BEC4008 Business Economics Assignment Sample
You need to write one essay of up to 2000 words (not including reference list).
Assignment topic: In 2021 the United Kingdom faced a ‘gas price crisis’, in which the rapidly rising price of natural gas had a variety of effects on the UK economy. Discuss the causes and effects of this crisis in relation to the economic concepts you have learned, describing potential short-term and long- term effects on both the natural gas market and other markets as well as the UK economy as a whole, considering both demand side and supply side effects.
Guidance Notes: You will need to read news sources about the gas crisis and reference them in order to give some description of what happened; make sure you reference your sources, using Harvard (author-date) referencing. The university provides guidance on referencing at https://study.cardiffmet.ac.uk/AcSkills/Pages/Referencing.asp x, which includes links to useful resources such as ‘Cite Them
Right’ which show you how to include references for different sorts of sources, such as web pages, books, journal articles, etc. But don’t spend your whole essay just describing what happened! It’s very important that you use your answer to show your understanding of the economic ideas you’ve been learning. In each part of your essay, try to explain the relevant economic ideas or parts of the economic models you’ve studied, and then use that to explain or predict effects on the market you’re considering. It may help to break your essay into sections with their own subheadings.
It's ok to research and reference things other people have written about the economic causes and effects (and if you use ideas from other people’s writings you MUST reference them, otherwise you could be committing plagiarism), but the important thing is always to give explanations in your own words of the fundamental economic ideas. Try to bring in as many of the ideas from the course as you can, but only if you can make a sensible argument for how each idea applies to the real-world example you are analysing.
Make sure you upload your essay to the submission point on Moodle before the deadline
Leave it to the very last minute on deadline day, in case you have technical problems. If illness or other circumstances out of your control prevent you being able to complete the assignment in time, remember that you can apply for an extension through the Mitigating Circumstances procedure – look for the Mitigating Circumstances link on
https://outlookuwicac.sharepoint.com/sites/students/SitePages/tools-and-resources.aspx for the form to fill in, and ask your personal tutor if you’re not sure how to do the application.
Learning Outcomes Assessed for assignment help
1. Examine the theoretical underpinnings of consumer behaviour and producer behaviour
2. Demonstrate understanding of how prices, quantities and technologies change
The increase in natural gas prices could be caused due to a wide array of factors. The impact of a price hike would be severe in a nation, if necessary measures are not taken from the end of government to compensate for the rapid rise in fuel prices. The gas price crisis of 2021 in the UK stands to be the main theme of the study, as the objective lies in the review of the incident with the application of economic concepts and models. The demand and supply concepts of economics would be used to systematically address the short-term and long-term implications of gas price crisis in the UK.
Causes and effects of the gas price crisis in the United Kingdom during 2021
The gas price hike during 2021 reflected the energy adversity faced by the UK, as sourcing of natural gases rattled the overall situation in the energy sector. The seasonal demand can be identified as one of the major promoters for the gas price crisis, as the winter season requires residential heating measures to a severe degree. In relation, the UK government always looks to take advantage of the summer season, thereby taking advantage of low prices and acquiring gas shipments for making the heating cost more economical for the people. As per the views of Saif-Alyousfi et al. (2021), the increase in gas and oil prices aids the cash flow for the banking units in a nation. Likewise, the case is no different for UK banks, as they also tend to benefit from the price increase of natural oil and gases, while some of the banks would be under pressure to escalate the interest rates, such as the Bank of England. In addition, the natural gas storage facilities seem to have a heavy influence over the natural gas prices, as a higher degree of inventory levels ensure that the supply and demands are met without disruptions, thereby leading to a drop in gas prices. In comparison to the European nations, the UK boasts only 8.9 Thermal Watt-Hour (TWh) gas storage capacities.
It is feared that the energy suppliers for the UK would soon collapse due to geopolitical threats. The economies have started to recover since the inception of the Covid-19 pandemic, whereas the cold weather in the UK is responsible for the depletion of the existing set of energy sources. As per reports, the prices of gas are found to be quadrupled over the last year to highs of 180 pence per thermal, from around 40p/the in the month of September, 2020 (Ambrose, 2021). Apart from that, it is also observed that the flows of pipeline gas to Europe from various sites over in Russia are unable to make up for the shortfall. As per the Heckscher-Ohlin model countries export the products that they are able to produce in mass quantities. It addresses the ways by which trade measures should be exercised by the nations.
