IGCSEEconomicsCIERevision Notes3. Microeconomic Decision Makers3.3. Workers3.3.1 Factors Affecting Choice of Occupation

Factors Affecting Choice of Occupation (CIE IGCSE Economics)

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Steve Vorster

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Economics & Business Subject Lead

Wage Factors

  • The occupational choices of workers are influenced by a range of wage & non-wage factors, which are often held in balance when making decisions about where to work
  • Wage factors are financial payments that workers receive for their labour
  • Non-wage factors incorporate a range of influences that are meaningful to a worker
       

A Summary of Wage Factors That Influence Occupational Choices


Factor
Explanation

Wages

  • An agreed amount of money/hour & is calculated directly from the number of hours worked
  • E.g. If a student works in a restaurant for 6 hours, 5 days a week & she gets paid $10/hour, her weekly wage is $300 (6x5x$10)

Salary

  • Employment contracts often state the agreed annual salary the employee will receive
  • This is then divided by 12 & paid monthly (in the USA it is divided by 24 & paid every 2 weeks)
  • The hours worked monthly may vary but the pay received is always the same

Commission

  • Often used as payment to sales people
  • It is typically a percentage of the value of the transaction involved e.g. estate agents receive 3-7% of the selling price of any property they sell
  • This can motivate employees to maximise sales

Bonus

  • Money paid in addition to a salary & is usually single annual payment
  • Often paid when the company earns high levels of profits, or as a reward for exceptional worker performance

Piece rate pay

  • A fixed amount paid to the employee for each completed item produced e.g. 25 Rupees paid to workers in India for each pair of socks they produce

Performance related pay (PRP)

  • Payment based on how well the worker performs
  • Workers doing exactly the same job may receive different compensation based on different outcomes they achieve

Share options

  • Payment through the issuing of shares in the company the employee works for
  • This is usually in addition to a monthly salary
  • The monetary value of the shares provided to the employee can be calculated on any given day as: number of shares x share price

Fringe benefits

  • Benefits provided in addition to the normal salary
  • They can be significant in influencing occupational choices
  • Includes benefits such as such as childcare, free lunches, gym membership, company car

Non-wage Factors

  • Many different non-wage factors influence a workers choice of occupation
      
  1. Length of training or level of education required: The longer the time period required to study/train for a job, the fewer the number of people who seek employment in that occupation e.g. it usually takes seven years to become a lawyer
     
  2. Job security: Employment contracts in different industries have different time periods attached to them. Some contracts are one to four years in length, so provide high security e.g financial sector contracts. Others have a short notice period & the employee can be dismissed with a very short notice period e.g. 30 days
     
  3. Job satisfaction: Finding fulfilment in a job role & enjoying work is a significant part of generating job satisfaction. Workers will often change their jobs/careers so as to improve their job satisfaction
     
  4. Career prospects: Jobs with a defined pathway for promotion (& salary increases) are often more desirable

  5. Level of challenge: Many workers step into an occupation due to the challenge of the role e.g. firefighters

  6. Status: Some jobs carry a higher recognition in society which workers find appealing, for example doctors, surgeons & lawyers

Exam Tip

This is a popular topic in Paper 2 structured questions. Questions can range from 2 mark 'define' questions (define wages) to 8 mark 'discuss' questions (Discuss whether an increase in wages will attract more people to work in a specific industry).

To answer the discuss questions develop a two sided argument:

  • On the one hand, yes it will attract more workers because...
  • However, on the other hand it may not because of the non wage factors (explain them)

If you look at both possibilities, then you have developed a balanced argument.

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    Steve Vorster

    Author: Steve Vorster

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.