1.1 Background of the Study Labour economics seeks to

 

1.1 Background of the Study

 

Labour economics seeks to understand the functioning and
dynamics of the markets for wage
labour. Therefore, wage
labour is defined as delivery of services by person for payment. Wage labour is the socioeconomic relationship between a worker and an employer, where the worker sells his or her labour power under a
formal or informal employment contract. These transactions usually occur in a labour
market where wages are market determined. A labour market is
the place where workers and employees interact with each other. In the labour
market, employers compete to hire the best, and the workers compete for the
best satisfy job. A labour market in an economy functions with demand and
supply of labour. In this market, labour demand is the firm’s demand for labour
and supply is the worker’s supply of labour. The supply and demand of labour in
the market is influenced by changes in the bargaining power. The viewpoint that
the entire economically active population (the employed plus the unemployed)
are participants in the labor market has become widespread among domestic labor
economists in recent years (Kotliar, 1998). In the past two decades, active labour
market policies have been widely adopted in developed capitalist countries,
especially OECD countries, to combat unemployment and economic inactivity  (Chris et al., 2013).

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In
the mixed economic situation, both of the public sector and private sector
conduct in the labour market. The
private sector is the part of a country’s economic system that is run by
individuals and companies, rather than the government. Most private sector organizations
are run with the intention of making profit. The segment of the economy under
control of the government is known as the public sector and also that portion of an economic system that is
controlled by national, state or provincial, and local governments. private
sector is larger in free enterprise economies, such as the United States, in
which the government imposes relatively few restrictions on businesses.

Labour
moving is more comprehensive in understanding when comparing movement of
employment one to another. Labours who work in private
sector attempt to move from the private sector to public sector or vice versa. Sector
switching is de?ned as when people move from the private to the public sector
or vice versa. (Bozeman and Ponomariov, 2009). Sector switching is of great
relevance to our understanding of public and private differences (Bozemanand
and Ponomariov, 2009). Which is an area with a lot of studies, but little consensus
on ?ndings (Baarspuland and Wilderom, 2011). Most studies on sector switching
have focused on the motives and consequences of switching from the private to
the public sector (Bozeman and Ponomariov, 2009; Su and Bozeman, 2009). This
research focus on to identify the movement of public sector to private sector. The thinking of switching from the
public sector to the private sector then the usual considerations of pay, job
location, the fit with career goals and the reputation of the potential employer
are some of the issues that will be evaluating (Kotila, 1998).

               Labour

Profit
maximization

High standard of
Service

 

Private
sector

Public
sector

 

 

Labour

 

 

 

 

Figure 1.1      Flow of the Workers

Source: Constructed by the
researcher

 

 

The
main objective in the private sector is Profit maximization.
A process that companies under go to determine the
best output and price levels in order to
maximize its return.
The company will usually adjust influential factors such
as production costs, sale prices,
and output levels as
a way of reaching its profit goal.
There are two main profit
maximization methods used, and they are marginal cost
and

marginal revenue method
and total cost
and total revenue method. Profit maximization is a good thing for a company,
but can be a bad thing for consumers if
the company starts to
use cheaper products or
decides to raise prices.
The resources available to maximize their profit and the firms have
opened until they have profited.  Also
the private sector reduces their redundant labours. But in the public sector do
not concern about the profit and always attempt to do high standard of service
to the society.

There are some factors to motivate the labour movements and it can be
happen in two ways. The push method which refers the factors affect to push
labours from the private sector to the public sector. On the other hand the
full method manipulates to full labours from public sector to the private
sector. The factors influencing to push method are working hours, number of
holidays, debt for labours, etc. and the factors influencing to full method are
wage, ethics in the companies, efficiency and etc. Public
service motivation was not a signi?cant factor in sector choice for the
unemployed workers, compared to the employed workers who cited the job
usefulness to society as a reason to join the public sector employment (Jin,
2013).

            The labor movement may
represent as follows. PSLM refer public sector labour
movement and pslm refer private sector labour
movement.

