a survey found that there were 5 million people working from home Home working is an example of flexible working It can help people manage work and family It can help a business reduce costs as they don’t have to have as many offices or facilities in their offices as not all the workers will be there at any one time Do you think there are drawbacks to the increase of homeworking? Flexible working : workers who are more adaptable in time, location or manner of work completed (e.g. home working)

Homework/Lesson: 

Homework/Lesson Research Activity – do a search for ‘home working’ online. See what people have to say. Do they like it? Are there drawbacks? Then answer the following question. Softcom is a company that sells software to manufacturing companies. It has a large sales force that travel all over the country selling to their customers. It has decided to introduce homeworking for its sales force. Do you think this is a good idea? (9 marks)

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2.2 The reward for working Learning objectives Understand the different ways that people are paid Understand the different items that appear on the pay slip Understand the differences between gross and net pay

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The reward for working People are paid for the labour they supply Generally people are paid more the longer they work There are a number of ways that people are paid for their labour Salary Paid monthly Normally for full time permanent jobs (also possible for part time) Those earning salaries are normally skilled, non manual occupations Wages Normally paid weekly More likely to be paid to lower skilled jobs Often part time or temporary workers Salary : pay stated as a yearly total Wage : pay calculated on an hourly rate multiplied by the hours worked

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The reward for working Commission A worker who adds to the firm’s sales receives a percentage of the sales value as reward Encourages workers to sell more Workers can be paid fully or partly on commission commission : payment made to workers for achieving a certain target (e.g. sales levels)

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The reward for working Overtime Businesses sometimes need workers to work longer hours Maybe production needs to be temporarily higher than usual Rather than employ more workers the business will encourage its workforce to work longer hours These extra hours are paid at a higher rate Overtime payment : higher rate of pay for work in excess of normal working hours

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The reward for working Shift work payment Some workers do not work traditional hours but will work in shifts This could happen if a business needs to be kept open for longer than the normal working day BACS This is a system used in the UK to pay employees It is an electronic bank system that automatically transfers money from the employer to the employee Shift work : work patterns that do not follow standard working hours BACS : automatic transfer of funds between bank accounts (e.g. employer to employees)

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The reward for working Fringe benefits Given in addition to salary E.g. school fees, private health care and company car These are often paid for highly skilled, highly paid jobs Fringe benefits : when workers are paid in ways other than money e.g. company car Expenses : payments given to workers to compensate for any expenditure necessary to complete their work e.g. train travel Complete questions 1 to 5 on P33

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Wages and Salaries The payment for work will appear on a piece of documentation known as a pay slip This shows the amount made to the worker and the deductions Before deductions are made the pay is known as Gross pay The deductions will be Tax, national insurance and pension contributions Once the deductions have been made the final amount is known as net pay or ‘take-home pay’ Gross pay is useful to know because it allows comparisons between different jobs Net pay is not good for comparison because deductions are different for different circumstances Gross pay : pay before deductions Net pay : pay after all deductions have been made

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Wages and Salaries Income tax is a tax on money paid to the worker The more income you earn the more tax you pay Only part of the income is taxed; each person has a tax free allowance Each person has a tax code that is related to the tax free allowance they have Income tax in the UK is paid in 2 main ways PAYE – pay as you earn – tax is deducted by the employer before income is paid to the worker SA – self assessment – workers who are self employed and the tax is paid by the worker Income tax : a tax calculated as a percentage of a worker’s income Tax code : workers have different tax codes which relate to the different amount of tax free allowance each worker has

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Other deductions National insurance Paid by employees on incomes to build up an entitlement to certain benefits and the state pension Paid as a percentage of income earned Rates are different to those used for income tax Pension contributions This contribution is paid before the NIC so that the NIC is lower This amount is invested and the pension will be given when reaching the retirement age Other deductions Trade unions subscriptions, student loan payments, staff association payments An employer must provide other documents – a P45 and a P60 National Insurance contribution : a tax paid by workers which entitles the payee to qualify for benefits when and if necessary Pension contribution : a deduction from a worker’s pay to be used for a pension P45 : a document provided by an employer when a worker leaves the organisation P60 : a document provided by an employer on a yearly basis showing total pay and deductions for the year

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Wages and Salaries Print (in middle of paper) and give out Have a look at the payslip and draw arrows to each line with an explanation of that line Pay period is week 9

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2.2 The reward for working Learning objectives – have we achieved them? Understand the different ways that people are paid Understand the different items that appear on the pay slip Understand the differences between gross and net pay

