4.

The labour market

I. Introduction to the topic

The labour market
There are two main features determining the labour market: the supply of labour and the demand
for labour. The quantity of labour available in a society depends on the size of the population, the
age distribution and attitudes concerning who should work, over what period and for how long
each year. Employers, by increasing wages and offering fringe benefits, can influence peoples
willingness to enter the labour market. At the same time low labour costs in emerging countries
threaten labour markets in the more developed part of the world. A recession in the economy or the
introduction of new technologies may also lead to a rise in unemployment. Governments have a
double task of both preserving jobs and reducing unemployment.

Types of unemployment
There are several types of unemployment, each caused by different circumstances: seasonal,
frictional, structural, conjunctural and voluntary unemployment.


Some ways of reducing unemployment

Providing retraining schemes for those who have been dismissed and are willing to
study in order to adapt to the changes in the labour market
Offering tax allowances and subsidies to companies to set up businesses and create
jobs in areas of high unemployment. They can also be attracted by investment in public
infrastructure.
Improving teleworking opportunities to overcome long distances and increase labour
mobility
Lowering unemployment benefits
Giving incentives to companies which employ long-term unemployed
Establishing efficient channels for informing people about vacancies

Trade unions
These organisations of workers, especially in a particular trade or profession, have been created to
act on behalf of the employees. They represent their interests by serving as a communication
channel between them and the management.

The black economy
People working in cash-in-hand jobs are employed illegally. The grey economy also constitutes a
substantial part of the economy.


The labour market in the EU
In certain countries of the EU the free movement of labour is temporarily restricted for citizens of
the new member countries, out of fear that cheap labour will raise unemployment. Therefore in
these countries foreign job-takers are obliged to apply for a work permit.
In countries which have fully opened their labour market, there is a large number of people who
have chosen to work there for the sake of better job opportunities and career prospects. The new
member countries are increasingly suffering from a brain drain i.e. the loss of highly-qualified
workers.




Vocabulary exercises based on the introductory text

A. Match each item in the left-hand column with one similar in meaning from the list
opposite


1. employers a. perks, such as the use of a car

2. fringe benefits b. employment involving working at home

3. prospects c. for a limited time

4. seasonal (unemployment) d. resulting from an economic recession

5. frictional (unemployment) e. rewards, inducements

6. structural (unemployment) f. chances, possibilities

7. conjunctural (unemployment) g. resulting from many people being made
redundant in one industry
8. teleworking h. people providing work for others

9. incentives i. occurring at a particular time of year

10. temporarily j. affecting people who are between jobs

B. For each item listed below, find in the text a word or phrase given in bold that is
similar in meaning


1. need
2. money paid to blue-collar workers
3. keeping in existence
4. teaching the skills of a different job ...
5. fired
6. money given to the registered unemployed (two words)
7. unfilled positions
8. act officially for
9. undeclared (job) (three words)
10. make a formal request for (two words)
II. Hungarian text
Exercise 1
Cover the English words and expressions given on the right and try to guess the English equivalents of the
underlined parts of the Hungarian text.

Exercise 2
After checking your guesses against the equivalents listed on the right, give an oral summary of the text in
English.


48 rnl is tbbet dolgozhatunk
Vilggazdasg 2006. jnius
A 48 rs heti maximlis munkaid tllpsnek
1
a lehetsgt tovbbra is biztostan
2
az EU-
tagllamok szmra az osztrk elnksg
3
munkaid-irnyelvrl szl javaslata
4
. A tervezet
5
a
maximum 48 rs heti munkaid betartsa alli felments
6
, az n. opt-out feltteleknt azt
szabja meg
7
, hogy a tlmunkt vgz
8
dolgoznak lehetsge legyen az ves
munkaszerzdsben
9
arra, hogy elutastsa
10
az ezt a mennyisget meghalad munkavgzst.
Emellett a foglalkoztatnak
11
meg kell magyarznia a hosszabb munkaid szksgessgt
12
.