On that note, UK being a poor producer of gas is unable to get the scope for export. As for the 2021 gas price crisis in the UK, the global gas crunch has played a pivotal role in contributing to the overall event. Furthermore, the detrimental event is shaped by the generation gap shared by the UK, as half of the UK’s electricity is known to be developed from the burning of fossil fuel. Nonetheless, the reliance on natural gas for residential purposes has made it quite cumbersome for the government to manage the gas price crisis.
The power shortage in the UK is justified by reports where it is seen that even shorter than 1% of Europe’s stored gas is currently kept by UK. The alternative energy sources are also under the scanner, as the UK's nuclear power plants, that has the capacity to supply up to 20% of electricity, would soon be having a closure date, having no major replacements.
According to the study by Mensi et al. (2021), increased inflation and reduced economic growth occur due to the price hike of natural gas and oil. Moreover, the cost of producing goods also creeps up with the oil and gas prices. It is reported that the Ministers are having a reliance on out-dated energy security policies. Likewise, the concern in regards to the current tension between Russia and western leaders is impacting the gas prices to rise even further in the UK. As per reports, a record closing price at 322.5 pence per thermal is found to be observed during the month of December 2021 in the UK (Ambrose, 2021). Russia being one of the biggest gas suppliers to Europe causes even more pressure upon the UK to go along with the crisis without negative implications. On the contrary, less than 5% gas is sourced from Russia (Plummer, 2022). The secured supply of the gas still remains to be a significant moderator of the current gas crisis that started in 2021.
In the case of the 2021 gas price crisis in the UK, the lack of strategy for gas supplies has played a crucial part. However, Of gem, the energy regulator in the UK plans to develop a set of policies to counter the supply crisis and price hike in natural gas. As per the study by Mugaloglu et al. (2021), it is seen that the relationship between stock market prices as well as the oil prices have been affected by the pandemic. In addition, the declining oil prices referred to the decreased the stock market prices in the first months of the pandemic. In relation, the UK faced drastic changes in the natural oil gas segment that also contributed to varied stock values in the market, making it rather difficult for the investors to cope with the situation. According to the views of Wen et al. (2021), both natural along with the human extreme events have the capability to increase oil price risk. In the crisis event, the contribution of Covid-19 in the form of a pandemic can be regarded as significant, as the economic structure weakened with the pandemic impact. The supply and demand models of economics allows for better review of the market demands and compare the degree of changes that could occur for a product based on the price fluctuations.
Economic demand concepts applied for a review of short-term and long-term effects of the crisis
A correlation between consumer confidence and the price of gas is present, for which the demand distribution has to be reviewed to identify the effects of gas price. As stated by Li et al. (2021), geopolitics is able to carry a significant negative impact on the import and export of the energy trade, whereas the natural gas prices show an increase due to it as well. The equilibrium can be addressed as the state where demand and supply are able to intersect. On that note, the demand for gas for energy generation is going to remain high in the UK, as long as there are no alternative energy sources. As for the 2021 gas price crisis in the UK, the cost of goods and services could increase steadily in the short term if the gas prices continue to escalate in the UK. In addition, the gas prices going up for a longer period of time would refer to a consumer demand going upwards. As viewed by Díaz and Medlock (2021), the demand curve is the graphical representation of the relationship shared between product price and the quantity of the product that is demanded. Therefore, it can be stated that the demand would remain the same in the UK in the coming time, whereas the quantity would be lower in relation to the rise in price. The current shortfall of energy is a reason that aligns perfectly with the demand being steady and quantity demand going down. As mentioned by Pellini (2021), the Substitution Effect is a concept in economics that highlights the tendency of people to substitute expensive goods with other goods that have not increased too much in price. However, for the fuel gas, there are barely any substitute products that could be used for beneficial progress in the long run. Apart from that, the substitutes that might be available for natural gas fuel, would not come across to be cheap either. In the case of the 2021 gas price crisis in the UK, the import of other goods in the country could be at risk due to the energy crisis in the short term. The elasticity of demand model is able to address the level of sensitive demand for a good as compared to the changes for the other set of factors in the economic domain. It is also regarded as the price elasticity, whereas the gas as a product cannot be deemed to be price elastic.
