Occupations and
earnings
iGCSE Economics
The individual as producer,
consumer and borrower
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Learning objectives?
• identify the factors affecting an individual’s choice of
occupation (wage factors and non-wage factors)
• describe likely changes in earnings over time for an
individual
• describe the differences in earnings between different
groups of workers (male/female; skilled/unskilled;
private/public; agricultural/manufacturing/services)
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Why do people work?
WAGE FACTORS
+
NON-WAGE FACTORS
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Group activity – why do people work?
In your group look at the job advertisements, and discuss the points in
activity 3.10 on page 130.
Gather your conclusions on your group work sheet.
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Factors Affecting an Individual’s
Choice of Occupation
Non-wage
factors
Wage
factors
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Overtime Pay
Bonuses
Wage
Factors
Wages
Commission
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Research activity
Use your laptops and devices in pairs to define the following terms
• Time rate
• Gross weekly wage
• Piece rate
• Fixed annual rate or salary
• Performance related pay
Give at least one advantage and one disadvantage of each method of
payment
Make notes in your purple books
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Wage factors
Most people will supply their labour to firms to earn an income. Firms pay
wages to workers to supply their labour to produce goods and services.
Paid employment therefore provides people with money to buy the goods
and services they need and want and cannot produce themselves.
The supply of labour to an occupation
depends on the wage rate for the job:
• time rate per hour worked per employee
• piece rate per unit produced per
employee
• performance-related pay: commission
on sales, annual bonuses, etc.
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Non-wage factors
A person will compare the advantages and disadvantages of different
jobs or occupations in order to choose one to specialize in
All the wage and non-wage factors that affect the attractiveness of a
particular job or occupation are called its net advantages
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The net advantages of a job – compare a
surgeon and an office assistant.
Surgeon
• highly skilled and in short supply
Office assistant
• low or unskilled work
•
job involves many years of study
and practice with little or no
income
•
little training involved
•
five days a week
long and often unsociable hours of
work including evenings and
weekends
•
few responsibilities and work may
become boring
•
large supply of labour relative to
demand
•
wages tend to be relatively low
•
•
intense pressure at work
•
high earnings are a
compensating differential
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Why do earnings change over
time?
Qualifications
 Often jobs pay you more the more
qualified you become over time
 For example an accountant may have to sit
a series of qualifications whilst doing the
job
Training & Skills
 Most jobs will require on-the-job training
 As you gain more training and become
more skilled you will become more
valuable to your company and they may
pay you more.
Promotion
 Each time you get a promotion to a more
senior role you are likely to get a pay rise.
Experience – length of service
 The more experience you have the more
you may be paid (not always)
 Teachers have a pay scale whereby their
salary goes up over the years
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Application
Look at the types of jobs and for each one explain the wage
differential.
Which one is paid more?
Explain why that may be the case
Share your answers
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Why are they paid different wages?
What reason do you think there is a difference in pay?
 Man and woman doing the same job?
 There may be a perception that a man is more
productive (discriminative and illegal)
 A nurse and a footballer?
 Both very skilled but the footballer may earn large
amounts of revenue in tickets for his club
 Cleaner vs doctor
 Unskilled vs skilled / high supply vs low supply
 Government vs private sector
 Government may earn more because it does not need to be as efficient (able to
pay more) or may pay less because it has power as a large employer to pay less
 Agricultural vs manufacturing vs services
 Depends on the size
of the supply of labour – high supply = lower pay
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What explains wage differentials?
Some workers are paid more than others because
they:
•
are more highly skilled than others and are much
in demand by employers
•
are more productive, and add more to output and
revenue than others
•
are in dangerous jobs (e.g. soldiers, firefighters)
•
work unsociable hours
•
have more information than other workers about
where the best paid jobs are
•
Earn more fringe benefits as well as salary or
earn more fringe benefits instead of salary
•
are more able than others to move location
and/or change their occupation to increase their
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pay - labour mobility
Wilson manufacturing
Watch the video
Why do Wilson organise their workers in this way?
Can you think of any issues of organising the workers in this way?
Wilson football
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SPECIALISATION –
THE DIVISION OF LABOUR
You would
never ask
a dentist
to MOT
your car...
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I'm a
dentist
not a
mechanic!
SPECIALISATION –
THE DIVISION OF LABOUR
I'm a bouncer
not a bricky!
You would
never ask a
nightclub door
supervisor to
build a house...
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SPECIALISATION –
THE DIVISION OF LABOUR
You would
never ask a
chef to
rewire a light
I'm a chef,
fitting...
not an
electrician!
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SPECIALISATION –
THE DIVISION OF LABOUR
...but why not?
I don't like
heights!
I would rather
pay an electrician
than do it myself!
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I don't
have the
skills!
SPECIALISATION –
THE DIVISION OF LABOUR
Human beings work together
but we don't all do the same
work.
That's why
we're so
successful as a
species!
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SPECIALISATION –
THE DIVISION OF LABOUR
Whenever
people work
in a group,
they should
start by
deciding who
is going to do
what...
I have to do
everything
around here!
… this is called the
division of labour.
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SPECIALISATION –
THE DIVISION OF LABOUR
“The division of labour
causes, in every art, a
proportionable increase
in the productive powers
of labour.”
