Like the market of any other resource, the labor market is subject to the laws of supply and demand, because labor, in fact, is the same product as any other. The only difference is that those who are sellers in the markets for finished products, in the case of labor, act as buyers. However, given the fact that the level of payment is one of the main factors in the well-being of the population, and therefore political stability in the country, state regulation of the labor market is becoming an integral, and moreover, an important part of the policy of any government. In this article we will talk about the main tools for regulating the labor market and the features of their use.
State regulation of the labor market is an important component of state economic policy, because the level of income of the country's citizens and their purchasing power depend on the conditions of remuneration . And, as you know, the higher the purchasing power of the population, the higher the aggregate demand, which is an important stimulator of the country's economic development. State policy on the labor market has two main aspects - providing citizens with an adequate level of income, as well as guaranteeing normal (non-harmful) working conditions. The first aspect has a direct impact on the labor market, since the application of various measures to regulate the market takes it out of equilibrium, turning it more into a seller’s market than a buyer's market. The second aspect has an indirect effect on the market, since it increases the costs of entrepreneurs not on labor remuneration, but on its organization.
In order to understand how state regulation of the labor market works, it is necessary to understand that, although its functioning is subject to the laws of supply and demand, it still has some specific features related to the fact that the line characterizing the supply of labor by one person has several a different view than the usual supply curve. So, with an increase in the wage rate, the individual first shows great interest and wants to work more. However, studies show that, having reached a certain level of income, the employee believes that this can be stopped, and a further increase in pay will have the exact opposite effect - the desire to reduce the number of working hours, while maintaining gross income at the same level.
State regulation of the labor market takes it out of balance due to the action of the following tools:
- The introduction of a minimum wage - increases the market wage rate, as people who agree to work even for an amount less than the minimum wage will receive income that exceeds their expectations;
- Payment of assistance to the unemployed - in some way reduces the supply of labor in the market, as well as increases its market price, since some people agree to live on benefits and do not want to work, receiving amounts slightly exceeding the amount of state assistance;
- The introduction of mandatory social insurance contributions - leads to the fact that many employers in order to reduce their costs, hire workers informally (paying the so-called salary "in envelopes"), thus causing a discrepancy between official statistics and the real state of affairs.
State regulation of the labor market in Russia and other countries of the former USSR at this stage has the characteristic features of both a socialist style of regulation (a relic of Soviet times) and regulation of the labor market of developed countries.
It is important to remember that the regulation of labor relations and their remuneration should be based not only on well-known theoretical knowledge, but also taking into account the political situation, the mentality of citizens, strategic goals and plans of the state.