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2.3 Understanding what affects pay Learning objectives Understand what factors affect the supply of labour Understand how the demand for labour is a derived demand Understand why wages differ between occupations Understand how the government can influence pay and conditions

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2.3 Supply of labour The supply of labour is the amount of work each worker is willing to perform Each worker can decided how to split their time between work and leisure The supply is affected by a combination of monetary and non monetary factors Monetary factors (the level of wages) are the main factor that determine supply of labour The higher the wage the more willing a worker will be to supply their labour You are not expected to know these diagrams for GCSE

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2.3 Supply of labour There are other non-monetary factors (things that are not wages) that affect the supply of labour Gender Traditionally women were less willing to enter the labour force This trend has changed The proportion of men is still higher than women The proportion of women is growing This is due to Change in cultural attitudes – it is now more acceptable for women to work A decline in primary and secondary industries that are more likely to recruit men Changes in legislation that make it easier to work and raise children Changes in taxes/benefits that reward those with children that return to work male all female Economic activity rates by gender

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2.3 Supply of labour Ethnic origin Traditionally workers of non-white origin were less likely to be employed Over the last two decades this has changed (particularly for males) Those classified as ‘white British’ are more likely to be unemployed than other ethnic origin groups This is a controversial issue and the reasons for this are not clear What patterns of employment would you expect to find based on the table? Explain your answer

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2.3 Supply of labour Taxation Income tax reduces how much of a wage or salary a worker is allowed to keep If income tax is reduced, workers keep more of their pay There is a greater incentive to work than before The overall supply of labour (people wanting to work) will increase

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2.3 Supply of labour State benefit Benefits are provided in the UK for those looking or work but not currently working If benefits payments are sufficiently low workers will be willing to supply their labour as they cannot afford to remain out of work for long If benefits are higher than minimum wage there will be little incentive to work Government has to make sure that benefits are just at the right level Have a look at the weekly benefit payments given to the unemployed in 2008 Do you think this would give them an incentive to work? Minimum wage was around £4.70 If they were lucky enough to get the average working week (42 hours) they would earn about £200 in one week

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2.3 Demand for Labour Derived Demand The demand for labour comes from businesses that need workers to produce their goods and services This is derived demand Businesses don’t demand workers for their own sake but because they need workers to produce goods and services If there is high demand for their goods and services there will be high demand for the workers If there is high demand for houses there will be a high demand for builders

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2.3 Demand for Labour Government influence and the demand for labour The UK government will indirectly affect the demand for labour It will influence through legislation how much a business must spend on a worker in addition to the wage that it pays Some of these influences are as follows: Right to paid holiday (increased in 2009) Maternity/paternity pay (new mothers can receive a proportion of their existing pay for up to 39 weeks of maternity leave and fathers can take up to two weeks fully paid leave from work) The more a business has to pay for each worker it may decide to employ less workers

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2.3 Demand for Labour How wages are determined The market wage refers to the wage rate that would be paid if the demand for labour and the supply of labour were to match exactly The market wage would ensure those wanting to work could find work at this wage rate and that businesses could find workers to employ You don’t need to be able to draw this diagram for GCSE The amount of people willing to offer their services The amount of people demanded by businesses

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2.3 Demand for Labour How wages are determined If the wage rate was not set at this market rate the following would occur: If the wage was higher, then more people would want to supply their labour than there were jobs available (unemployment) If the wage rate was lower, then businesses would want to recruit more people than were willing to supply their labour (shortage) You don’t need to be able to draw this diagram for GCSE

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2.3 Demand for Labour Differences in wages The wage rate for a particular job is determined by the demand for and the supply of labour There is not one wage rate for all workers Workers are paid different amounts depending on their job These differences are known as wage differentials There are a number of reasons that explain these as follows Training and skills A cleaner does not need any training and needs little skill so the pay is low A surgeon has many years of training and needs a lot of skill so the pay is high Complete case study C on P38

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2.3 Demand for Labour Differences in wages Gender Women are likely to be paid less than men This is partly due to women being more likely to take a career break to raise children This means they miss out on training and promotion opportunities Thirty years ago women earned approximately two-thirds of men’s earning This differential has narrowed so that women’s wages are now around 85 per cent of men’s Complete case study D on P38 and do some extra research online to help you answer the questions

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2.3 Demand for Labour Differences in wages Age Older workers are likely to be paid more than younger workers This is because they are likely to have more experience and possess the skills needed for the higher-paid jobs Trade unions Trade unions are organisations that workers can decide to join They protect workers and negotiate for higher wages for their members They can achieve this by the threat of industrial action Trade unions can call member out on strikes in order to encourage businesses to pay higher wages In the UK, trade union powers have been reduced over the last 20 years. What effect will this have had on the demand for labour?

