Question

Explain how wages are determined in internal labour markets.

Answer 1

A worker typically enters an internal labor market at the least-skilled port-of-entry job in the job ladder or mobility chain. While the wage rate of the port-of-entry job will be strongly influenced by the forces of demand and supply in the local external labor market, wage rates and the allocation of workers within the internal labor market are governed primarily by administrative rules and procedures. The wage structure within an internal labour market is determined by administrative procedures,through custom and tradition, and by the pattern of mobility that is sought. A system of jobevaluation is usually used to establish the wage rate attached to each job in a job ladder. Jobevaluation is a procedure by which jobs are ranked and wage rates assigned in terms of a set ofjob characteristics and worker traits.