Select your language

Suggested languages for you:
Log In Start studying!
StudySmarter - The all-in-one study app.
4.8 • +11k Ratings
More than 3 Million Downloads
Free
|
|

All-in-one learning app

  • Flashcards
  • NotesNotes
  • ExplanationsExplanations
  • Study Planner
  • Textbook solutions
Start studying

Employment

Employment

Employment spans the four core sectors of the economy. There are significant differences between the predominant nature of employment in developed and developing countries. Employment issues affect individuals and economies alike and need to be managed so that economic decline is avoided. More so than economic decline, employment issues can extend beyond the individual scale and result in geopolitical tensions. This article will introduce employment and explain the problems associated with it on an individual and economy-wide scale.

What is employment?

Employment is essentially a relationship between two people: the employer and the employee. The employer (usually) pays the employee to work in an employment relationship. In macroeconomics, employment acts as a function of economic activity (usually measured by the GDP) and the workforce's productivity (measures the output of labour compared with the input of capital).

Macroeconomics is a type of economics that looks at large-scale factors affecting the economy. Therefore, when thinking about employment, macroeconomics makes sure that we consider the large-scale factors at play. As briefly discussed, this includes economic activity on a national level, measured by the GDP and how productive a workforce is.

GDP (Gross Domestic Product): the measure and size of a country's economy.

Productivity: this shows how much output is gained from the inputs. For example, if a certain amount of money is injected into a project, productivity will tell us how much product/labour we get out of it.

Employer - meaning

When you go into employment you become an employee, someone who gets paid to do a job. Your boss will be your employer, meaning that they will hire you to do a job, and you usually answer to them while being on the job. While this is most often a job where the employer will pay you for your work/services, it can also be that you, as the employee, work as a volunteer. You are still hired, you still answer to an employer, but the employer does not pay you for your time.

Types of employment

There are four main sectors of the economy. The primary sector relies on the use of natural resources (e.g. farming and mining). The secondary sector relies on the manufacturing and/or processing of natural resources to create a product. The tertiary sector relies on the provision of a service (e.g. retail and entertainment). The quaternary sector relies on innovation and the creation of new ideas (e.g. designing software and providing knowledge)

Check out our explanations: Economic Activity, Types of Economies, and Socioeconomic Policies to learn more about employment, the economy and how they affect our lives!

Employment covers each of these areas. Within these four sectors, there are different types of employment, including but not limited to:

  • Full time
  • Part-time
  • Self-employed/freelance
  • Temporary worker
  • Fixed-term
  • Casual
  • Apprenticeship

Different types of employment alter the relationship between the employer and the employee. For example, if you are self-employed, you are effectively your own employer. When you work with/for someone, you are still in charge of your own hours and billing.

Fixed-term employees are only contracted for a given 'fixed' period of time, while casual employees work hours to fit around the needs of the employer/business. Essentially, by distinguishing between different types of employment, it is possible to convey different expectations of different people and make these legally binding through the use of contracts.

It isn’t just on an individual scale that employment varies; when you consider different types of economies (e.g. developing vs developed), there are disparities.

Employment A team of employees at the Regional Institute of Culture in Katowice StudySmarterFigure 1: A team of employees at the Regional Institute of Culture in Katowice Robert Garstka, Wikimedia, CC BY-SA 4.0

Employment rate

According to Eurostat, the employment rate is:

... the percentage of employed persons in relation to the comparable total population.1

What exactly does that mean? Well, it means calculations that will provide us with an understanding of how many people are employed compared to a specific group. Employment rates are usually calculated for specific categories, such as age or geographical location, or calculated against all working-age people. For example, you want to know the employment rate of men aged 18-25 in country A and compare those to the same group in country B.

Of course, the same can be done regarding unemployment rates.

Employment UK

The tertiary and quaternary economic sectors currently dominate employment in the UK. The outbreak of the coronavirus pandemic has caused many complications for employment in the country. This is because many businesses were forced to close or operate at a significantly reduced capacity. For many people, this meant being out of work temporarily or even being let go permanently. However, from October 2021 onwards, the job market started to recover from the setbacks faced by the pandemic. What does this mean? This means that the employment rates have been going up, and the unemployment rates have been going down. It is essential to acknowledge that while employment in the UK is recovering, it hasn't reached pre-pandemic levels yet. Some industries are still not operating the way they used to, so their former glory has not yet been restored. The economic implications of this are still felt throughout the country.

Employment: Developed countries vs developing countries

If we take a look back at the history of the UK, we can see patterns of employment evolving. Before the Industrial Revolution, the economy was dominated by activities in the primary sector. This was before the technology was available to allow for manufacturing. The dawn of the Industrial Revolution heralded a new era: manufacturing in factories became a booming business and let the UK economy surge. As economic growth continued, the predominant sector began to turn to the tertiary sector and the provision of services. One explanation is the increased wealth of the population, who now had more disposable income that was spent on 'luxuries'. Slowly, as both technology and wealth have continued increasing, activity in the quaternary sector has risen drastically.