The elasticity of demand is known to be an economic measure of the sensitivity of demand relative to a change in price. As per the views of Han et al. (2021), gasoline products act as relatively inelastic products, thereby clearly indicating the fact that the price changes share a bare minimum effect on the demand in the market. As for the 2021 gas price crisis in the UK, the price elasticity of gas tends to be hovering across -0.10 and -0.28. According to the study by Cook (2021), taxes and distribution are found to be some of the factors that impact the pricing of gas. In the UK, there lies a fragile system in terms of storing the gas and there after channelling it for the purpose of meeting the demands that always remains strong, irrespective of the prices. Therefore, the government should rather focus on upscaling the production of renewable energy that would cause people to apply the substitute rule and decrease the demand for gas for energy generation. Unable to do so would generate a long- term energy shortage all across the UK, thereby affecting the living habits of unnumbered residents.
Economic supply concepts applied for a review of short-term and long-term effects of the crisis
Price elasticity aids in the process of measuring the responsiveness of demand to changes in price. For gasoline, being an inelastic product, the costs would not fall, thereby reflecting the fact that the supply curve would shift to the left. However, there are plenty of factors that could influence the supply to halt or maintain a seamless flow such as the infrastructure, demand, taxes as well as subsidies offered from the end of government. As per the study by Aruga (2022), the supply curve goes to show that the price hike responds to a quantity rise as well and vice versa. Equilibrium is hard to be established for a product such as gasoline, thereby creating difficulties for both the producers and people consuming it. In the case of the 2021 gas price crisis in the UK, the automobile industry could be facing long-term sales issues due to the rise in the cost of gas and fuel. On the other side, the switch towards the electric vehicle concept would not be a wise solution either, as facilities required to power the batteries would still share a dependence on non-renewable energy sources.
The suppliers that would be able to deliver gas in the UK have been trimmed due to the inclusion of tough regulations. The energy price cap can be identified as one of those elements that are rising and creating trouble across the supplier base of natural gases.
According to the views of Majid et al. (2021), rules and restrictions of a nation in regards to the import and export of goods and services could cause a severe change in the supply and demand of those items. Tougher financial stress over the small-scale supplier base is causing difficulties for the UK to manage the crisis of gas price hikes in the nation. As for the 2021 gas price crisis in the UK, the oil price increase would stifle the growth of the economy in the long term. As stated by Hamie et al. (2021), the increase in natural gas supplies results in the price going down. However, the present situation in the UK and the geopolitical scenario is not helping the sources of supply to increase by any means. Henceforth, there is an expectancy that the fuel prices would continue to climb up as the supply shortage is to be seen in the coming days. The lifestyle of UK people shall also be under threat as for the winter season the power outage could practically take a toll on the standard of living as certain functions relying on gas energy across the residential areas might not run.
As per the developments across the study, it can be clearly inferred that there is a possibility for the UK to recover from the gas price increase crisis of 2021 in the form of having a better-developed infrastructure and policy to support the souring of natural gases more efficiently. On the contrary, the present-day situation is not favouring the nation, as the cost of gas is continually escalating, thereby hammering the economy in a brutal fashion. If the nation and its people are to resist the demand and supply issues surrounding natural gas, there has to be the inclusion of more secured suppliers for the product.
Ambrose, J. (2021) ‘Gas crisis fuels call for the UK to update energy security policy’, The Guardian. Available at: https://www.theguardian.com/business/2021/dec/15/gas-crisis-fuels- call-for-uk-to-update-energy-security-policy [Accessed on: 6 th February 2022]
Ambrose, J. (2021), ‘What caused the UK’s energy crisis?’, The Guardian. Available at:
[Accessed on: 6 th February 2022]
Aruga, K. (2022), ‘Energy and Waste Problems’, In Environmental and Natural Resource Economics, pp. 151-167.
Cook, M. (2021), ‘Trends in global energy supply and demand’, In Developments in Petroleum Science, 71, pp. 15-42.
Díaz, A.O. and Medlock, K.B. (2021) ‘Price elasticity of demand for fuels by income level in Mexican households’, Energy Policy, 151, p.112132.
Hamie, H. Hoayek, A. and Auer, H. (2021), ‘Modeling Post-Liberalized European Gas Market Concentration—A Game Theory Perspective’, Forecasting, 3(1), pp.1-16.
