Labor_Supply

The Labour Supply: The state of the Economy and Economic Policy State’s economic policy and economy are giving a big effect on labour supply which different policies or economy situation can influence labours’ working hour rates or labours work rates. As we know that Canadian government did different policy to protect or improve labours’ salaries or their life. Minimum wage is a policy which government would like to help lower wage labours to against inflation and employment insurance is a protection for labours and it is one of the main concerns when labours are finding jobs. Moreover, economic situation will also affect labours supply or how labours are making their decision. Inflation is one of the economic situation can affect the labours market which labours may need to find part-time to sustain their daily life and how union can affect labours market and what the concern if there are no unions to support the labours. Minimum wage is a policy which government wants to improve the lower income labours and improve the poverty problems. Minimum wage is a policy helping lower labours increase their salaries and improve their life, however, inflate rate increase in the same time, it does not really help much for lower labours income and it has a big effect to higher salaries labours. From figure 1 can show that minimum wage policy has improved the lower skill and lower salaries workers that to reduce lower bound unemployment rate. However, for small businesses, it is not a good deal for them because they need to reduce other costs to pay the minimum wage to the workers which they may reduce the working hours, training for workers or they do the job cut. Therefore, minimum wage may not a good policy to resolve the problem of improve lower income labours and may not good for labour supply. Employment Insurance is a policy of Canadian government which is giving a protection to the employees when the employees lose their job. Now a day, most of the small business companies join the employment insurance program in Canada which it is one of the direct ways for employers and employees have an interaction. Although employment insurance seems not giving an effect on labour supply, it is one of the points for labours to decide or thinking to find a job and labours’ abilities. Inflation is an economic situation which is giving some impacts to labour supply. Inflation can give out a net unemployment impact, benefit or disruptive of labour market and it is giving a benefit to employers to adjust wage of the workers to respond on the supply and demand. If the inflation rate increase, it is bad for the labours supply because employers may decide to reduce the work hours of the workers to reduce the wage expense. In figure 2 shows that when the inflation rate increases, on the benefit or disruptive effect on wage change will more disruptive or benefits will be lesser which it impacts how the labours work. Labours may need to find part-time to increase their income to sustain their daily life. Labours union is one of the impacts which it can improve the labours’ salaries and the protection of the labours. Under union protection, labours can get fair salaries from their employers and it may affect the labours’ ability that they may work better and high quality. Moreover, labours under union protection can get higher pay than labours with no union. When inflation rate increases, labours union will help labours to fight for better benefits and salaries which it give a protection for labours have stable salaries and have a good impact in labour supply. Figure 1 Figure 2