Supply Of Labour | Meaning, Factors, Demand For Labor, Wages, Unemployment, Trade Union

Meaning of Supply of Labour Labor supply can be defined as the overall count of individuals of working age available for employment The size and growth rate of the population. The supply of labor refers to the quantity of labor that workers are willing and able to offer for employment at various wage rates in […]

Meaning of Supply of Labour

Labor supply can be defined as the overall count of individuals of working age available for employment The size and growth rate of the population.

The supply of labor refers to the quantity of labor that workers are willing and able to offer for employment at various wage rates in a given market or economy. It’s essentially the availability of workers to participate in the workforce. Several factors influence the supply of labor:

1. Wage Rates: Generally, as wages increase, the quantity of labor supplied tends to rise as more people are attracted to work. Conversely, when wages decrease, the quantity of labor supplied may decrease as some workers may opt out of the labor force or seek alternative opportunities like education or leisure.

2. Non-Monetary Factors: Besides wages, other factors such as working conditions, job security, and benefits also influence the supply of labor. For instance, an increase in job security might encourage more people to enter the workforce or stay employed.

3. Population and Demographics: The size and age distribution of the population impact the supply of labor. A growing population, especially with a large proportion of young people entering the workforce, generally increases the labor supply.

4. Education and Training: The level of education and skills of the population affect labor supply. Higher levels of education and skill training may lead to a more productive and sought-after labor force, potentially increasing the supply of labor.

5. Government Policies: Policies related to immigration, retirement age, welfare programs, and labor market regulations can influence the supply of labor. For instance, immigration policies that encourage or restrict the inflow of foreign workers can affect the overall labor supply.

Understanding the dynamics of labor supply is crucial for policymakers, employers, and economists as it helps in analyzing and predicting changes in the labor market, wage levels, and overall economic activity.

  1. The age distribution within the population
  2. Official school leaving age
  3. Official age limits for entry and retirement
  4. The number of individuals pursuing full-time education beyond the typical school leaving age
  5. The employment participation of married women
  6. The number of working-age individuals with disabilities
  7. The number of able-bodied individuals unwilling to work
  8. The weekly working hours
  9. The rate of remuneraton or wage rate at a specific time and a given wage rate. This supply is also linked to the quantity of available labor.


Factors Impacting Labor Supply


Demand For Labor

Demand for labor is defined as the total number of workers that employers are willing and prepared to hire at a specific time and wage rate. It pertains to the quantity of human effort needed by entrepreneurs for production. The demand for labor is considered a derived demand.


                Factors Influencing Labor Demand

  1. The number and nature of industries in a country
  2. The availability of other factors of production
  3. The wage rate or price of labor
  4. The employment state in the economy
  5. The demand for labor output and the overall price level in the economy.



Wages denote payment to labor on a daily or weekly basis, while salaries represent monthly payments.

Types Of Wages

Nominal Wages: The actual money paid for labor within a specific time frame.

Real Wages: The purchasing power of labor, indicating wages in terms of goods and services they can buy.

Determination Of Wages

Wage rates in a competitive labor market are determined by the interplay of demand and supply forces. In a competitive labor market:

  1. If the supply of labor exceeds demand, wage rates will decline.
  2. If demand for labor surpasses supply, wage rates will rise.
  3. When demand equals supply, a favorable wage rate is established for both employers and employees.

Government activities and policies, including wages commissions, play a role in wage determination, especially in public services. Considerations include the cost of living, productivity levels, and the type of occupation

Factors Contributing To Wage Variation

  1. Disparities in training costs and durations
  2. Required skill levels
  3. Bargaining power of trade unions
  4. Risk levels associated with an occupation
  5. Prestige attached to an occupation.



Unemployment is the state where individuals of working age, willing and able to work, are unable to find paid employment. It occurs when qualified individuals cannot secure jobs due to various factors.

Types Of Unemployment

  1. Structural Unemployment
  2. Seasonal Unemployment
  3. Voluntary Unemployment
  4. Technological Unemployment
  5. Frictional Unemployment
  6. Casual Unemployment
  7. Residual Unemployment
  8. Cyclical Unemployment
  9. Disguised Unemployment

Causes Of Unemployment

  1. Economic recession
  2. Changes in demand patterns
  3. Seasonal variations in production
  4. Economic reform policies
  5. Inadequate education and poor planning
  6. Capital-intensive production methods
  7. Population growth outpacing economic growth
  8. Physical and mental disabilities.

Consequences Of Unemployment

  1. Increased crime rates
  2. Threats to peace and stability
  3. Wastage of human resources
  4. High dependency rates
  5. Migration

Solutions To Unemployment Problems

  1. Industrialization
  2. Population control
  3. Educational system redesign
  4. Effective development plans
  5. Provision of social amenities


Trade Union

A trade union is an organization of workers formed to collectively address issues related to their welfare and working conditions. Examples include the Academic Staff Union of Universities (ASUU) and the National Union of Petroleum and Natural Gas Workers (NUPENG).

Trade Union Objectives

  1. Securing competitive wages
  2. Safeguarding members’ interests
  3. Participating in policy formulation
  4. Regulating entry qualifications into professions
  5. Ensuring job security
  6. Securing better working conditions

Instruments Of Trade Unions

  1. Negotiation or collective bargaining
  2. Threat of strike
  3. Work-to-rule strategies
  4. Picket lines
  5. Strikes

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Revenue Concept

Cost Concept

Production Possibility Curve

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