Category: Essential Economics for Business: Ch 12

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The globalisation of labour

The UK and global labour markets are changing significantly. In the UK we have faced a level of immigration of around 500 – 600 thousand people (the government does not know the exact figure), while in the global economy the International Monetary Fund (IMF) has estimated in its latest World Economic Outlook that the global labour force has quadrupled in the last quarter of a century. So what is the impact on the UK labour market? Many assume that the effect is negative, but as is always the way with these things, you will find plenty of economists who will argue the opposite. The article below from the Times Online looks at these national and global issues.

Workers count cost of a global labour flood Times Online (29/4/07)
Migrants create job market slack Times Online (20/5/07)


Questions
1. Using diagrams as appropriate assess the impact of recent immigration on the UK labour market.
2. Discuss the extent to which changes in the global labour force and UK immigration have affected the level of wages in the UK labour market.
3. Discuss the extent to which the global labour force is likely to change in the next decade.
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Talk is cheap

The article linked to below is an extract (printed in the Guardian) from a new book by Dan Atkinson and Larry Elliott (economics editor for the Guardian). The introduction to the article summarises its theme quite effectively:
“We don’t manufacture anything any more. Most of the world won’t buy our records or watch our films. Only our gift of the gab is keeping Britain’s economy ticking over. But how long can the hot air last, ask Larry Elliott and Dan Atkinson “

Talk is cheap Guardian (18/5/07)


Questions
1. Explain the underlying trade performance of the UK in recent years for (a) trade in goods and (b) trade in services.
2. “Labour believes Britain is at the cutting edge of the knowledge economy and that Britain’s well-educated (sic), highly skilled (sic) and entrepreneurial (sic) workers are ready to kick German, American, Japanese and Chinese butt all round the global village.” Discuss the extent to which this is true.
3. Assess the extent to which the theory of comparative advantage can help explain the differences in trade performance outlined in the article.
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The EU goes on getting bigger

January 1st 2007 saw further enlargement of the EU with Romania and Bulgaria joining. This brings the total number of members to 27. So what will be the impact of this expansion on the EU and the new member countries? The links below offer a range of views and information on the enlargement.

Q&A: EU enlargement BBC News Online (1/1/07)
Romania and Bulgaria join the EU BBC News Online (1/1/07)
New EU citizens ‘will benefit the UK’ BBC News Online (1/1/07)
EU hardens tone on enlargement BBC News Online (15/12/06)
Bulgaria: Key facts and figures BBC News Online (21/12/06)
Romania: Key facts and figures BBC News Online (30/12/06)
Today’s European Union is 27 states in search of a story Guardian (4/1/07)
Clubbing together Guardian Blog (1/1/07)

Questions

1. What are the likely benefits to Bulgaria and Romania of membership of the EU?
2. What are the likely costs to existing EU members of Bulgaria and Romania joining the EU?
3. Assess the likely impact on the EU budget of Bulgaria and Romania joining the EU.