1.     
More labors may move from the
private sector to the public sector.

           PSLM
> pslm

2.     
More labors may move from the
public sector to the private sector.

           PSLM
< pslm 3.      Labours moving in the public sector may equal to labor, moving in the private sector.             PSLM = pslm   Labour welfare is also a  key concept in the labour market. Labour welfare refers the  living standard of labours. The benefits of the workers also depend on the labour welfare.  There is a difference in benefits of labours in the public sector and private sector. In order that labour welfare or living standard refers people may be happy in their work, these three things are needed: They must be fit for it; they must not do too much of it; and they must have a sense of success in it (Ruskin, 1898). Labour welfare is understood to mean "such services, facilities and amenities, which may be established in, or in the vicinity of, undertakings to enable persons employed there in to perform their work in healthy and congenial surroundings and to provide them with amenities conducive to good health and good morals" (Joshi,1977). Welfare of a labour gives as several meanings. Such as in absolute level we think living standard is our income. Satisfaction with life is an indicator of a person's wellbeing, where respondents subjectively assess whether they are generally satisfied with the way their lives have turned out ( Beuningen, 2012). Though a labour who get low income and he highly satisfy with his life or the job, he has higher living standard than high income labour. Therefore, welfare determines not only the income. But also comfort, wealth, material goods, etc. The term living standard has typically focused on material wellbeing and the definition of living standard is the degrees of wealth and material comfort available to a person or community (Oxford Dictionary, 2011). According to the Cambridge dictionary living standard is the amount of money and comfort people have in particular society. And also  living standard of a life is the level of wealth, comfort, material  goods and necessities available to a certain socioeconomic class or a certain geographic area. The standard of living in a economy includes factors such as income, gross domestic product, national income growth, economic and political stability, political and religious freedom, environmental quality, climate and safety.   The welfare is often used to compare geographic areas, such as standard of living in the united states versus Canada or the standard of living in St.Louis versus New York. In my view welfare of a labour depends on wage, efficiency, working hours, the number of holidays, debt for labours, wealth, comfort, material goods, job satisfaction, Job security, ethics in companies, etc. Therefore, these factors affect to the difference of welfare between public sector and the private sector. Welfare can defined as the quality of a labour and it depends on efficiency in private sector and public sector. The benefits in public sector as follows:   Help the community - As someone whose salary  is being  funded by  taxpayers , a sense of responsibility to the community is instilled in public sector workers. The flip side of this is that, can directly effect local areas, or even the nation, for  the      good through the quality of the work.    Job security - Job stability is often referenced as a major perk in this sector.  The public sector is relatively stable, and whilst profit-based companies are prone to closure, public sector organizations have the stability of government-backing.   Working atmosphere - In terms of the atmosphere at work, the public sector is less demanding than the private sector. The cut-throat nature of work in a private company can be stressful. And, although the standards of work in the public sector are high, there isn't the obvious competitiveness often found in the private sector.   Flextime – Government organizations are quite accommodating when it comes to recognizing the different circumstances of its employees. Flexible working hours are common – usually based around a core time of hours, or on a 'shift work' basis. Part-time jobs and job sharing can be also found in the public sector.   Staff training schemes – Public sector organizations are committed to realizing the potential in their staff. Employees are often encouraged, if not required, to improve their skills set by attending training programs, or attaining external qualifications. This can lead to further career opportunities.   Pension scheme – Although there has been some furor over public sector pensions lately, having a guaranteed pension scheme tied into the job is a  CHAPTER ONE INTRODUCTION   1.1 Background of the Study   Labour economics seeks to understand the functioning and dynamics of the markets for wage labour. Therefore, wage labour is defined as delivery of services by person for payment. Wage labour is the socioeconomic relationship between a worker and an employer, where the worker sells his or her labour power under a formal or informal employment contract. These transactions usually occur in a labour market where wages are market determined. A labour market is the place where workers and employees interact with each other. In the labour market, employers compete to hire the best, and the workers compete for the best satisfy job. A labour market in an economy functions with demand and supply of labour. In this market, labour demand is the firm's demand for labour and supply is the worker's supply of labour. The supply and demand of labour in the market is influenced by changes in the bargaining power. The viewpoint that the entire economically active population (the employed plus the unemployed) are participants in the labor market has become widespread among domestic labor economists in recent years (Kotliar, 1998). In the past two decades, active labour market policies have been widely adopted in developed capitalist countries, especially OECD countries, to combat unemployment and economic inactivity  (Chris et al., 2013).   In the mixed economic situation, both of the public sector and private sector conduct in the labour market. The private sector is the part of a country's economic system that is run by individuals and companies, rather than the government. Most private sector organizations are run with the intention of making profit. The segment of the economy under control of the government is known as the public sector and also that portion of an economic system that is controlled by national, state or provincial, and local governments. private sector is larger in free enterprise economies, such as the United States, in which the government imposes relatively few restrictions on businesses. Labour moving is more comprehensive in understanding when comparing movement of employment one to another. Labours who work in private sector attempt to move from the private sector to public sector or vice versa. Sector switching is de?ned as when people move from the private to the public sector or vice versa. (Bozeman and Ponomariov, 2009). Sector switching is of great relevance to our understanding of public and private differences (Bozemanand and Ponomariov, 2009). Which is an area with a lot of studies, but little consensus on ?ndings (Baarspuland and Wilderom, 2011). Most studies on sector switching have focused on the motives and consequences of switching from the private to the public sector (Bozeman and Ponomariov, 2009; Su and Bozeman, 2009). This research focus on to identify the movement of public sector to private sector. The thinking of switching from the public sector to the private sector then the usual considerations of pay, job location, the fit with career goals and the reputation of the potential employer are some of the issues that will be evaluating (Kotila, 1998).                Labour Profit maximization High standard of Service   Private sector Public sector     Labour         Figure 1.1      Flow of the Workers Source: Constructed by the researcher     The main objective in the private sector is Profit maximization. A process that companies under go to determine the best output and price levels in order to maximize its return. The company will usually adjust influential factors such as production costs, sale prices, and output levels as a way of reaching its profit goal. There are two main profit maximization methods used, and they are marginal cost and marginal revenue method and total cost and total revenue method. Profit maximization is a good thing for a company, but can be a bad thing for consumers if the company starts to use cheaper products or decides to raise prices. The resources available to maximize their profit and the firms have opened until they have profited.  Also the private sector reduces their redundant labours. But in the public sector do not concern about the profit and always attempt to do high standard of service to the society. There are some factors to motivate the labour movements and it can be happen in two ways. The push method which refers the factors affect to push labours from the private sector to the public sector. On the other hand the full method manipulates to full labours from public sector to the private sector. The factors influencing to push method are working hours, number of holidays, debt for labours, etc. and the factors influencing to full method are wage, ethics in the companies, efficiency and etc. Public service motivation was not a signi?cant factor in sector choice for the unemployed workers, compared to the employed workers who cited the job usefulness to society as a reason to join the public sector employment (Jin, 2013).             The labor movement may represent as follows. PSLM refer public sector labour movement and pslm refer private sector labour movement. 1.      More labors may move from the private sector to the public sector.            PSLM > pslm

