3.

2 Occupations and earnings

Why do we work?

The simple answer to this question is that people work (or supply their labour) in
order to earn money for the goods and services that they need to buy and consume.
The principles of a free market economy are based on specialization- people and
businesses specialize in the production of a particular good or service, earn money
from selling the good/service and then use this money to purchase what they
need/want.

So, yes, people primarily work to earn a living. But do people get other benefits
from working?

Consider the case of Stavros. He has recently left catering college and has been
offered two jobs at different restaurants. Both offer the exact same wage rate, $8
per hour- so what else will he need to consider when making a decision?

Why do people work? Wage & non wage factors

Wage factors Non wage factors

The supply of labour to an occupation depends on the wage rate for the job:
Wages can be paid as:
• time rate per hour worked per employee
• piece rate per unit produced per employee
• performance-related pay: commission on sales, annual bonuses, etc.

Salaries are normally paid to those whose hours worked or level of output would
be difficult to measure. Usually ‘white collar’ workers- primarily semi professionals
and professionals (eg doctors, lawyers, teachers, nurses, police officers) Salaries are
expressed as yearly figures (e.g. $120,000 pa) and are normally paid on a monthly
basis.
A person will compare the advantages and disadvantages of different jobs or
occupations in order to choose one to specialize in

All the wage and non-wage factors that affect the attractiveness of a particular job or
occupation are called its net advantages

Specialisation at work

Most people specialize at work in one particular role or a number of tasks.

Specialisation occurs in all types of industries- education, manufacturing and
agriculture. It has a number of key advantages and disadvantages:

Advantages Disadvantages

• Doing the same job for many years may become boring
• People can lose their jobs if their skills or occupations become unwanted as
consumer demand and/or technology changes
• They can improve their skills further by repeatedly carrying out the same or
similar tasks
• More-experienced and skilled employees usually earn more than less-
experienced and unskilled employees because they are more productive and
demand for their labour by firms is greater
• They must rely on others to produce the goods and services they cannot
produce themselves
• They make best use of their skills and abilities