Labor market and wages

The most important and most frequently used form of the market economy income of any country is wages, its movement necessarily reflects many economic processes taking place in the state.

The labor market and wages are interrelated. Salary means the price for labor or income that a hired worker receives per work per unit of time. Wages can be of several types. First, there is a nominal wage - this is the salary that the employee receives for his work. Secondly, there is such a thing as a real salary, which is inversely proportional to the level of prices, that is, the totality of goods and services that an employee can purchase for his nominal wages. It happens that the nominal wage increases, while the real one, on the contrary, falls due to a rapid rise in prices.

The labor market and wages are often considered together, because the level of wages is determined precisely in the market. The labor market determines the cost of labor, terms of hiring workers, working conditions, guaranteeing employment and obtaining additional education, and much more. Moreover, the labor market clearly reflects the extent of unemployment and labor mobility.

As in any other markets, there is a demand in the labor market and there is an offer. Demand is based on the employers' need to close vacant positions in the organization, and the proposal, respectively, is determined by the unoccupied workforce or the change in the place of work. The supply on the labor market directly depends on the population, especially the working age, the qualifications of the workers, the duration of the annual working time, etc. The demand is influenced by scientific and technological progress, the state of economic conjuncture, etc.

Demand and supply are in competition, for example, for a good position there are always several candidates who may be asked to take a test when applying for a job. It happens the other way around, when a valuable and skilled worker is in demand in several enterprises, and they offer a large salary or better working conditions in order to "lure" him to themselves. Thus, the relationship between the labor market and wages is manifested.

There is still such a thing as the cost of the marginal product of labor. The number of employees recruited is determined by the wage and this cost. The attraction of new units of labor ceases as soon as wages are equal to the value of the marginal product. This is another feature of the chain "labor market and wages."

Due to its specificity, the Russian labor market has many classifications. Let's consider some of them. If we consider the time component applied to the labor market, we can identify the current, prospective, potential and forecast markets.

In addition, in the context of a market economy, one can speak of a regulated and unregulated market. If the market is not regulated, then workers are practically not protected by the social, there are no guarantees of employment and labor protection, whereas the regulated market has an extensive regulatory framework and the state plays a leading social role.

There is also a market for physical labor, mental labor, creative labor, the market of peasant labor, and so on. On the balance between supply and demand, the market can be equilibrium, excessive and scarce.

There is also an external and internal labor market. The external market is determined by the mobility of labor between states, enterprises and organizations, while the internal market implies the movement of personnel within the organization, internal rotation of personnel. The latter is based on the principle of "value and skills of cadres", when a "core" of high-quality, constantly working specialists and "periphery" is formed at the enterprise.

This classification logically implies the division of the market into primary and secondary. The primary market offers highly paid jobs and good working conditions, on the secondary market - low wages, instability and poor working conditions.