Unis diplomatk szerint
13
elkpzelhet, hogy az osztrk kompromisszumos
14
javaslat nem
lesz elgsges azoknak a meggyzsre
15
, akik az opt-out megszntetst kvetelik
16
rja a
Financial Times. Az Eurpai Bizottsg
17
foglalkoztatsi gyekrt felels
18
tagja, Vladimr
Spidla azt is el szeretn rni
19
a munkaid szablyozsnl
20
, hogy az j llsba kerl
21

dolgozknak a kezdst kvet egy hnapig legyen lehetsgk arra, hogy tgondoljk
22
:
akarnak-e heti 48 rnl tbbet dolgozni.

Spidla emellett akkor is rgzttetn
23
a heti maximlis munkaidt, ha a munkavllal
beleegyezik
24
a maximlist meghalad munkaidbe. London mg az elz flvben mint
soros unis elnk jelezte
25
: szmra a 65 rs plafon
26
elfogadhat
27
lenne. Nagy-Britannia
mellett
28
jelenleg tbb tagllamnak, kztk
29
Magyarorszgnak is van valamifle opt-outja;
tbbsgk az egszsggyben alkalmazza
30
a heti 48 rs munkaid tllpst.

Magyarorszgon a teljes munkaid jogszablyban rgztett
31
mrtke napi nyolc, heti negyven
ra. A foglalkoztat s a dolgoz megllapodsa alapjn
32
azonban a munkaid hossza
legfeljebb napi 12
33
, maximum heti 60 rra emelhet, ha a munkavllal
34
kszenlti jelleg
munkakrt
35
(pl. biztonsgi r, ports) lt el, vagy a munkltat, illetve a tulajdonos kzeli
hozztartozja
36
.
1563n

1
Exceeding the maximum working time
1
ensure
1
Austrian presidency
1
proposal
1
draft bill
1
exemption from observing
1
set a condition
1
doing overtime
1
annual labour contract
1
refuse
1
employer
1
explain the necessity for
1
according to Union diplomats
1
compromise
1
to persuade
1
demand elimination
1
European Commission
1
commissioner in charge of employment affairs
1
achieve
1
regulation
1
hired in a new job
1
think over
1
fix
1
agrees to
1
present Union chairman indicated
1
ceiling
1
acceptable
1
besides
1
among them
1
applies in health care
1
prescribed by law
1
on the basis of agreement
1
12 hours a day
1
employee
1
does standby work
1
close relative






III. English text

GM reveals union deal will cut new employee costs by two-thirds
By Bernard Simon in Toronto
Financial Times Oct 16, 2007

1. General Motors will cut the cost of employing new blue-collar staff in the US by two-thirds
compared with existing workers, under a labour contract agreed with the United Auto Workers
union. GM, which yesterday revealed details of the deal agreed with its main union last month,
also aims to reduce substantially the number of workers who currently cost the carmaker $78.21
(55) per hour, as part of a drive to improve its competitiveness against Asian rivals.
2. The company estimated new recruits, or so-called tier 2 workers, would cost it $25.66 an
hour under the deal. Fritz Henderson, chief financial officer, said the company had started talks
with the UAW on a new buy-out and early retirement drive. About three-quarters of GM's
74,500 blue-collar workers are eligible to retire over the next four years, clearing the way for a
major infusion of cheaper labour.
3. The centrepiece of the new contract is a union-managed healthcare fund, known as the
Voluntary Employees' Beneficiary Association (Veba), which will take over GM's $46.7bn in
liabilities to its blue-collar workforce. The carmaker will contribute $35.7bn to the Veba, of
which $31.9bn will be new funding, equal to 68 cents for each dollar of current liabilities. The
contribution will include a $4.3bn convertible bond, which could make the UAW GM's biggest
single shareholder, with a 16 per cent stake.
4. Toyota and other foreign carmakers with plants in the US pay roughly the same wages as the
Detroit-based companies. Yet their healthcare and pension benefits are far less generous. GM
expects to reclassify about 16,000 positions as tier 2 largely staff who do not work on the
production line. GM will continue to push some workers to the tier 1 level, covering mainly staff
who work on the production line. They earn the same wages but do not enjoy the same benefits
as existing workers.
5. Himanshu Patel, analyst at JP Morgan, estimated the savings from these workers at over $10
an hour. The combination of retirements and buy-outs indicates the company "expects a wide
conversion of its existing wage structure into a combination of less expensive wage and benefit
levels".
1812 n