...and in plain English this means...
Adam Smith (1723-1790)
(Very important person in Economics)
(Image: wikipedia)
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SPECIALISATION –
THE DIVISION OF LABOUR
“When the task is
divided up between
you and your mates
– you make more
stuff than doing it all
on your own”
Adam Smith (1723-1790)
(Very important person in Economics)
(Image: wikipedia)
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SPECIALISATION –
THE DIVISION OF LABOUR
“To see how the division of
labour really works, why not
set-up your own production
line with each person doing
one specialised task?”
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SPECIALISATION –
THE DIVISION OF LABOUR
•
•
•
•
•
•
•
One person will work on his/her own.
The rest of the group will decide who
will:
Cut out the 'nets'
Fold the boxes
Decorate the boxes (if your instructor
has given you decorations)
Stick the boxes together
Clear-away the scraps of paper
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SPECIALISATION –
THE DIVISION OF LABOUR
QUESTIONS TO THINK ABOUT AFTERWARDS
1.Who made the most boxes – the person working on
their own or the people working together?
2.How did you decide who would do each bit of the
production line?
3.Were some jobs more difficult than others?
4.How do you think you would cope with doing the same,
repetitive task all day long?
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Specialization
“The process of doing something
that you are best at is called
SPECIALIZATION.”
• A country or
• A firm or
• An Individual can choose to specialize
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Specialization of an Individual
•Also called “Division of Labor”
•Each individual specialises at one
task of production rather than the
whole process
•Hence, the output per worker
increases.
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SPECIALISATION –
THE DIVISION OF LABOUR
In conclusion,
the advantages
of the division
of labour are...
Adapted from:Kishtainy N, et al, (2012), The Economics Book, Dorling Kindersley Ltd: London UK
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SPECIALISATION –
THE DIVISION OF LABOUR
The disadvantages of the
division of labour are...
“It's not fair
that some
people always
have do the
unpleasant
jobs.”
“Doing the
same thing all
day is boring.”
“This is the only
job I know how
to do.”
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“If I stop
working
nothing is
made.”
SPECIALISATION –
THE DIVISION OF LABOUR
SUMMARY
When different people are given different
jobs, more things can be produced at a
faster rate. This is called the division of
labour.
When people specialise at
doing their particular job
they become better at
doing their job. This is
called specialisation.
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SPECIALISATION –
THE DIVISION OF LABOUR
EXAM PRACTISE
Read more about
the division of
labour and
answer the exam
style questions.
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SPECIALISATION –
THE DIVISION OF LABOUR
What are the advantages of the
division of labour to a car
manufacturing business?
Only write about
advantages to a
business.
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SPECIALISATION –
THE DIVISION OF LABOUR
EXAMPLE ANSWER:
When using the division of labour, a car manufacturing
business will be able to produce more cars per worker at less
cost. The reasons for this include:
Workers only have to learn how to do a few tasks so they
become faster and more skilled at what they are doing.
Production lines lead to the production of more cars than
building each car, in place, by hand because workers do not
have to move around. The business can afford specialised
tools and machinery for each task because it is making a lot
of cars on a large scale.
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SPECIALISATION –
THE DIVISION OF LABOUR
What are the disadvantages of
the division of labour to the
workers in a car manufacturing
business?
Only write about
disadvantages to
the workers.
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SPECIALISATION –
THE DIVISION OF LABOUR
EXAMPLE ANSWER:
Perhaps the biggest disadvantage to the workers is that they
can become bored because they are doing the same task over
and over again.
If one group of workers decide to stop working, or if one of
the workers is off sick, it could hold everyone up; this would
mean that the workers could lose their bonuses.
When the division of labour is used, workers only learn a few
skills so they may find it difficult to find other work if they
become unemployed.
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Advantages
• Time is saved
• Worker can be trained more quickly
• Worker becomes more skilled  if demand is more  wages will be
more
• Reduces the pressure of the job, because it is easy to do it
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Disadvantages
• Worker maybe bored
• It may increase the per unit cost (cost of production)
• If the worker is absent, his work can be covered by another worker
• If can do only one job, then difficult to find another kind job
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Most people specialize at work
Advantages
• They make best use of their skills
and abilities
•
•
They can improve their skills
further by repeatedly carrying out
the same or similar tasks
More-experienced and skilled
employees usually earn more than
less-experienced and unskilled
employees because they are more
productive and demand for their
labour by firms is greater
Disadvantages
• They must rely on others to
produce the goods and services
they cannot produce
themselves
•
Doing the same job for many
years may become boring
•
People can lose their jobs if
their skills or occupations
become unwanted as consumer
demand and/or technology
changes
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Who earns the most? Why?
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Reasons why some people earn
more than others….
Different occupations
Different industries
Different regions
Qualifications
Unsociable hours
Skills in short supply
People get job satisfaction, not concerned about pay
Skills in high demand
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Investigation and observation
• Remember our work on demand and supply of products…..
• Instead of consumers paying a price for a product, where does
the demand now come from? Where does the supply come
from? What is the reward for the supply?
• Using what you understand about the interaction of wage,
demand and supply illustrate and explain the following:
Movement along the demand curve
Movement along the supply curve
Shifts in the demand curve
Shifts in the supply curve
Elasticity of supply
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