Government Involvement in the Labor Markets - Essay Example

Government Involvement in the Labor Markets Government Involvement in the Labor Markets Labor market plays a key role inpropelling the economic growth of a nation since it provides a platform where the employers compete for the best employees that ascertain goal realization of a firm, while the employees compete for the best job positions that suit their capabilities. The interaction of the employer and employees is critical in the various levels of goal realization of organizations, and government involvement in this relationship has diverse impacts in an economy. Government Intervention in the labor markets remains to be a contentious issue with some individuals advocating for its involvement while others opposing it. Various critics argue that the government involvement in the labor markets is significant since it promotes free and fair employment while other argue the exact opposite, citing that in hinders the willing employer, willing employee relationships, owing to the various policies implemented (Tisdell and Hartley, 2008 p.269). Government involvement in the labor market is critical since it acts in response to various challenges that emerge in employment. For instance, employers may opt to hire employees at extremely reduced rates, owing to their intended purpose of maximizing their profits. At such instances, some employees may be willing to work with such wages, owing to the unemployment rates resulting from economic recession globally while other suitable employees may be unwilling to work under such rates. This creates a challenge since the unemployed individuals may act in their fight for increased pay, which may lead to property and life destruction, and this call for government involvement, in a bid to provide a solution to such a predicament through the introduction of the minimum wage policies. Source: http://learneconomicsonline.com/gilabour.php In other instances, some unscrupulous employers may overwork their employees without increasing their minimum salaries, and even subject them to working under harsh and dangerous conditions without the implementation of the necessary safety measure policies, in their bid to reduce costs(Neugart, 2002, p.69). This places the employees’ welfare at risk, and cases of employee opposition have been rampant across the globe. As such, government intervention is critical in such institutions since the government is tasked with the provision of apt safety policies that safeguard the welfare of such employees. This serves to reduce the employer-employee conflicts hence promoting production and profit maximization of such firms. Additionally, cases of employment of minors are still in practice, in developing nations. This hinders the development of such minors for future employment, and hence the need for implementation of rigid measures within such nations. Source: http://learneconomicsonline.com/gilabour.php Corruption cases within the labor markets where employers hire unqualified personnel while sacrificing the qualified and most suited ones are evident, particularly in the developing nations. This happens in employment situations, owing to various the employer-employee affiliations. This may have diverse negative impacts in the production within such institutions on one hand and may seriously heighten the unemployment rates within such nations. This calls for government involvement by setting employment policies that highlight employment modes on merit basis, where individuals receive employments in which they are best suited (Grant and Vidler, 2004, 440). Besides, the government may implement policies within the labor markets in other diverse ways. The governments of various nations may set institutions that involve themselves in employment in various ways. The government may involve itself in employment through the provision of employment information to diverse jobseekers within such institutions. The government is responsible with the provision of detailed information regarding various employment opportunities while providing for qualification and aiding in job placement (Hale, G. 2001, p.41). The government may also involve itself through the provision of advice to the jobseekers and services such as resume improvements, preparing individuals for the interview and acting as a liaison between the employer and the employee. This will serve significantly in enhancing employment and hence reduce the unemployment rates. The government may also engage in the employment through the provision of services such as training. The government may organize training workshops, where they impact new skills to jobseekers that improve their employability (Mulligan, 2012, p.9). They also implement various campaigns that aim at encouraging and promoting employers to create new employment opportunities, and incorporate the unemployed individuals, and hence mitigate over the unemployment rates in a nation. The government may also aid in employment creation, through the provision of capital to qualified individuals and hence significantly reduce the challenges associated with unemployment. This serves to enhance economic growth within a region. The government may also actively involve itself in supporting the unemployed individuals as they seek employment through wage compensation, and the provision of other unemployment benefits (Price, 2011, p.442). The government may also regulate the retirement age, where individuals retire early, and create employment opportunities to other young qualified job seekers. Critics argue that the government involvement in the labor markets may have negative impacts on the employer-employee relations, and this may have significant implications on the unemployment rates and the economic propulsion for growth. Such critics argue that the government intervention in minimum wage policies is detrimental. Employer and employee relations during the employment process are a confidential issue, and