Important terms

blue-collar staff workers who perform physical rather than managerial or
administrative work
labour contract agreement between an employer and a trade union regarding
wages and hours worked (collective agreement)
recruits new workers
buy-out money given to employees to persuade them to leave the company
liabilities money owed to its employees
convertible bond bond which can be converted into a companys common stock
reclassify positions change an existing position rather than create a new one
benefits extras offered to employees in addition to their regular pay

Extended vocabulary

substantially: significantly, i.e. by a large amount
drive: special effort, campaign
eligible to retire: qualified to withdraw from active working life
clearing the way for: making possible
infusion: inflow, addition
centrepiece: the main feature
roughly: approximately

Comprehension questions


1. What are the two goals that GM hopes to achieve with its new labour contract?



2. What is GMs motivation behind this new labour contract?



3. What are the issues that GM is addressing in its talks with the auto union in order to
achieve its goals?



4. How many of GMs blue-collar workers are qualified to retire over the next few years?



5. What is the main selling point or focus of the new labour contract?




6. What main advantage will GMs creation of a union-managed healthcare fund bring to the
union, and thereby indirectly, to the workers?



7. How do the wages paid by foreign carmakers in the US compare with those paid by GM?



8. In what way do foreign carmakers differ from GM in terms of their overall pay package?



9. What is the difference between tier 1 and tier 2 workers at GM?



10. What combined effect does GM hope to achieve through its combined retirement and job
buy-out campaign?


IV. Discussion questions

A. Discussion questions related to the text

1. Do you think that GMs new labour contract with the union is a good and fair way to reduce employee
costs? Explain.

2. What do you think is the best way for North American carmakers to improve their competitiveness
with Asian carmakers?

3. Do you think that a company has an ongoing responsibility to the workers it lays off, buys out or forces
into early retirement? Why or why not?

B. Additional discussion questions

1. How have the opportunities of Hungarian job-takers changed with our accession to the EU?

2. How can the government relieve unemployment?

3. Do you think there is discrimination against women in the workplace? If so, what are the
indicators?

V. Role-playing exercises

7. Office relocation

Student:
As the senior manager at a computer graphics company, you are responsible for coming up with
an action plan to relocate your fast-growing company from your small city-centre location to a
new suburban development area with bigger offices. The owner of your company meets with you
to discuss this plan.


Examiner:
You are the owner of a computer graphics company. Your business is expanding and the
number of your employees has doubled to 120. You urgently need to move away from the city
center to bigger offices in the suburbs. You meet with your senior manager to discuss his action
plan for this move and how to make sure it goes smoothly.






8. Corporate Social Responsibility

Student:
You are a board member of a manufacturing firm which employs 500 people in a small town in
which there are no other major employers. Your company is making a loss, however, and you
must cut costs. Youre having a meeting with the mayor of the town to discuss your options.


Examiner:
You are the mayor of a small town in which there is only one major employer. Youve heard that
the company is making a loss and youre afraid that jobs may be cut, or worse, the company will
shut down. You meet with one of the board members to discuss this.






1
exceeding maximum working time
2
ensure
3
Austrian presidency
4
proposal
5
draft bill
6
exemption from keeping
7
set a condition
8
doing overtime
9
annual labour contract
10
refuse
11
employer
12
explain necessity of
13
according to Union diplomats
14
compromising
15
persuasion
16
demand elimination
17
European Commission
18
in charge of employment affairs
19
achieve
20
regulation
21
hired in a new job
22
think over
23
fix
24
agrees to
25
present Union chairman indicated
26
ceiling
27
acceptable
28
besides
29
among them
30
applies in health care
31
prescribed by law
32
based on agreement
33
12 hours a day
34
employee
35
does standby work
36
close relative