By contrast, many developing countries have not yet had the development opportunities afforded to places like the UK. As such, many developing economies are still dominated by secondary sector employment. This is one of the reasons why transnational companies (TNCs) outsource their manufacturing work elsewhere.

Employment issues

There are two major issues associated with employment: unemployment and underemployment. Unemployment occurs when somebody doesn’t have a job, whereas underemployment occurs when somebody is working in a job that doesn’t fulfil their potential. As well as negatively impacting the individuals that these apply, unemployment and underemployment have a negative impact on the economy. This is because it is not making use of all the people who could potentially be contributing to economic growth.

The most recent figure from the Office for National Statistics estimates that the UK employment rate is 75.5% (early 2022). This shows that, although most people are employed, a large proportion of the population is not. Both of these employment issues are especially prominent in cities. Why? As urbanisation continues and more people move to the cities, more pressure on the job market to provide work for more people. However, sometimes these issues disproportionately and systemically affect specific subgroups of society. This can be classified as discrimination.

Employment discrimination

For employers in most countries, it is illegal not to hire or fire an employee based on discrimination. Discrimination happens when an employer deliberately treats individuals differently because they have specific characteristics. Discrimination can occur during the recruitment process while under contract or ending a work contract.

There are two types of discrimination. Direct discrimination is a deliberate and intentional act of discrimination against someone. For example; a woman is more qualified for a specific job, but a less-skilled man is hired instead.

Indirect discrimination occurs as an indirect consequence of decisions and procedures. This occurs when a workplace policy applies to everybody, but someone with a protected characteristic, such as ethnicity or disability, is at a clear disadvantage. For example, a Jewish person who observes Sabbath cannot work on Saturdays. If the company policy is that everybody has to work Saturdays, then this person will have to come to work. This is indirect discrimination.

The laws of many countries try to prevent discrimination from happening by identifying characteristics that must not be discriminated against. Deliberately discriminating against a protected characteristic can result in punishment, including public prosecution and substantial fines.

Discrimination can involve unfair treatment; harassment; denial of reasonable workplace changes, which may be needed due to religion or disability; improper questions about, or disclosure of, specific information, such as medical information; and retaliation when discrimination is brought to light.

Employment discrimination: Common forms of discrimination

The following are the most common forms of discrimination:

  • Sex & gender
  • Gender reassignment
  • Sexual orientation
  • Race & ethnicity
  • Disability
  • Religion
  • Age
  • Pregnancy
  • Marriage
  • Parental status

Employment discrimination: Protected characteristics

Protected characteristics are aspects of your identity that make you...you. An employer cannot consider these characteristics when hiring, firing or promoting you.

Over the years, the UK has put several legislations in place to protect people from discrimination based on any of these aspects, including the following:

  • Sex Discrimination Act 1975
  • Race Relations Act 1976
  • Disability Discrimination Act 1995

In 2010, the Equality Act replaced all legislation and put them under one act. The Equality Act 2010 outlines the following 9 protected characteristics:

  1. Age
  2. Gender/sex
  3. Race
  4. Disability
  5. Religion/belief
  6. Sexual orientation
  7. Gender reassignment
  8. Marriage/civil partnership
  9. Pregnancy/maternity

Employment A sign that reads I earn 7K less than him for the same work StudySmarterFigure 2: A photo from a protest addressing the gender pay gap, Nick Efford, Wikimedia CC BY-2.0.

How do changes in employment affect a country?

Having a sizeable working population can aid economic growth within a country. Sometimes, people migrate to different countries because of comparatively greater job opportunities. This movement of employees across borders can affect both countries involved. For example, the country they are leaving would suffer an economic decline, and the country they are moving to would benefit.

Take a look at the following explanation to learn more: Migration, Consequences of Migration, UK Migration, Migration and Identity, & Migration and Capital

As well as the people being employed controlling economic shifts relating to employment, other factors can influence a country. The coronavirus pandemic has had widespread effects. One of these effects has been that certain businesses have had to stop offering their services, with some closing indefinitely. This has resulted in economic decline in many sectors and, by extension, many countries. Due to globalisation, many countries depend on each other economically. Therefore, the termination of employment, certain businesses and resulting economic decline in certain countries have affected multiple countries worldwide.

Political changes in employment can also impact a country. For example, if the flows of labour and products are stopped between countries, it can have disastrous effects. Let's think about this in relation to the current Ukraine crisis. Russia and many countries have imposed sanctions on each other, and these flows are stopped. Because of the nature of employment in Russia, it is a dominant player in many sectors, including energy. If these flows of energy and employees involved in energy pipeline construction were to stop, many countries would really struggle depending on their energy use. This highlights how political tensions can adjust employment, which can have widespread geopolitical consequences.

Employment - Key takeaways

    • Employment sustains the economy; In turn, issues of unemployment and underemployment can damage the economy and the individuals they affect.
    • Some employment issues are systemic and are caused by the discrimination of individuals that share specific characteristics.
    • Discrimination in employment has been made illegal in many countries, with the identification of ‘protected characteristics’ that cannot be used against someone.
    • Employment, and changes to employment, can have significant impacts on countries. These impacts can be economic, political and social.
    • Some impacts of employment on a country originate from natural causes (e.g. the coronavirus pandemic) and some are due to human influence (e.g. political tensions between countries).