Han, K. Song, X. and Yang, H. (2021), ‘The pricing of shale gas: A review’, Journal of Natural Gas Science and Engineering, 89, p.103897.
Li, F. Yang, C. Li, Z. and Failler, P. (2021), ‘Does geopolitics have an impact on energy trade?’, Empirical research on emerging countries. Sustainability, 13(9), p.5199.
Majid, A. Mortazavi-Naeini, M. and Hall, J.W. (2021). ‘Efficient pathways to zero-carbon energy use by water supply utilities: an example from London, UK’, Environmental Research Letters, 16(10), p.105010.
Mensi, W. Rehman, M.U. Maitra, D. Al-Yahyaee, K.H. and Vo, X.V. (2021), ‘Oil, natural gas and BRICS stock markets: Evidence of systemic risks and co-movements in the time-frequency domain’, Resources Policy, 72, p.102062.
Mugaloglu, E. Polat, A.Y. Tekin, H. and Dogan, A. (2021), ‘Oil price shocks during the COVID-19 pandemic: evidence from United Kingdom energy stocks’, Energy Research Letters, 2(1), p.24253.
Pellini, E. (2021), ‘Estimating income and price elasticities of residential electricity demand
with Autometrics’, Energy Economics, 101, p.105411.
Plummer, R. (2022), ‘Will Russia-Ukraine tensions push up UK gas bills?’, BBC News. Available at: https://www.bbc.com/news/business-58637094 [Accessed on: 6 th February2022]
Saif-Alyousfi, A.Y. Saha, A. Md-Rus, R. and Taufil-Mohd, K.N. (2021), ‘Do oil and gas price shocks have an impact on bank performance?’, Journal of Commodity Markets, 22, p.100147.
Wen, J. Zhao, X.X. and Chang, C.P. (2021), ‘The impact of extreme events on energy price risk’, Energy Economics, 99, p.105308.
Impact of the US-China War on The Chinese Economy and Its Long Term Implications
This economics assignment essay will go into great length about the effects of the US-China war on the Chinese economy and its long-term ramifications, highlighting two of the most competitive and powerful economies in the world.
China and the United States of America have long been considered each other's sworn enemies. While disagreements and conflicts have arisen over a variety of topics, including the army, the middle east situation, China's proximity to Pakistan, and Russia, commerce has also seen an increase in friction.
The two nations' trade relations have been a topic of controversy, and recently, the animosity between them has risen. The turning point in this situation came when US President Donald Trump threatened China with increased import taxes in America or a temporary total boycott of Chinese goods after China inflated exchange rates with respect to the American Dollar to boost Yuan, their currency, well in the international market. One thing led to another, and following a recent American president's strike, the Trump administration placed a higher tax duty on $35 billion worth of Chinese goods, creating a severe market squeeze in China.
Well, the reasoning is straightforward. The US consumer will switch to buying domestically made items once the very affordable Chinese goods become too expensive for them to purchase. This will boost the US manufacturing sector and force the Chinese market and supplier out of the US market as well. China, on the other hand, responded right away. The Chinese government denounced this US action, calling it the greatest trade war in history. The Chinese government then levied a 25% tax on $35 billion worth of US imports of goods like automobiles to equal what the US did and to balance the books (Aleem, 2018).
Reason Behind Trade War
One way the US government justified their action was as retaliation for the act of secondly as a response to China's policy of forcing American corporations into reviving technology in exchange for market, by increasing the FOREX rate for Yuan with respect to the Dollar. Despite the fact that the practice has been extremely immoral, these trade obstacles will have an impact that will hurt China more than it will hurt the US.
But this is only the very tip of the iceberg. The situation is out of control and much worse than anticipated. Both countries' markets have been significantly impacted, but China has seen the biggest effects.
Fig 1: State of US trade with China
The Chinese Economy and Market
A socialist market economy exists in China. Public ownership and state-owned markets are the foundation of this type of market. This strategy, which emphasizes everyone having their own part, is based on Marxist doctrine. Since China has a closed economy, it is extremely challenging for businesses from around the world to enter its market. As a result, China frequently receives criticism from the international community under the pretext of trade restrictions (Eckart, 2016).
