The Changing Nature of Demand for Labor in the United Kingdom

This study discusses the fluctuating demand for workers in the United Kingdom due to changes in the labor market and sets forward policy recommendations for the government to implement that may help in increasing the demand for labor in the UK labour market. The study suggests revising the market wage rate slightly downwards and utilizing expansionary monetary and fiscal policies to increase the availability of resources to both firms and consumers. The literature review discusses various studies conducted on the topic of labour demand in various sectors of the economy, both within the United Kingdom and all over the world.

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THE CHANGING NATURE OF DEMAND FOR LABOR IN THE UNITED KINGDOM
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The Changing Nature of Demand for Labor in the United Kingdom
Policy Recommendations
It is worth noting that over the past few years, the demand for workers in the United
Kingdom has been fluctuating (Cribb, Joyce, and Keiller, 2017). Mainly, this is due to changes in
the labor market. For this reason, this study sets forward various policy recommendations for the
government to implement that may help in increasing the demand for labor in the UK labour
market.
Firstly, the government should revise the market wage rate slightly downwards in order
to encourage firms within the economy to hire more workers. It is imperative to note that there
exists an inverse relationship between the demand for labour and the minimum wage rate. As
such, when the minimum salary level is high, wages expenses for firms is also high (Demand for
Labor, n.d.). In turn, they reduce their demand for labour in the market. In retrospect, a lower
market wage rate policy would reduce a company’s salary expenses significantly and, thereby,
encourage an increase in their demand for workers within the UK economy.
Additionally, the government may utilize expansionary monetary and fiscal policies to
increase the availability of resources to both firms and consumers. As such, an expansionary
monetary policy will make loans more affordable and accessible to both firms and consumers.
As a result, the level of investment and consumption of goods and services within the economy
will increase significantly (Amadeo, 2018). When demand for goods and services I the economy
rises, firms will be forced to increase their productivity and thus, will be forced to hire more

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workers. In turn, this would bring about an increase in the demand for labor within the UK labor
market.
Literature Review
Over the past decade, various studies have been conducted on the topic of labour demand
in various sectors of the economy, both within the United Kingdom and all over the world. Using
the case study of Chile, Saens et al. (2008) investigate the relationship that links the demand for
agricultural goods and the firms’ demand for labour. The findings of this study reveal that the
demand for goods directly influences the demand for labour within the same economy. In
another study, Falk and Koebel (2000) examine the nature of demand for labor in the
manufacturing sector in Germany. In this study, workers are categorized as skilled, unskilled or
semi-skilled. According to the findings of this study, the demand for labor is not elastic for all
categories of occupation. Particularly, the demand for unskilled workers is more elastic
compared to the demand for skilled and semi-skilled labour within the economy. Also, Ismail et
al. (2015) investigate the labor demand elasticity and labor requirements using the case study of
the Malaysian economy. The results of the study indicate that the elasticity of labor-wage can be
either negative or positive while that of labour-output is positive.

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Reference List
Amedeo, K. (2017). Expansionary Monetary Policy [online] The Balance. Available at:
https://www.thebalance.com/expansionary-monetary-policy-definition-purpose-tools-3305837
[Accessed 11 Apr. 2018].
Cribb, J., Joyce, R., and Keiller, A. (2017). The UK labour market: where do we stand now?
[online] Institute for Fiscal Studies. Available at: https://www.ifs.org.uk/publications/9170
[Accessed 11 Apr. 2018].
Demand for labour. [online] Economics Help. Available at:
https://www.economicshelp.org/labour-markets/demand-labour/ [Accessed 12 Apr. 2018].
Falks, M., and Koebel, B. M. (2000). A dynamic heterogeneous labour demand model for
German manufacuring. Applied Economics, 33, pp. 339-345
Ismail, R., Sulaiman, N., Agus, A., and Ahmad, F. (2015). LabourDemand Elasticity and
Manpower Requirement in MalaysianService Sector. International Review of Business Research
Papers, 11 (2) , pp. 13-17
Saens, R., Lobos, G., and Rivera, E. (2008). Agricultural labor demand in Chile: A cointegration
approach. Chilean Journal of Agricultural Research, 68(4), pp. 391-395