Labor market - What is it? characteristics, elements, and more

Labor market - What is it? characteristics, elements, and more
Posted on 08-03-2022

Labor market

Mercantile space in which those interested in acquiring a job and those offering job vacancies participate.

What is the labor market?

The labor market is that mercantile space in which those interested in acquiring a job and those who offer job vacancies are related in order to be linked later.

This market is governed by a series of regulations and laws issued by the State, which are of great importance in protecting the employee, pointing out the rights that he/she possesses when contracting a labor relationship with an employer.

Its importance lies in the socio-economic contribution that employment provides to society, therefore, maintaining optimal levels of employment and unemployment will provide greater stability to the nation, and it is precisely in this labor market environment that the labor links that are responsible for contributing to the levels of employment and unemployment.

Characteristics of the labor market

The main characteristics of the labor market are listed below:

  • It is governed by laws issued by the State.
  • The parties involved must meet a certain minimum age to be able to participate in this market.
  • In this, the labor links are carried out.
  • It contributes directly to the levels of unemployment and employment in a nation.
  • Job offerers and those interested in acquiring a job participate in it.
  • Job offers and applicants fluctuate according to labor dynamics.
  • It is of great importance since it contributes in a socioeconomic way to a State.

Labor market elements

The main elements of the labor market are listed below:

  • Supply and demand: refer to the volume of individuals or organizations that participate in said market, both those interested in contracting a job position, that is, the applicants, and those who offer the said position, also called bidders.
  • Labor laws and policies: refers to the set of regulations and policies that the government constantly issues, these must be taken into account since they are issued in order to govern the labor market, and vary according to the territory to which said labor market belongs.
  • Wages: indicates the price to be paid for the provision of services by workers, this element is extremely important, since it is the consideration given for the individual's performance, therefore, it must satisfy their interests.
  • Labor unions: are all the subdivisions in which the labor market participants branch out, and are constituted according to specific interests or operations.
  • Employment and unemployment levels: the result of the actions and decisions taken in the labor market, these grant socioeconomic stability to the State.

Labor market indicators

Some labor market indicators are listed below:

  • Gross Participation Rate (GPR): this rate allows us to measure the relative size of the labor force in a given territory. This rate divides the economically active population (PEA) by the total population (PT).
  • Global Participation Rate (TGP): this rate allows us to measure the relative size of the workforce in a given territory. This rate divides the economically active population (PEA) by the working-age population (PET).
  • Occupation Rate (TO): this rate allows us to measure the individuals who want and carry out productive activities. This rate divides the population of working age (PET) by those who are exercising a productive activity (O).
  • Unemployment Rate (TD): this rate allows us to measure the proportion of the labor force that is unemployed. This rate divides the economically active population (PEA) by the people who are unemployed (D).

 

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