Fig2: China GDP
China Growth Statistics
China is reputed to be the only nation to have a developed economy that is reported to have removed the greatest number of individuals from the labour force while still creating middle class customers. While China has been successful in accomplishing these feats, it has also come under fire for its tough and immoral approach against businesses that are not from China, particularly any corporation from the United States.
The US-China Face-Off
The American people and the cultures in the western economies have not taken this well. China has received numerous warnings for these actions, but last July, President Donald Trump took action and enforced the new tariff law, denying China access to a sizable market in America and ultimately causing a minor but noticeable economic crisis.
The US-China Face-Off
While economists from all over the world have praised China's rapid rate of development, this rapid change has also brought about a number of other changes, including a rapid and high rate of urbanization, higher consumer demand globally, an increase in work load, challenges to environmental sustainability, and external imbalances brought on by the feverish desire to achieve lofty target goals. China is now in a precarious position from which it cannot escape and must finally satisfy all demands, from those of foreign consumers to those of its own people.
Impacts of the Trade War On World Economy
The United States and China are two of the most significant and powerful economies in the world, and their integration has led to some fairly well-established regulations and opened markets for both of these countries as well as the rest of the world. Even if the US-China trade war is still in its early stages, it has already had an impact on people, organisations, and nations all over the world, particularly these two countries.
Fig 3: Widening Trade Gap
The countries' willingness to accept the defeat and refusal to give in to ego by finding a middle ground is astonishing. Both of these nations are confident in their capacity to diplomatically convene, identify answers to the issue they are currently experiencing, and mutually relieve one another without incident (Tahn, 2018). Due to the global financial crisis, both of these nations are now in the centre of attention, making them the champions of the cause. It seems as though people have begun to anticipate that they will be the cause of the current financial crisis and that they will also be responsible for its resolution. It is perplexing that now, only two of the world's 180 independent nations are credited with maintaining global economic stability. In fact, the United States and China represent both the causes and risks of global macroeconomic imbalances. The majority of the blame for the current crisis may possibly rest with U.S. regulatory and macroeconomic policies (Prasad, 2009).
Solutions to the Problem
A very deliberate and nonviolent strategy must be used to bring about peace in the situation. Due to the fact that its manufacturing and production sector will take a significant hit as a result of what president Donald Trump has done, China will likely suffer the most from this trade war. The output of Chinese goods will increase significantly if America stops buying from China, resulting in a market deficit for both nations. Despite having a socialist economy and a restricted market, China is unable to soften the impact of the American blow. There are various simple ways that both the United States and China can resolve this conflict, but it will be impossible to do so without causing diplomatic turbulence (SOlomon, 2016)
Problem in Leadership and its Effect on Economic Situations
The attitude problems of both countries' leaders might also be blamed for this issue. Even though the leaders are aware of how this crisis will affect both their countries and the global economy, none of them are willing to step back. Both of these leaders must intervene as soon as possible to change this terrible situation of bigotry and irresponsibility. It is therefore crucial to see how both countries' decision-makers attempt to find a middle ground in this murky scenario without doing more harm than they already have in the benefit of both their economies and societies. If this occurs, there will be less wastage of money, resources, and commodities, and China and America can establish a more comprehensive and sustainable trade relationship (World Bank, 2017).
US-China Trade War Facts
It is now even more crucial for China to take a step back and make things right because the US was, and still is, the country's top exporter by trade volume. Otherwise, the economic collapse the country has already experienced will only worsen over time. The international community is aware of some unethical tactics China used to strengthen their currency (inflating the FOREX rate for the Yuan relative to the Dollar), which did not sit well with the USA. However, changes must be made as soon as possible to prevent a situation similar to the 2008 market collapse, except this time it will only affect China. Chinese exports to the United States increased from $100 billion in 2000 to $338 billion in 2008, while imports rose from $16 billion to $71 billion. These increases illustrate how dependent the two nations were on one another at one point in time and how the proper balance was maintained in the global economy as a result. There are a number of nations prepared to capitalise on this deteriorating relationship, but doing so would only make China's problems worse and is undoubtedly not a positive indication.
