Question

9.Are there barriers in the labor markets? Give an example of a barrier and explain how would a firm exploit it?

Answer 1

Barriers in the labor markets are :

i) Major potential barriers are :

a) Work related Capabilities - Lack of Education / skills , Work Experience , Health Problems

b) High Non - labour Income - Dividends , Interest & Rent

c) Scarce Job Opportunities - Limited job opportunities in the Market

For e.g a candidate being a graduate but the job description requirement is of an MBA . So , he will get rejected in the first instance only .

Due to Covid - 19 , The job requirements are limited as an economic slow down is going on .

Firms in the first case may appoint the candidate at a very lower pay package & also exploit him in terms of longer working hours & since he s under qualified he is not in a position to negotiate the term of employment .