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2.3 Demand for Labour Differences in wages Government influence In the 1990s the UK government introduced a minimum wage Before this some employers paid unfairly low wages The minimum wage is the legal minimum hourly rate that can be paid to workers It varies depending on the age of the worker Do some research online and see what people say about the minimum wage in the UK. Make sure you can answer Q’s 10, 11 and 12 on P39 next lesson

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2.3 Demand for Labour Differences in wages Regional pay differences

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2.3 Demand for Labour Why do wage rates change? Surpluses of labour If more people want to work in a particular occupation than the number of jobs available we describe this as a surplus of labour This is likely to lead to lower wages in this occupation as businesses can afford to pay less as there are more workers available Shortages of labour If there is a shortage of labour in a particular industry, businesses will need to offer higher wages This will encourage more workers to supply their labour for that industry

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2.3 Understanding what affects pay Learning objectives – did we achieve them? Understand what factors affect the supply of labour Understand how the demand for labour is a derived demand Understand why wages differ between occupations Understand how the government can influence pay and conditions

Assessment of Section 2.2 and 2.3 (Work): 

Assessment of Section 2.2 and 2.3 (Work)

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2.4 Understanding unemployment We have looked at why someone may choose not to work and now we consider why people who want to work but cannot find employment and why this is a problem Learning objectives At the end of this section you will understand what the costs of unemployment are to the individual Why the duration of unemployment varies between individuals Why government are concerned about unemployment What strategies the government has to reduce unemployment

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2.4 Costs of unemployment to the individual Unemployment creates costs for society and the economy as a whole The costs of unemployment to the individual are as follows Monetary costs A person that is unemployed will receive no income except for benefit payments The amount paid will depend whether they are single or married and whether they have children The average pay per week in the UK is about £500 – benefits will be a lot lower than this Non-monetary costs Loss of skills – the longer someone remains unemployed the more skills they lose (they will not have the latest on-the-job training) Health – more likely to suffer from poor health particularly where mental health is concerned Family breakdown – high marital breakdown rates

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What could government do to help reduce unemployment in the North East?

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2.4 Costs of unemployment to the individual Duration of unemployment Many of the costs of unemployment to the individual are made worse by an extended period of unemployment For short periods the costs are less severe

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2.4 Costs of unemployment to the individual Why does the duration of unemployment vary? The reasons will include Skills and training - the more highly skilled a person is the more likely they are to find a new job Qualifications – school leavers without qualifications may be seen as less attractive to businesses Age older people may find it harder to get jobs because they often expect higher wages They may be considered to be too old to train for new positions Age related discrimination is illegal Laws banning age discrimination in the workplace were only introduced in 2006 in the UK What kind of skills do you think a person will lose if they remain unemployed for a long period of time?

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2.4 Government strategies to help the unemployed Tax allowances This allows people to earn up to a certain level before they start paying income tax One of the reasons for this is to make sure that people who work are not worse off once they lose their unemployment related benefits Jobseekers’ allowance These benefits are now only paid if people an prove that they are actively seeking work This reduces the problem of the unemployed remaining on benefits indefinitely

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2.4 Government strategies to help the unemployed Working tax credits Older unemployed people are likely to have family commitments Taking a job may mean that they not only lose unemployment benefit but they might have high costs of child care once they are working The government lets those who have taken jobs receive benefits through working tax credits This means that they don’t lose all the benefits that they received while unemployed New deal This policy focuses on providing training for people that have been unemployed for an extended duration It is aimed at those aged under 25 because they may be unemployed due to lack of skills

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2.4 Government strategies to help the unemployed Education Government is encouraging non-academic students to gain vocational qualifications There are a range of vocational diplomas to help students who struggle with academic studies and make sure they leave school prepared for the world of work Introducing ICT and communications skills into all schools means that they should be more employable when they leave school Apprenticeships Apprentices work alongside experienced staff and gain job specific skills The student may attend college and work one day a week This helps the business because they get unpaid workers It also helps the apprentice gain skills that make them employable

Assessment of Unemployment: 

Assessment of Unemployment

Revision Time Test on …..: 

Revision Time Test on …..

Assessment of Section (Work): 

Assessment of Section (Work)