critics argue that the determining factors should be the mutual agreement between the employer and the employee. For instance, in employment cases such as the domestic helper employees, there may be situations where the employer is incapacitated to provide the government set minimum wage, and the employees are willing to settle for such reduced wages, owing to the availability of other benefits (Agénor, 2004, p.570). Government involvement may hinder such an employment process and give rise to the unemployment rates within a said region. Other critics in regions with fast economic developments such as China argue that the government should not implement policies that control the working hours within business organizations. In this issue, they argue that such agreements should be mutually between employers and the employees since it serves to increase production, and hence economic growth. They reason that the government should involve itself in such matters that interfere with the healthiness of the employees such as working under extremely severe conditions, or working overtime hours without compensation. Regularizing the retirement age also acts as a key contentious issue among the employers, employees and the government. Some individuals feel that early retirement age is unjustified since some members of the aged workforce feel that they are economically productive, and have the skills and experience to drive production (Manning, 2003 p.365). Besides, there are nations that have populations that the aged constitutes a significant percentage, and play a critical role in economic propulsion through various production levels. As such, it will be critical for governments of such nations to review the retirement age, in their bid to retain the aged employees in the job market. The government also implements policies that compel employers to pay employees certain amounts, as a result of long-term service in their organizations and terms of severance payments. These compel employers to terminate the employment of some unskilled workforce, owing to their fear of paying them the long-term service compensation. As such, challenges of heightened unemployment rates result (Boeri, and Ours, 2008, p.2008). As such, reviewers argue that such agreements of service payments ought to be between the employer and employees, in a bid to eliminate the laying off employees from fears of increased long-term service payment. Government involvement in the labor market policies such as training to increase employability and various support services such as unemployment benefits serve significantly to mitigate over the unemployment rates within a state. However, some economic reviewers and policymakers argue that the government spends excessively in these policies and call for regularization of such funds. They claim that the excess funds could be channeled to other economic sectors that may augment economic expansion. Besides, some economists argue that the regularization of unemployment benefits may have positive impacts in increasing workforce in the labor markets (Coudouel, and Paternostro, 2006, p.145). For instance, individuals receiving high unemployment benefits, particularly the low-income earners, may be unwilling to look for employment, since they feel satisfied with the benefits. As such, reduction of such wages may serve to increase the workforce, and hence boost economic production. Governments also play a critical role in providing suitable environments for foreign investors to establish businesses within their nations. This serves to increase the employment rates within such nations (Price, 2011, p.442). However, some government policies may serve to reduce foreign investments within their countries through the implementation of complex registrations and licensing, and imposition of unjustified taxes. This may serve to heighten the unemployment rates within such countries. Government intervention in the labor market is significant in the provision of controls that allow for fair employment opportunities for both employers and employees in their bid to foster economic development. The government actively involves itself in labor markets through the implementation of policies such as minimum wages regularization policies, safety and working hours’ policies, retirement policies and long-term service payment policies (Manning, 2003 p.365). The government may also participate in the labor market through the training of employees for a better job placement and provision of unemployment benefits. Government involvement in the labor market faces strong support, as well as severe opposition from the employers and employees. In my opinion, this involvement of the government is critical since it serves to improve labor force and reduce unemployment for economic development. Bibliography Agénor, P. 2004. The economics of adjustment and growth. Harvard University Press, Cambridge. Boeri, T and Ours, J. 2008. The economics of imperfect labor markets. Princeton University Press, Princeton. Coudouel, A & Paternostro, S. 2006. Analyzing the Distributional Impact of Reforms, 2: A Practitioners Guide to Pension, Health, Labor Markets, Public Sector Downsizing, Taxation, Decentralization and Macroeconomic Modeling. World Bank Publications, Washington, DC. Grant, S and Vidler, C. 2004. Heinemann economics for OCR. Heinemann Educational, Oxford. Hale, G. 2001. Labour markets. Heinemann, Oxford. Manning, A. 2003. Monopsony in motion: imperfect competition in labor markets. Princeton University Press, Princeton, N.J. Mulligan, C. 2012. Redistribution Recession : How Labor Market Distortions Contracted the Economy. Oxford University Press, Oxford. Neugart, M. 2002. Forecasting labour markets in OECD countries: measuring and tackling mismatches. E. Elgar, Cheltenham. Price, A. 2011. Human resource management. Cengage Learning, Andover. Tisdell, C and Hartley, K 2008. Microeconomic policy a new perspective. UK: Edward Elgar, Cheltenham. Read More