The labor market is an economic category through which the level of employment is established, as well as the average wage, regulated by the ratio of supply and demand.
Main functions
The labor market is characterized by two main functions in which its importance is manifested:
- Social function implies providing decent living standards by providing employees with wages and other guarantees. Also here we are talking about quality of education which should ensure the replacement of qualified personnel.
- Economic function It is to provide the production and non-production sectors with a sufficient number of personnel to achieve maximum effect.
The role of the labor market
More narrowly, the essence of the labor market can be reflected in the following functions:
- the establishment of labor costs, which occurs under the influence of the balance of supply and demand;
- determination of the conditions under which hiring and dismissal are made, which avoids discrimination;
- formation of standards regarding safety and working conditions;
- education and advanced training in the case when production reaches a fundamentally new level.
Supply and demand
The main categories by which the labor market can be characterized are supply and demand. So, the first concept implies the currently required number of employees of a certain specialty and qualification. It is worth noting that, as in the case of the commodity market, demand begins to decline as the average wage rises.
Speaking about the labor supply, it must be said that this is the number of able-bodied people who are ready to start work. This indicator is also characterized by the qualifications and level of education of potential personnel. Unlike demand, labor supply will grow steadily with an increase in the average wage.
Features of the labor market
Most people are used to applying the concept of "market" only to the economic environment where it comes to buying and selling certain goods. However, this category is also relevant to the workforce. So, the features of the labor market can be described as follows:
- self-regulation of this mechanism is based on the assumption that relations in the economic environment are free and based on the priority of private property;
- each person has the right to independently choose the place and type of work, and no one has the right to force him to do anything (exceptions are forced labor appointed by the sentence of the court);
- each participant in labor relations has every right to start his own entrepreneurial activity both independently and on the basis of partnerships (in this case, he subsequently becomes an employer).
The labor market in Russia
In each individual state, working relations are built on approximately similar principles, but with their own specific points. Thus, the development of the labor market in Russia under the influence of various political and historical processes, which led to some of its features. Before the collapse of the USSR, this sphere was completely under state control, which excluded such concepts as "staff shortages" and "unemployment."With the collapse of the Union, the situation in the economy worsened dramatically, which led to crisis phenomena and a sharp reduction in the number of employed citizens. Nevertheless, after going through a long period of rehabilitation, the labor market again began to return to its normal state, which is expressed in the balance of labor supply and demand.
Analysis of the labor market, based on statistical data and sociological studies, indicates that at the moment the number of unemployed does not exceed 5%, which is a perfectly acceptable indicator. Nevertheless, it is averaged, and therefore does not provide absolutely objective information. The fact is that unemployment in a number of regions is much more significant, which is due to natural conditions, geographical location and lack of industry.
The main problems of the domestic labor market
The labor market in Russia can be characterized by the presence of a number of significant problems. The main ones can be considered the following:
- Millions arrive annually in the country labor migrants. Given that the requirements for wages and working conditions are much more modest for them than for state citizens, it is quite natural that employers prefer them. This situation is mainly observed in the unskilled labor market.
- Inconsistency of supply and demand of labor. This is not just about quantitative indicators. The main problem is that employers cannot offer applicants for the position the desired level of remuneration. This leads to a decrease in incomes of the population, as well as to a drain of qualified personnel who find suitable conditions in foreign companies.
- It is rather difficult for citizens from regions with high unemployment rates to find jobs in other areas. This is due to the fact that in almost all organizations a prerequisite for hiring is the presence of a local residence permit or temporary registration.
Legislative regulation
The main legislative act on the basis of which the labor market is regulated is the Law "On the Employment of the Population of the Russian Federation". The following points are indicated in it:
- the procedure for recognizing citizens as unemployed and their respective registration;
- promotion of the right to work;
- basic postulates of public policy regarding the functioning of the labor market;
- measures to improve the situation in the field of employment;
- the procedure for the activity of employment services in the regions;
- determination of the rights and obligations of all participants in the labor market;
- the procedure for compiling and analyzing statistical reporting;
- labor rights granted to special vulnerable groups of citizens.
In addition to the above law, working relations are also regulated by the Labor and Civil Code.
Labor market structure
The modern labor market is characterized by a rather complex structure, which includes the following elements:
- subjects of labor relations, which are applicants for a certain position, as well as directly employers;
- market conditions, which is a combination of supply and demand, as well as working conditions, average wages, level of education and qualifications;
- legislative acts that contain rules governing labor Relations;
- government bodies authorized to resolve issues related to employment;
- alternative employment, which may be expressed in temporary work or underemployment;
- a system of social guarantees for the unemployed, as well as people who are not able to work due to their physical condition or due to their advanced age;
- educational and informational component, aimed at training and retraining of personnel reserves, as well as advanced training.
Competitive Labor Market Model
The labor market, functioning on the basis of a model with pure competition, is characterized by the following features:
- the number of firms working in the industry is quite large, and therefore there is a high level of competition for labor resources;
- the number of employees of certain qualifications applying for similar positions is also at a significant level;
- the current market situation does not give any side of labor relations the opportunity to dictate terms regarding wages.
Thus, the system is independently regulated based on market conditions. An increase in average wages provokes an increase in supply and a decrease in demand. And vice versa.
Labor market monopoly
In order for the labor market to be considered monopolistic, it must have a number of mandatory features, namely:
- the bulk of workers of a certain specialty and qualification are concentrated in a single organization;
- employees do not have the possibility of alternative employment (this may be due to economic and geographical features, as well as the specifics of the education received);
- All rights and powers regarding the setting of wages belong exclusively to the hiring company (the figures can vary significantly depending on the number of employees).
A similar situation is typical for small and remote settlements, where there is only one city-forming enterprise or there is a tense situation in terms of employment. The activities of such firms should be controlled by trade unions in order to prevent violations of the rights of the working population.
international experience
The goal of most advanced economies in the world (American, Japanese and many others) is absolute (or full) employment, and the labor market in this case will be considered optimal. To achieve this goal, the following activities are often used:
- support for developing firms, as well as tight control of large organizations in order to somehow equalize the wages that they can offer applicants;
- the rule follows from the previous provision, which obliges enterprises to be united in the policy of remuneration of labor (for example, small organizations overestimate this indicator, while large ones, on the contrary, somewhat underestimate);
- entrepreneurs receive some benefits and subsidies, in exchange for which they undertake to hire unskilled personnel with decent pay and working conditions;
- those sectors of the economy that produce socially significant products or services receive comprehensive state support even in the case of unsatisfactory economic results.
It is worth noting that the labor market is not static, but prone to constant changes. They can occur both under the influence of market factors, and as a result of interference from government bodies.
