| Why may Governments Intervene in the Labour Market? | -Several Problems can arise from Labour Market Failures, including Unemployment or Income Inequality |
| What does the National Minimal Wage aim for? | -The NMW is a Legal Minimum Hourly Rate of Pay for Different Age Groups. This was established in the UK in 1999 to Prevent Firms from Setting such low Wages.
-The NMW has tried to create a more Equal Distribution of Income, and make People encouraged to Work |
| Why may a NMW lead to Unemployment? | -Introducing a NMW which is Higher than the Industry's Equilibrium Wage leads to the Wage Rate rising from W to NMW. This means the Demand of Labour Contracts while Supply Increases
-Hence an Excess of Labour exists, meaning Unemployment Exists! The Amount of Unemployment depends on the Elasticity of Demand and Supply |
| Has NMW lead to Unemployment rising in the UK? | -No not really. The NMW has done its aim and been Tackling Inequality and Poverty |
| What are the Advantages of the NMW? | -Bringing in an NMW will help those on Very Low Incomes and Reduce the Level of Poverty in the Nation
-NMW can Boost the Morale of Workers as they get Higher Wages, leading to more productivity
-NMW gives Greater Rewards for Doing a Job that pays the NMW. It gives an Incentive for People to Work
-The Government's Tax Revenue will be Greater from the NMW |
| What are the Disadvantages of the NMW? | -NMW will raise the Costs of Production leading to Job Losses and Unemployment
-NMW can Decrease the Competitiveness of UK Firms compared to other International Firms
-UK Firms may Pass the Increased Wage Cost in the Form of Higher Prices, leading to Inflation
-Would NMW Decrease Poverty? Many of Society's Poorest Members are the elderly and Disabled and do not work so |