2.     
More labors may move from the
public sector to the private sector.

           PSLM
< pslm 3.      Labours moving in the public sector may equal to labor, moving in the private sector.             PSLM = pslm   Labour welfare is also a  key concept in the labour market. Labour welfare refers the  living standard of labours. The benefits of the workers also depend on the labour welfare.  There is a difference in benefits of labours in the public sector and private sector. In order that labour welfare or living standard refers people may be happy in their work, these three things are needed: They must be fit for it; they must not do too much of it; and they must have a sense of success in it (Ruskin, 1898). Labour welfare is understood to mean "such services, facilities and amenities, which may be established in, or in the vicinity of, undertakings to enable persons employed there in to perform their work in healthy and congenial surroundings and to provide them with amenities conducive to good health and good morals" (Joshi,1977). Welfare of a labour gives as several meanings. Such as in absolute level we think living standard is our income. Satisfaction with life is an indicator of a person's wellbeing, where respondents subjectively assess whether they are generally satisfied with the way their lives have turned out ( Beuningen, 2012). Though a labour who get low income and he highly satisfy with his life or the job, he has higher living standard than high income labour. Therefore, welfare determines not only the income. But also comfort, wealth, material goods, etc. The term living standard has typically focused on material wellbeing and the definition of living standard is the degrees of wealth and material comfort available to a person or community (Oxford Dictionary, 2011). According to the Cambridge dictionary living standard is the amount of money and comfort people have in particular society. And also  living standard of a life is the level of wealth, comfort, material  goods and necessities available to a certain socioeconomic class or a certain geographic area. The standard of living in a economy includes factors such as income, gross domestic product, national income growth, economic and political stability, political and religious freedom, environmental quality, climate and safety.   The welfare is often used to compare geographic areas, such as standard of living in the united states versus Canada or the standard of living in St.Louis versus New York. In my view welfare of a labour depends on wage, efficiency, working hours, the number of holidays, debt for labours, wealth, comfort, material goods, job satisfaction, Job security, ethics in companies, etc. Therefore, these factors affect to the difference of welfare between public sector and the private sector. Welfare can defined as the quality of a labour and it depends on efficiency in private sector and public sector. The benefits in public sector as follows:   Help the community - As someone whose salary  is being  funded by  taxpayers , a sense of responsibility to the community is instilled in public sector workers. The flip side of this is that, can directly effect local areas, or even the nation, for  the      good through the quality of the work.    Job security - Job stability is often referenced as a major perk in this sector.  The public sector is relatively stable, and whilst profit-based companies are prone to closure, public sector organizations have the stability of government-backing.   Working atmosphere - In terms of the atmosphere at work, the public sector is less demanding than the private sector. The cut-throat nature of work in a private company can be stressful. And, although the standards of work in the public sector are high, there isn't the obvious competitiveness often found in the private sector.   Flextime – Government organizations are quite accommodating when it comes to recognizing the different circumstances of its employees. Flexible working hours are common – usually based around a core time of hours, or on a 'shift work' basis. Part-time jobs and job sharing can be also found in the public sector.   Staff training schemes – Public sector organizations are committed to realizing the potential in their staff. Employees are often encouraged, if not required, to improve their skills set by attending training programs, or attaining external qualifications. This can lead to further career opportunities.   Pension scheme – Although there has been some furor over public sector pensions lately, having a guaranteed pension scheme tied into the job is a substantial perk.   Consider the personal benefits of a move in to the private sector: Many commercial organizations look for new solutions and ways of working to provide a competitive edge, providing employees with the opportunity to be creative and contribute their ideas in the private sector. Benefits of a labour consider as the welfare of a labour. The combination of labour income, job satisfaction, savings of the labours, number of holidays, housing and transportation take place in identifying the benefits of a labours.   perk.   Consider the personal benefits of a move in to the private sector: Many commercial organizations look for new solutions and ways of working to provide a competitive edge, providing employees with the opportunity to be creative and contribute their ideas in the private sector. Benefits of a labour consider as the welfare of a labour. The combination of labour income, job satisfaction, savings of the labours, number of holidays, housing and transportation take place in identifying the benefits of a labours.