What is the labor market?

The labor market or labor market is called the confrontation between supply and demand for employment in a given country or region. Supply and demand will depend on the employment needs required by both companies and citizens of a country.

The malfunction of this supply is essential for the development of a country, which depends on the existing economic growth and employment. For this reason, the proper functioning of the labor market depends on the job that is offered and demanded, on the training that is required and the one that is offered.

Hewage is the price of the labor factor of a country. The lower the salary that is required, the greater the amount of job offer in that country. On the contrary, the higher the salary, the more people will demand employment but less work will be offered.

How does the labor market work?

As for the functioning of the labor market, as we have indicated, it works through the law of supply and demand of employment, although this is not entirely the case. In this market there are legal regulations, institutions and other regulatory bodies to protect workers and companies. Both will have minimum work, salary, conditions, etc ...

The same has a huge impact when it comes to hiring personnel, since the more demands are required, the more or less job offer these companies will offer. In addition to this, and together with the intervention of public bodies which cause this market to be not entirely perfect. Some requirements allow wages to be of a certain amount or with certain conditions (contracts), conditioning that bidders (companies, in this case), do not play freely between supply and demand (workers).

Thanks to the concept of the labor market and its proper functioning, other indicators will depend (although it is somewhat relative). We are talking about indicators such as the number of unemployed and unemployed,Consumer Price Index (CPI), active population, among others ...

Leave a Comment