The exchange rate problem has received a lot of attention recently, and it doesn't need any more than it already has. The fact that the exchange rates of the Yuan and the US Dollar have been steadily declining shows how disastrous China's economic policies have been. Due to China's employment of protectionist policies, which make it the least liked or favoured country by foreign investors worldwide on the FDI front, the value of the Yuan has fallen as a result (Financial Times , 2018). This war has the potential to result in numerous casualties and the economic instability of not only China but also several other dependent economies. Before time runs out, the only way out of this mess is a solution-centric strategy. In the modern era, economic stability is one of the things that all world leaders look forward to most, and any incidence like this has the potential to seriously harm the growth and even bring it back down.
We may therefore draw a conclusion by comprehending how the three factors—the FOREX Rate Problem, China's Closed Market and Protectionist Policies, and the Lack of FDI and Investor Trust in China—have played a significant role in forming the world's largest trade war between America and China. Both nations need to find a middle ground to get out of the economic mess they have created, which has the potential to affect people and economies all over the world as well. The USA is merely working on lines of maintaining ethics and implementing trade rules against all the bad practises of China. Both of these nations are confident in their capacity to diplomatically convene, identify answers to the issue they are currently experiencing, and mutually relieve one another without incident (Lau, 2018). Due to the fact that China's manufacturing and production sector will be severely impacted by this trade war and that many Chinese citizens will likely lose their jobs or suffer significant financial losses, China will likely be the country that suffers the most. It is therefore crucial to see how both countries' decision-makers attempt to find a middle ground in this murky scenario without doing more harm than they already have in the benefit of both their economies and societies.
Z. Aleem (2018). In less than 500 words, explain the US-China trade battle. Citing https:// www.vox.com/world/2018/7/6/17542482/china-trump-trade-war-tariffs
J. Eckart (2016). The Chinese economy: 8 things you should know. the 8 facts regarding China's economy that were taken from https://www.weforum.org/agenda/2016/06/8-facts-about-chinas-economy/
E. Prasad (2009). The Crisis' Impact on the Economic Relations Between the United States and China. Retrieved from "The Effect of the Crisis on the U.S.-China Economic Relationship" at from https://www.brookings.edu/testimonies/the-effect-of-the-crisis-on-the-u-s-
Global Bank (2017). China World Bank. the World Bank website http://www.worldbank.org/en/country/china/overview
Business Times (2018). What is the US-China trade war and how does it affect India? Retrived from Financial Express at https:// www.financialexpress.com/economy/us-china-trade-war-what-it-is--how-it-impacts-India/1233408
D. Solomon (2016). What effects may a trade war between the United States and China have on each country's economy? Reproduced from https:// www.focus-economics.com/blog/impact /impact /impact-of-the-trade-war-between-the-us-and-china-on-their-economies.
Lau, L. (2018). (2018). How would the Chinese economy react if the US-China trade conflict worsens? These are the figures. Retrieved from "if-us-china-trade-war-escalates-how-will," " www.scmp.com/comment/insight - opinion/united-states/article/2156470"
Tahn, W. (2018). China's attempts to repair its economy are being hampered by the trade conflict. from https:// www.cnbc.com/2018/07/18/us-china-trade-wars-impact-on-chinas- economy.html
Essay on Low Minimum Wage Assignment Sample
Task: This Economics assignment's goal is to improve students' ability to construct arguments based on facts and organized reasoning, including ways for recognizing coherent group arguments that reach consensus.
The next step is to decide on the best course of action for both parties. That is, using comprehensive research and a minimum of six references from peer-reviewed journal articles, you must simulate what would be good arrangements that the affirmative and the negative teams are likely to propose. In an argumentative essay, your arguments must be organized. Be creative, engaging, and perceptive in how you present your message.
As stated in the employment essay, the minimum wage in the employment sector refers to the least amount of compensation that businesses must give wage earners for the work they do during a specified time period and that cannot be reduced through an individual contract or collective agreement. Thus, the current employment essay tackles the issue of whether a low minimum wage increases employment using reasons that satisfy both the positive and negative elements and are supported by substantial data.
Framed argument from the affirmative side
Because employers with low minimum salaries will seek more labour in the competitive labour market and may be able to hire them for the necessary or required amount of money, low minimum wages increase employment. According to David Manning & Smith (2016) in their analysis of the employment scenario essay, businesses who have steady or low minimum wages have more opportunities to hire new employees since they have enough resources to provide them a living wage while also efficiently running their businesses. Low minimum salaries help businesses in labor-intensive industries, and they will see proportionately larger reductions in pay costs.
