What is the labor market for? The modern labor market and its features

One of the fundamental parts of the modern economy in all countries of the world is the labor market. It is difficult to underestimate the role of this mechanism, since its meaning lies in the fact that billions of people who sell their labor get their livelihoods, and millions of organizations need the personnel they need to function. This is why the labor market is needed first. That is why it is necessary not only for economists and owners of large firms, but also for all people, to know its essence, significance and peculiarities.

The concept of the labor market

The labor market is a place where the employer and the applicant find and conclude a contract of employment. This is a kind of system of mutually beneficial relationships, social and economic, between the two actors.

One side of the contract of employment is a person in need of a workplace. The other is, as a rule, a legal or physical person who needs professional cadres or labor and who is able to employ a job seeker.

As in any other market, there is a commodity here - it's work. A person looking for work, acts as a seller of their knowledge, time, abilities and skills. And he wants to receive a remuneration in the form of wages for the offered goods .

Elements of the market

Elements of the market are:

• Applicant and employer;
• Supply and demand, their ratio;
• Laws governing the mechanism of the market;
• Organization of employment services;
• Career counseling services, enterprises for professional development of employees;
• Organizations for temporary provision of employment (seasonal work, home-based work, etc.);
• A system of state financial support for citizens who have lost work on reduction, transferred to another job or simply unemployed.

The applicant and the employer as subjects of the market

The following groups of able-bodied citizens act on the job market:

• Citizens who do not have a work place and who want to work at the same time; Possibly, people who have already registered at the employment center, or people who are just looking for a place to work;
• People working, but wishing to change the place of their work for some reason, choosing another position;
• The able-bodied citizens who are on the brink of dismissal.

The employer in this market can be:

• Various forms of enterprises and organizations (legal entities);
• Individual entrepreneurs (individuals).

Market Functions

For what the labor market is needed - it is easy to understand, having considered its main task and the functions arising from it. So, the main goal of this mechanism is to organize full employment of the population with the satisfaction of the needs for wage workers from enterprises and organizations.

The market in question achieves this by using the following functions:

• Organization of meetings of representatives of enterprises and competitors;
• Ensuring healthy competition among market participants;
• Establishment of equilibrium wage rates.

The process of negotiating and signing a contract for the sale and purchase of human labor on mutually beneficial terms is under way in the market. A well-established mechanism contributes to maximizing the useful use of people's labor potential, which means that at the macro level the economy is in the black. Labor market, Consequently, performs the function of regulation.

Having examined in more detail the labor market, the concept and its functions, one can ask the question of what contributes to its emergence in countries and what its state is today.

Economic preconditions for the formation of the labor market

To understand why the labor market is necessary, one must know that it is formed in any country, first of all, with the appearance of economic prerequisites. These are:

• Liberalization of all spheres of the economy. Its essence is the right to private property, to the availability of means of production and land in its own possession.
• Recognition for a person of freedom of choice in a professional, workplan. That is, everyone can decide where and how to work for it, for what price and whether to work at all. At the same time, forced labor is prohibited in the country, except for those imputed to justice by punishment.
• Freedom of entrepreneurship as a kind of activity. Everyone in the state independently or with a group of persons has the right to freely open their own business.

Thus, the economy influences the formation and functioning of the labor market. The labor market can not be formed outside of it.

Social preconditions for the formation of the market

For the formation of the labor market, in addition to economic aspects, sociological prerequisites are also necessary, which consist in the formation of inequality in terms of income, length of service and qualification of work, the degree of health and the level of education between people. And also the difference in mental abilities and personal qualities (endurance, physical strength, charm, etc.).

This kind of social inequality must be balanced by the state authorities with the help of federal and municipal programs to protect the population from unemployment, thanks to pension payments, subsidies to low-income families and health insurance.

The legal preconditions for the formation of the labor market

The legal preconditions that make up the labor market and the mechanism of its functioning include laws and orders of the government that can protect the population economically and socially, aimed at the rights and freedoms of the individual. In the Russian Federation, for example, they are:

• Constitution of the Russian Federation, art. 7, which states that the Russian Federation is a social state whose goal is to create conditions that ensure a decent life and free development of people.
• The Labor Code of the Russian Federation, which lists and explains the rules for the control and regulation of labor relations.
• The Civil Code, which defines the organizational and legal forms of business.
• FZ No. 10321 "On employment in the Russian Federation", Federal Law No. 207-FZ "On Collective Agreements and Agreements", Federal Law No. 10-FZ "On Trade Unions, Their Rights and Guarantees of Activities" and others.

