Why do people work?

The decision to supply labour

Most people will supply labour to private sector or public sector firms to earn an income, the goods or services received for an investment or job.

Voluntary work:
    Voluntary work also exists, that is the supply of labour for free so that means that money may not be the only reason why people work.

   Working also satisfies us, we are able to do something for society and be useful.
The combination of financial and non-financial reasons for working is what motivates people to supply labour.

Payments for labour:
Wage rate- Payment advertised by firms to attract people to supply their labour.

1. Time rate- Rate of pay per hour worked, it is all added up each week in the gross weekly wage. If a worker works extra hours or on the weekend they would receive an overtime wage, which is greater than the normal one.
2. Piece rate- Payment per unit of output produced. The output is the good or service produced for the consumer.
3. Salary- Fixed annual rate with a number of working hours per week agreed with the firm.
4. Performance-related payments- Individual employees or group of workers who are highly productive, make a big amount of output in a short period of time. Mostly used for people involved in sales, the more sales they make for the firm the more they will earn, it is calculated as a percentage of their sales.

The gross earnings of a worker each week or month may change and be made up of different types of rates. All these forms of payment are the wage factors.

Workers may also be offered other kinds of benefits such as a company car, free medical insurance or price discounts. These are referred as fringe benefits or perks.

Choosing an occupation?

• Most people do a specialization on a particular subject
• Wage factors are clearly important when choosing
• But it is not all about the money, we have to find a job which satisfies us
• Non-wage factors can also attract workers to many different occupations, some people may prefer a lower wage rate and many other kinds of benefits such as long holidays, satisfying actions and interesting careers
• People will choose an occupation by comparing the wage and non-wage factors of a potential job.

Occupational specialization

• Specializing in a certain subject can have both advantages and disadvantages
• Modern technology also has a big impact on many employees
• It is being used in the agricultural and manufacturing sectors
• Robots substitute labour and this replacement is called factor substitution
• Machines are called capital equipment as they enhance the production of a certain product

Benefits:

• Allows individuals to make the best out of their skills and abilities
• Employees can improve further their skills by always doing the same job
• Skilled employees will often gain more money than unskilled employees as it requires time and skill to specialize in a certain subject. There is more demand for their labour due to their high productivity.

Disadvantages:

• The rest of the society relies on specialized people to produce a certain good or service as they cannot make it themselves
• Doing the same job can become boring and stressful
• Skills can become outdated due to new technology and consumer demand. This can leave a great number of specialized workers without a job to do and no other knowledge of a different job, they would have to retrain.