ECS2604 EXAM PACK 2023

ECS2604 LABOUR ECONOMICS PAST EXAM PACK QUESTIONS AND ANSWERS (2020 – 2014) 2020 MAY/JUNE EXAM QUESTIONS AND ANSWERS 2020 SUMMARISED NOTES DISCLAIMER: Extreme care has been used to create this document, however the contents are provided “as is” without any representations or warranties, express or implied. This document is to be used for comparison, research and reference purposes ONLY. Directly submitting and/or reselling/ distribution / reproduction any part of this document is not permitted. S - The study-notes marketplace ECS2604: LABOUR ECONOMICS MAY/JUNE 2020 EXAM MEMO UNIQUE NUMBER: SUB SECTION A1 QUESTION 1 According to the theory of demand, discuss and illustrate by means of a graph the implication of the amendment of Compensation for Occupational Injuries and Diseases Act no 61 of 1997? (10) COMPENSATION FOR OCCUPATIONAL INJURIES AND DISEASES ACT, 1993 AS AMENDED BY ACT 61 OF 1997 AIM OF THE BILL The Act was promulgated with the objective of providing compensation for: - 1. Disablement caused by occupational injuries or 2. Diseases sustained or contracted by employees in the course of their employment, or 3. Death resulting from such injuries or diseases. The Act establishes a compensation fund which consists of penalties and assessments paid by employers, interests on investments of the compensation fund and moneys vested in the fund. This is to be used for payment of compensation, the cost of medical aid and witness fees. Chapter 6 of the Act deals with calculations that are to be taken into consideration when compensating an employee for temporary total disablement and permanent disablement. Permanent disablement of employees in training or less than 26 years of age, compensation if an employee dies, if an employee previously received compensation, pensions S - The study-notes marketplace Downloaded by: chanellubbe | Distribution of this document is illegal S - The study-notes marketplace and increased compensation due to negligence of an employer is also dealt with under this chapter. Section 65 of the Act entitles an employee to the compensation if he or she contracted a disease in the course of employment. Medical aid is provided in case of temporary disablement The employer is responsible for conveyance of injured employees and their medical expenses in cases where they contract diseases. An employer who demands or receives from an employee contribution towards the cost of medical aid supplied shall be found guilty of offence. The labor demand of an employer is the number of labor-hours that the employer is willing to hire based on the various exogenous variables it is faced with, such as the wage rate, the unit cost of capital, the market-determined selling price of its output. According to the amendment of the Compensation for Occupational Injuries and Diseases Act no 61 of 1997, it reduces the labour demand by within the labour market as all employers conducting business in the Republic are required to register with the commissioner and furnish him with the prescribed particulars of his business, a health and safety representative and a trade union representative shall have the right to inspect and where appropriate bring to the attention of the commissioner, any register, document or record which the employer must maintain which then increases the costs of employing more workers therefore will result in an leftward shift of the demand for labour as illustrated below. From the diagram above the amendment of the COIDA (1997) increases the cost of labour to the employer and therefore will shift the demand curve for S - The study-notes marketplace Downloaded by: chanellubbe | Distribution of this document is illegal S - The study-notes marketplace labour to the left from DL1 to DL2 this will also cause a change in the quantity of labour from L1 to L2 and W1 to W2. QUESTION 2 The COVID 19 (Corona Virus Disease) is having a devastative effect on wages and the cost of labour. In your opinion, what will be the effects of this pandemic on the dual labour market? (10) A labour market divided into two non-competing markets, i.e. a primary and secondary labour market, with the primary market characterised by the choice jobs, high earnings and security of tenure. The secondary market is characterised by low-wage, unstable, dead-end jobs; workers in this market have little hope of acquiring a job in the primary market. The primary segment. This segment is characterised by high earnings, good working conditions and employment stability. It often consists of large enterprises or segments of the labour market where trade unions play a major role. The primary market can also be divided into a number of internal labour markets, which could refer to individual enterprises or occupations, for example multinational corporations or the labour markets for lawyers or medical doctors. These markets are characterised by the following: • Access is usually severely restricted and is only possible at the bottom level. • Skilled jobs are more often than not filled by promotion from within the enterprise. • Promotion is often determined by bureaucratic and rigid rules of the company or occupation, which may have been established through collective bargaining. The secondary segment. Workers “on the outside” often have little or no job security, little prospect of promotion and generally poor conditions of employment. This is the so-called “secondary segment”, which consists of jobs that are low paying and have unstable patterns of employment. Secondary segment enterprises are typically over-competitive, small in scale and labour intensive with a low level of unionisation. There are low levels of skills in this sector, which means employers have little incentive to encourage stable employment patterns. Employers also have little inclination to train workers properly wages are low enough for the employer not to pay much attention to productivity. Therefore, in the secondary segment, “bad” jobs produce “bad” workers, while in the internal or primary market, “good” jobs make “good” workers. Examples of secondary labour market jobs are domestic workers, dishwashers in restaurants, cleaners, janitors and other menial jobs where a low level of skill is required. S - The study-notes marketplace Downloaded by: chanellubbe | Distribution of this document is illegal S - The study-notes marketplace Covid-19 has resulted in a substantial decline in wages to both the primary and secondary market. However the degree of wage decline has seen to be high in the secondary market as it is characterised by jobs that are low paying and have unstable patterns of employment, examples of secondary labour market jobs are domestic workers, dishwashers in restaurants, cleaners, janitors and other menial jobs where a low level of skill is required and because of the national lockdown which was put in place resulted in most of workers losing their jobs. However with regard to the primary labour market is characterised by high earnings, good working conditions and employment stability. It often consists of large enterprises or segments of the labour market where trade unions play a major role, earnings in this sector did not decline substantially, as there are employment contracts, role of trade unions in bargaining for the employees wages were not affected that much because of the Covid-19. SUB-SECTION A2 QUESTION 3 3.1. If the number of unemployed people is 500, the number of employed people is 2000, the working-age population is 1600, then the labor force will be (2) Labour force is the percentage of the population of working age that furnishes its labour for the production of economic goods and services, whether employed or not. Labour Force = Number of Employed + Number of Unemployed Therefore: 500+ 2000+1600=4100 3.2. In an economy, 10 million people are employed, 5 million are unemployed, but 2 million part-time workers would prefer full-time work. What is the unemployment rate? (4) The unemployment rate – is the number of unemployed persons taken as a percentage of the total labour force (the economically active population), which includes both the employed and the unemployed. Therefore: 10million+2million/10million+2million+5million =12million/17million =70,5% 3.3.In an economy, 30 million people are employed, 2 million are unemployed, and 8 million are not in the labor force. What is the labor force participation rate? (4) Labour force participation rate is the percentage of the population of working age that furnishes its labour for the production of economic goods and services, whether employed or not. in short it refers to the percentage of the population that is in the labour force. It is equal to 30million+2million=32million. S - The study-notes marketplace Downloaded by: chanellubbe | Distribution of this document is illegal S - The study-notes marketplace QUESTION 4. Discuss the possible advantages and disadvantages of COVID 19 unemployment relief fund of R350 Advantages 1. Unemployment relief fund helps to fight poverty among those unemployed children. 2. It also assist in those unemployed to have a stable balanced nutrition and to maintain a better health as they use the R350 relief fund for food. 3. It also helps to reduce the distress of being unemployed Disadvantages 1 .It increases a burden on government budget 2. It is subject to corrupt activities with government officials Your mark reading sheet can get lost, you are therefore also requested to write down your answers for Section B in the space provided below. Question Answer Question Answer Question Answer 1.1 3 1.11 3 1.21 1 1.2 2 1.12 5 1.22 2 1.3 5 1.13 3 1.23 1 1.4 2 1.14 1 1.24 d 1.5 3 1.15 4 1.25 2 1.6 1 1.16 4 1.26 3 1.7 5 1.17 1 1.27 3 1.8 3 1.18 1 1.28 2 1.9 4 1.19 5 1.29 1 1.10 3 1.20 1 1.30 3 S - The study-notes marketplace