Supply and demand in the labor market

From the definition of the labor market and the description of its subjects, it becomes clear that this mechanism is based on economic concepts such as supply and demand. Demand is the availability of open vacancies, it reflects the market capacity. And the offer is the number of unemployed who are ready to sell their labor to the employer. In whatever country is organized and whatever the labor market, supply and demand in the labor market always exist. They vary depending on external and internal factors.

So, the demand in the labor market depends first of all on the level of wages. Its connection under normal conditions, under ideal competition, is inversely proportional to the price of labor. Also, the level of demand is influenced by other economic facts, such as, for example, the demand for the goods produced by the enterprise, the level of its technological equipment or the price of the firm's capital.

The offer of labor, on the other hand, is directly proportional to the remuneration of labor. That is, if wages are growing, the number of people willing and able to sell their professional skills at a given cost increases.

On the supply of labor, in addition to the level of wages, the number of able-bodied population, the number of hours allocated for labor per day, week, year, vocational qualifications of the working masses are affected to varying degrees.

Demand and supply in the labor market form the market conditions. It, with their different ratio, can be the following:

• With a labor shortage (the market is experiencing a shortage of labor resources);
• With labor overabundance (the market is full of job offers);
• Balanced (supply and demand are balanced).

Subjective and objective influence on the functioning of the labor market

Undoubtedly, the state is able to regulate the functioning mechanism of the labor market. This action can be taken at different levels of government:

• Federal laws (for regulation at the national level);
• At the regional or local (to regulate local labor markets according to their specifics).

Also, public organizations, such as, for example, trade unions, can influence the labor market.

But not only the subjective regulation of employment and unemployment issues depends on how the labor market will function. The supply and demand in the labor market, of course, also play a significant role in this process. And their influence will be independent of the will and opinion of people, since it will be based on economic laws. That is, it will be objective.

Models of the labor market

What can be the labor market? The classification of markets can be as follows:

• Depending on the degree of competition (fully competitive market, monopsonic market);
• Depending on the state characteristics (Japanese model, US model, Swedish model).

Completely competitive - this is the labor market, which includes a large number of firms and organizations that compete with each other, as well as a lot of workers coming into confrontation with each other. With this model of the labor market, neither enterprises nor workers can dictate their own conditions.

Monopsonical is the labor market, which consists in the monopoly of one of the buyers of labor. With this model, almost all employees are employed in the same enterprise, without the possibility of choice. Consequently, the company dictates its own rules, including setting salaries. This model is typical for small settlements where one large plant or organization operates.

The Japanese model of the labor market is characterized by a system of lifelong hiring, that is, the employee works in the same place until reaching the retirement age. At the same time, his wages and social benefits directly depend on the length of service. Professional development and career growth occur strictly according to plan. If an organization is required to reduce, workers are not dismissed, but simply transferred for a short working day.

The US labor market model is based on the decentralization of legislation in terms of employment and assistance to the unemployed. Each state makes its own rules. In organizations there is a strict discipline and disloyal attitude towards workers. Career growth is not within the firm, but by leaving for another enterprise. The unemployment rate, in comparison with other countries, is very high in America. This is the labor market in the United States, and the causes of unemployment stem from its characteristics.

The Swedish model of the labor market is distinguished by the great influence of the state on the sphere of employment of the population. Here, the minimum level of unemployment due to its prevention.

Specificity of the labor market

It is worth noting that the modern labor market and its characteristics in each state, in each region and even in each locality vary. But the main distinguishing features of all markets is that the subject of sale and purchase is labor. The fact that the seller and the goods can not be separated from each other, as well as the fact that the product itself is not possible to store when it is not necessary.

The specificity of all these markets is the impossibility of setting wages below the specified state.

For what the labor market is needed - it is easy to understand, having considered its concept, goals, models and prerequisites of occurrence. In general, we can say that it is the basis of a market economy. So, he is able to dictate his laws.