References

  1. Employment rate: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Employment_rate
  2. Fig. 1: Employee meeting (https://commons.wikimedia.org/wiki/File:Wiki-training_with_employees_of_Regional_Institute_of_Culture_in_Katowice_02.jpg) by Robert Garstka (https://commons.wikimedia.org/wiki/Special:Contributions/Marta_Malina_Moraczewska) licensed by CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/deed.en)
  3. Fig. 2: Gender pay inequality (https://commons.wikimedia.org/wiki/File:Gender_Pay_Inequality.jpg) by Nick Efford (https://www.flickr.com/people/85896424@N00) licensed by CC BY 2.0 (https://www.flickr.com/people/85896424@N00)

Frequently Asked Questions about Employment

Employment refers to the performance of labour and is usually formalised through an agreement between an employer and an employee.

  1. Full time
  2. Part-time
  3. Self-employed/freelance
  4. Temporary worker

The most recent prediction for the UK employment rate by the Office for National Statistics is 75.5% (early 2022). 

  1. The primary sector => relies on the use of natural resources (e.g. farming and mining)
  2. The secondary sector => relies on the manufacturing and/or processing of natural resources to create a product
  3. The tertiary sector => relies on the provision of a service (e.g. retail and entertainment)
  4. The quaternary sector => relies on innovation and the creation of new ideas (e.g. designing software and providing knowledge)

In macroeconomics, employment is a measure of levels of economic activity and the productivity of the workforce.

Final Employment Quiz

Question

What is the primary sector?

Show answer

Answer

relies on the use of natural resources (e.g. farming and mining)

Show question

Question

What is the secondary sector?

Show answer

Answer

relies on the manufacturing and/or processing of natural resources to create a product

Show question

Question

What is the tertiary sector?

Show answer

Answer

relies on the provision of a service (e.g. retail and entertainment)

Show question

Question

What is the quaternary sector?

Show answer

Answer

relies on innovation and the creation of new ideas (e.g. designing software and providing knowledge)

Show question

Question

In the UK, when did the economy move from being dominated by the primary sector?

Show answer

Answer

Industrial Revolution

Show question

Question

When can countries afford to be dominated by a tertiary sector economy?

Show answer

Answer

When the population is wealthy enough to afford 'luxuries' and 'services'.

Show question

Question

What are the two major employment issues?

Show answer

Answer

Unemployment and underemployment

Show question

Question

What is it called when people are employed in a job that does not make full use of their skills?

Show answer

Answer

Underemployment

Show question

Question

What is discrimination in employment?

Show answer

Answer

Discrimination happens when an employer deliberately treats an individual differently because they have certain characteristics.

Show question

Question

What are protected characteristics?

Show answer

Answer

Aspects about a person that an employer cannot take into consideration when hiring, firing or promoting.

Show question

Question

What are the most common forms of discrimination?

Show answer

Answer

  • Sex/gender

  • Race

  • Disability

  • Religion 

  • Age

  • Sexual orientation

  • Gender reassignment 

  • Pregnancy

  • Marriage

  • Parental status

Show question

Question

How does the employment rate affect the economy?

Show answer

Answer

When the employment rate is high, there is economic growth. When the employment rate is low, there is economic decline.

Show question

Question

As well as unemployment and underemployment, what factors can affect employment?

Show answer

Answer

Natural causes (e.g. coronavirus) and human causes (e.g. globalisation and political conflicts)

Show question

Question

What is the rate of employment in the UK?

Show answer

Answer

75.5%

Show question

Question

What is employment?

Show answer

Answer

Employment refers to the performance of labour and is usually formalised through an agreement between an employer and an employee.

Show question

Question

What does an employer mean?

Show answer

Answer

An employer is someone who hires a person, called an employee, to perform a specific job or provide a particular service. This will make the employer the employee's boss. An employer will usually pay an employee.

Show question

Question

What do we mean by 'employment rate'?

Show answer

Answer

The employment rate means the percentage of people in employment in relation to the comparable total population. This means calculations that will provide us with an understanding of how many people are employed compared to a specific group. 

Show question

60%

of the users don't pass the Employment quiz! Will you pass the quiz?

Start Quiz

Discover the right content for your subjects

No need to cheat if you have everything you need to succeed! Packed into one app!

Study Plan

Be perfectly prepared on time with an individual plan.

Quizzes

Test your knowledge with gamified quizzes.

Flashcards

Create and find flashcards in record time.

Notes

Create beautiful notes faster than ever before.

Study Sets

Have all your study materials in one place.

Documents

Upload unlimited documents and save them online.

Study Analytics

Identify your study strength and weaknesses.

Weekly Goals

Set individual study goals and earn points reaching them.

Smart Reminders

Stop procrastinating with our study reminders.

Rewards

Earn points, unlock badges and level up while studying.

Magic Marker

Create flashcards in notes completely automatically.

Smart Formatting

Create the most beautiful study materials using our templates.

Sign up to highlight and take notes. It’s 100% free.