As a result, they will be able to expand their workforce without having to worry about paying higher labour costs. Furthermore, as shown by Dube, Lester, and Reich (2016), low minimum salaries make businesses more competitive than high minimum wages because higher wages drive up expenses that could force businesses out of business if they cannot afford the labour costs. Therefore, this becomes the main issue for businesses that compete on the global market since the higher minimum salary renders them less competitive than the lower minimum wage and forces the business to manufacture its goods in nations with inexpensive labour rather than its own. As a result, the unemployment rate declines, and the company tries to implement the low minimum wage approach.
According to Engbom & Moser (2018) in their employment essay, low minimum wage rates contribute to cost-push inflation because they force businesses to incur higher costs that are more likely to be passed on to clients. This is especially true if wage differentials are kept at a healthy level. As reputable businesses have the opportunity to hire them with an acceptable amount of legal salary because no one is deprived of their wage rights and improves their employment, the low minimum wage aids in the reduction of people working in the black market. By giving them secure employment and raising the income of the low wage groups, the low minimum wage helps the poor by giving them higher benefits. Thus, the low minimum wage benefits those who earn a second income because, if one member from each household is given the option to work for less than the legal minimum wage, they will be able to support their families and lift them out of poverty. Therefore, Harasztosi & Lindner (2019) believe that there are some benefits to low minimum salaries, which are covered in the following section of the employment essay.
• It affects jobs in the marketplace of international trade.
• It discourages the use of the illicit market by giving everyone access to legitimate jobs and wages.
• It enables any company in a given nation to pay employee wages and hire an increasing number of workers.
• As a result, prices dropped as the firm passed on stable or declining wages. Additionally, regional wage balances contribute to higher first-line effectiveness and productivity on the global market.
Can you provide a framed argument from the negative side in regards to the case scenario of employment essay?
According to Lindner, Zipperer, Dube, and Doruk (2019), a higher minimum wage has a greater impact on reducing unemployment than a lower minimum wage because it encourages workers to work more and earn more money in order to live luxurious lives and escape poverty. Consequently, the increased minimum wage has the following benefits:
Reduction of poverty: The lowest-paid worker's income is increased by raising the minimum wage to higher rates, which helps this worker achieve a stable income status and lessen relative poverty.
Increased productivity: According to the principle of efficiency pay, higher minimum wage rates encourage workers to put in more effort, which in turn boosts labour output (Meer & West, 2016). Thus, it is made clear in the employment essay that if businesses must pay their workers more wages, they may focus more on raising labour productivity, which boosts the effectiveness of the nation's economy.
Increases the incentive and job acceptance: With greater minimum wages come significant variations in the quality of benefits and take-home pay. The high minimum wage encourages participation because the benefits and facilities at work are better and more valuable.
Increase in investment: As labour costs rise, businesses will be more motivated to invest, which will also result in an increase in labour productivity. Long-term, the high minimum wage encourages more investment and higher labour productivity. Instead than only competing with the low minimum wage, that economy is founded on the high added value.
Knock-on impact of the minimum wages: The employment essay looked at Raissian & Bullinger's (2017) opinions on the knock-on effects of the minimum wages. They found that even though only 5% to 7% of workers are paid the minimum wage, this has an indirect impact on those workers' earnings who are paid more. In order to preserve the pay premium for the experienced and highly trained workers, the firms may need to raise the wages for those who are earning more than the minimum wage rates.
Counterbalance the impacts of the monopsony workers: If corporations have this power, they would employ far fewer people, which will drive down wages. As a result, the low minimum wages make it very difficult for labourers to work for the company. Therefore, the high minimum wage may benefit the amount of employment.
According to the evidence presented above in this essay on employment, it can be concluded that the low minimum salaries would contribute to the creation of jobs for people living in that country. The minimum wage helps the businesses incur the necessary funds to hire more and more workers, which helps to increase the employment level of the specific area and gives the worker the legal wage they deserve, as can be seen in the employment context essay above. Due to the population's benefits from employment in many industries and their ability to work hard to lower their families' poverty levels, this aids in reducing the level of poverty in the nation. While high minimum wages weaken businesses since they may run out of money to hire more and more staff while also needing to hire a lot of experienced personnel while forcing low-rated employees to depart from their positions because the company could not pay them.