• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Discuss the arguments for and against the UK economy being a low wage economy or a high wage economy.

Extracts from this document...

Introduction

Discuss the arguments for and against the UK economy being a low wage economy or a high wage economy. A low wage economy can be defined as a can be defined as a economy where there are a high number of jobs that are of a low wage, within a range of employment incomes. A low wage can be defined as a wage which is on or below the social security benefit level. In comparison a high wage economy can be defined as an economy where a large proportion of the jobs pay a wage which is of a high wage, i.e. a wage which is a high level above the minimum social security level. The are good arguments for Britain to be a low paid and a high paid economy, the basis of the high paid economy is basically that extra money produces more money and this brings about a buoyant economy. A high wage economy results in high levels of personal disposable income, this disposable income and high wages is a reward for personal effects in the job. Because there is extra disposable income in the economy this results in a number of things, there is a high level of aggregate demand , as there is high demand. Because of the extra demand in the market business profits are boosted. This can be seen in the demand and supply diagram below. ...read more.

Middle

As there are high wages UK goods and services become less competitive, this results in a number of problems. The first is that the number of UK exports fall as exports fall this results in a balance of payments deficit this isn't helped because as there are high wages and goods are high cost the UK is open to cheaper imports from low wage economies . If the UK is to be a high wage economy and wishes to compete effectively at the same time with the low wage economies of the, far east, Africa and even eastern Europe it must The way that the UK must compete is through better efficiency it must embrace modern technology and increase specialisation and labour division it must look to the internet for growth and only innovation can it hope to compete with low wage economies. In Britain we currently have a mixed wage economy with both low wages and high wages in jobs. However in recent years There has been an influx in the number of low wage jobs, those are jobs that re on the same level or just above the social security benefit level. There are many advantages to a low wage economy. The main advantage has to be it is of a big benefit to whole economy as it helps to keep both demand pull inflation down and wage cost inflation under control. ...read more.

Conclusion

If individuals have less disposable income through low wages this results I a lower demand for consumer goods, if demand is really low this could result in a low amount of economic growth for the country. The final problem with a low wage market is that firms may and probably will try to increase their profits in the short term. They can do this by becoming less capital intensive and more labour intensive, this will help to increases profits in the short run but may result in a loss of profits in the long run as the businesses doesn't strive to become more efficient and invest in new technology. Britain is a mixed wage economy it is neither high wage nor low wage there are however big advantage and disadvantages of both. For its size Britain is quite amazing, it is one of the world leaders when it comes to industry and is possibly the money centre of the world. The way forward for Britain is to keep the delicate balance between low wages and high wages, it is from this delicate balance that Britain manages to extract both the advantages and disadvantages of each type of wage economy. Through the embracement of new technologies we can continue to keep efficiency high along with wages. The Internet will be a powerful tool in helping firms to communicate and improve efficiency. Whilst keeping high wage jobs we need to make sure that not all low wage jobs are wiped out as it is these that help to keep inflation under control. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Outline the main features of a market economy and compare it to a Command ...

    as the much as they like as the consumer only has the choice buying the product or going without it. In a command economy this doesn't occur as the state has no self-interest only the publics' and therefore will set a reasonable price.

  2. Assessment of the market economy system

    When it happens between individuals, it is usually called "division of labour", which is the production of a certain kind of good or service done by a number of people who are responsible for different parts of the work. The seemingly separation of work, in fact, is co-operation of jobs,

  1. Analysis the cost of running the UK economy in the fiscal year 2003/2004, and ...

    It can be measured in three ways. In addition, to the sum of the income of the country (the "incomes approach"). It can also be derived by adding the value of the output of the goods and services produced by the country (the "output approach"), or by adding the total expenditure on goods and services within the economy (the "expenditure approach").

  2. Advantages and disadvantages of minimum wage.

    This basket consists of items that an average family consumes for their living, and which are weighted for their importance. Inflation of this 'basket' of goods is taken into account. From the survey of this 'basket' of goods, the living wage and the Retail Price Index are found.

  1. Chinese economy sets for soft landing in 2005.

    For his part, William G. Parrett, Global Chief Executive Officer, Deloitte Touche Tohmatsu, USA, also a Co-Chair of the China Business Summit 2004, told participants that the definition of what makes a great company does not vary by country. As the world globalizes, "greatness" is increasingly defined on a global scale.

  2. Assess the arguments for and against the national minimum wage

    and may increase the number of horse worked by those who work part time. This could only be good for the economy as the supply of labour increases. The NMW could ensure that whilst employees have increased wages and this should reduce the number of people dependant on the government via benefits.

  1. What are the Academic arguments for and against public body regulation

    They would see that the "safety net" the government provides is no longer there so they would have to in order to stay in business. The investors would know that their money was not "risk free" so therefore would put pressure on the banks to regulate themselves to protect their money.

  2. Discuss the extent to which the economic theories in the Market's Reader can be ...

    For example, transmitting the information that AOU become in Kitan will effect in Kitan house price. Amarya Sen; is the last theoretical perspective of competitive market. Sen's model draws attention to the conflictive nature of markets rather than their harmonious aspect .

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work