MAKERERE UNIVERSITY

COLLEGE OF HUMANITIES AND SOCIAL SCIENCES

DEPARTMENT OF PSYCHOLOGY
COURSE: INDUSTRIAL AND ORGANIZATIONAL
PSYCHOLOGY.
NAME: ARUBAKU PAUL
REGISTRATION NUMBER: 19/U/10223/EVE
STUDENTS NUMBER: 1900710223
LECTURERES NAME: NSUBUGA MIIRO BRYAN.
COURSE: LABOUR ECONOMICS (IOP 3107)
QN1 DISCUSS THE ROLE OF THE GOVERNMENT IN THE LABOUR SUPPLY CHOICES IN A CASE OF
UGANDA.

LABOUR SUPPLY: refers to the number of workers willing and able to work in a particular job or
industry for a given wage.

Immigration laws .Through the ministry of Internal Affairs that issues work permits to foreign labor in
Uganda. Immigration affects the labor supply as it increases the pool of workers in certain sectors of
the economy. At the same time, immigration is likely to increase the demand for labor force, as
migrants expand consumer demand for certain goods and services. Therefore immigration may
increase competition for existing jobs in certain occupational sectors but it can also create new jobs.
However the expenses incurred in employing this foreign labor is high so employers opt to hire the
local labor.

Licensing .Organizations have to secure licenses and work permits as some occupations cannot be
carried out without licensing as occupations like doctors and lawyers cannot set in business without
qualified training. Therefore the government’s intervention is to regulate this kind of labour by
setting regulatory laws as the employer doesn’t have the knowledge to determine if someone is
indeed trained an qualifies for that kind of employment.

Sets minimum wage. This is done by the government of Uganda to limit the exploitation of the workers
from the raising and increasing supply of labor yet the demand is low, through doing this the
government sets the wages that the worker who earns less will get and this is provided for in the
constitution of Uganda however it was last set as 6000 Ugandan shillings.

According to the Rules and Regulations governing the recruitment and employment of Ugandan migrant
workers abroad, the government has put in place strict migration laws as clearly seen in licensed
workers for employment abroad. In addition contract agreements are entered into between the
principle and the recruitment agency defining their respective rights, obligations and responsibilities on
the side of the employer and the employee.

Education, Skills Development and Training

The policy recognizes the importance of universal primary and secondary education as a precursor to
skills development. Skills development and training of the labor force enhances productivity and
competitiveness. Promotion of skills development and training, especially for vulnerable youth already
in wage employment, shall be a major focus of this policy. Similarly, the focus on training for the self-
employed shall be on those young people who already have a good track record of small enterprise
management.

Labor Productivity, Skills development and training

Government recognizes that skills development and training are important in improving productivity,
competitiveness of the labor force and enterprise growth. Therefore, Government shall emphasize the
following strategies:

i. Providing incentives for the private sector to encourage them impart integrated skills through in-
employment training programmers, attachments, mentoring and apprenticeships/internships.

ii. Ensuring the collection of the industrial training levy as stipulated in the BTVET Act (2008) to generate
additional resources and to ensure equitable distribution of training costs among employers and users
of trainees or budgetary allocations.

iii. Strengthening vocational education and training as an integral component of the general education
system and productivity improvement.

The NSSF act 1985 was established by the Act of parliament to provide for its membership the payment
of contributions to and the payment of benefits out of the fun and for the purposes connected to it. It
guarantees a compulsory registration of employers and eligible employees so as to qualify for the NSSF
benefits like age, withdrawal, invalidity, emigration and survivor’s benefits thus a clear assurance of a
security fun to employees.

Providing young entrepreneurs support through tax rebates at least for the 1st five years of
establishing business.

The government provides for laws on health and safety, these help to protect the workers who suffer
from accidents at the work place, workers who work in risky jobs such as mining sites are given health
and protective gears such as gumboots and this law is provided for under article 40, clause (1) of the
1995 constitution of Uganda as a 2006 act of Parliament hence improved supply of labor since they can
no longer fear to work.

The government also sets the working time per as weekly, in Uganda the government of Uganda has
set the weekly working time as 48 hours weekly, expect for those part timing and those that work in
shifts, this has helped workers to express their skills in different areas hence improved labor supply in
Uganda.

Behavior nudges, the government of Uganda has improved the life of workers in the labor supply
through advocating for the behaviors about saving for retirement, this is done through coming up with
pensions and correction of some amount of money for NSSF through doing this the government has
encouraged the workers to save and improve on their wellbeing even during their retirement.

QN 2 EXPLAIN IN DETAILS THE DIFFFRENCE IN THE DETERMINATION OF WAGES BETWEEN A

COMPETITIVE FIRM AND A MONOPSONIST.

Definition of the key terminologies

A Monopsony is a market condition in which there is only one buyer, substile controls the
market as the major purchase of goods and services offered by many would be sellers.
Competitive firm. It is also known as a perfect competitive firm. It is a market structure whose
assumption are strong and therefore unlikely to exist in most real-world markets.
Wage: a wage is payment made by an employer to employee for work done in a specific period
of time.
A minimum wage: is the lowest remuneration that employers can legally pay their employees,
the price flow below which employees may not sell their labor
Maximum wage is a price ceiling imposed on how much compensation a worker can receive in
a given period of time

COMPETITIVE FIRM GRAPH MONOPSONIST GRAPH

 In competitive firm workers receive wages equal to their MRPs while workers employed
by a monopsonist firm receive wages that are less than their MRPs. This fact suggests
 sharply different conclusions for analysis of minimum wage in competitive firms versus
monopsony condition.
 The completive modal of demand and supply in the labor market predicts that an
increase in minimum wage will lead to reduction in employment and increase in
unemployment while imposition of minimum wage on a monopsony employer could
increase employment and wages at the same time, the possibility is generally regarded
as empirically unimportant given that rarity of cases of monopsony power in labor
market.
 In a competitive firm the wage it pays each worker is equal to the marginal revenue cost
of a worker therefore the firm determines the number of workers to hire while a
monopsonist firm does not have a labor demand curve because there is no curve the
firm can go to at a given wage to find its optimal number of workers. it uses MRP and
MRC curves to determine the number of workers, then uses the labor supply curve to
find the wage
 In a competitive firm, the market wage is the firms MRC of an extra worker. The firm can
hire all the workers it wants at the market wage and does not have to increase the wage
to attract another worker while the monopsonist must increase its wage to attract
another worker, since it pays this high wage to all workers, MRC of an extra worker
exceeds the wage to that worker.
CONCLUSION: the competive firm labour wages are determed by the market forces of
demand and supply of labour whereas a monopsonist firms sets the bwages for his or her
employees due to the available of monopoly powers.