Assess the Likely Impact of Uk Government Labour Market Policies on Any Three Macro-Economic Objectives. Refer to the Information and to Your Own Knowledge

703 WordsApr 4, 20133 Pages
Assess the likely impact of UK Government labour market policies on any three macro-economic objectives. Refer to the information and to your own knowledge (30) Labour market policies are government programmes that intervene in the labour market to help the unemployed find work. The three macro-economic policies I am going to look at are: full employment, steady sustainable economic growth and low inflation. Full employment is the point in an economy, where everyone who is willing and able to work is in a job. A labour market policy the government could implement to help reach full employment could be the rise in the compulsory age for people in training or education. The effect of this will be that people will have better skills when…show more content…
This would shift labour rightward as more people would be entering the labour force, creating jobs for the economy. More jobs in the economy not only mean that firms have a stronger work force but these new workers are spending in the economy, increasing consumption. The diagram shows the effect this would have on the economy. The supply of workers moves from S1 to S2. However with the increase in the quantity of workers, also means a higher rate of inflation in the economy. A problem however is it would be wrong to assume that the immigrants moving into the country would all get into work immediately, it may be the case that the immigrants come in and are happy with the benefits they are receiving from not working. This would mean that the only thing that has changed is that the government have a larger benefits bill to pay. This leaves them with a smaller amount of money to spend on reinvestment. Another thing to consider would be the effect on the quality of production. The third objective of the UK government is low inflation. Inflation is defined as the general rise in the prices of everyday goods. A labour market policy the government could use to reduce inflation in the long term would be to weaken trade union powers. Trade unions are organisations of workers that seek through collective bargaining with employers to protect and improve the real incomes of their members. The effect of reducing their powers is that it puts the power back into the hands

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