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Understanding the Labour Market


A definition of a labour market is:

A labour market is the place where workers and employers interact with each other.

In the labour market, employers compete to hire the best, and the workers compete for the best satisfying job.

A labour market in an economy functions with demand and supply of labour. In this market, labour demand is the firm's demand for labour and supply is the worker's supply of labour. The supply and demand of labour in the market is influenced by changes in the bargaining power.

(Economic Times, 2014)

Information about what is happening in the labour market focuses on:

DEMAND Who is buying labour? – industries and employers What kind are they buying? – occupations , working patterns availableSUPPLY what sort of labour is available? number, mix, choices of workers

Within the labour market there are key constructs such as industries (categorised by SIC codes, as explained in the employers section) occupations (categorised by Standard Occupational –SOC – codes) and employers.

Other key concepts to consider are:

  • The existence of a Primary (ie jobs with good working conditions and high entry standards) and secondary (ie low pay and standards) labour market
  • Internal (ie within an occupation, industry or organisation) or external labour markets
  • Core (primary and secondary market positions with secure contracts) and periphery (flexible, temporary work) labour
  • The geographical scope of particular labour market: from local to international.

Reading: The Discourse of the Labour Market

The key reading for this section is Marcus Offer’s 2001 chapter ‘the Discourse of the Labour Market’ (in your reading pack). Offer highlights some of the contrasting ways of viewing the labour market. He challenges the classical economic view of a self-regulating market, where supply and demand are balanced.

The depiction of the labour market in the media is also an important issue. Towards the end of the chapter, Offer suggests that, when it comes to the labour market, ‘careless talk costs lives’ (p. 92).

Consider this statement in relation to media messages that we and our clients pick up from the media.

Activity: Media Watch

This involves monitoring the media for references to a particular subject over a period of time. You are asked to complete a Media Watch file as you progress through this module, gathering together examples of media references labour markets in the media. Post at least one of these items to the Media Watch thread in the Forum as part of the formative assessment for this module.

You are of course welcome to post more than one item if you think it will be useful. When posting, please identify the source and indicate why you have selected the contents. The style of contributions is meant to be fairly informal and spontaneous. Please also comment on others' posts to develop our discussion.


Other Sources of Information about the Labour Market

Labour Market Information might include:

  • Data on the structure of the labour market (the number and type of jobs that exist, which sectors and organizations employ them). Within this, there is important information on equality within the labour market, e.g. which individuals are employed in different roles and sectors and at what levels.
  • Information on general employment trends (i.e. unemployment rates, skills gaps, projected demand)
  • Information on the way the labour market functions (how people get into jobs and move between them)
  • Information on labour market demand (the types of jobs - role, level, terms and conditions that attract workers)

Some of the sources available to us come from:·

  • Government departments
  • Sector Skills Councils
  • The National Census
  • Local Economic Partnerships
  • Universities (e.g. destinations data)
  • Research organisations
  • Employers and professional bodies


Activity: Comparing sources of LMI

Here are two examples to explore

1. The Office for National Statistics

2. Occupation specific information included on Icould (I have used working with horses as an example - use the site to find your own)

How do these compare as sources of LMI for a) career practitioners and b) clients?

Reading: The recent UKCES research Report 'Using and Sharing Career-related Labour Market Information' includes a useful overview of forms and uses of LMI on page 10:

 UKCES LMI summary

The full report can be accessed from this link.

There is a strong current policy interest in ensuring those that need it can get access to labour market information. UKCES has recently released the first pilot version of LMI for All, a data portal which brings together existing sources of LMI in one place as an open data project.


References (accessed 1 March 2014)