WHAT IS THE LABOUR MARKET?
The labour market is the informal mechanism where the demand (need for specific types of workers) and supply (available workforce with the corresponding knowledge, skills, and ability) of labour interact. A labour market could be any type of functional economic region — a community, a city, a region, a country, or a larger area.
The supply of labour includes all those who are either working or looking for work (that is, all those who are participating in the labour force).
Demand for labour is driven by the demand for employers’ products (sometimes called consumer demand), export demand, and government policies among other factors, all of which are strongly interrelated. For example, an increase in the demand for construction workers because of a major construction project will result in an increase in demand for workers in other sectors, such as those that supply building materials, transportation, and hospitality and retail.
The labour market can experience both “shortages” and “surpluses”. Typically this occurs because of skill mismatches, immobility of the labour force, and incomplete information about both workers and employers.
What is LMI?
Labour market information (LMI) is data about the supply and demand for labour within a certain region. LMI primarily covers industries, occupations, and demographics. It describes the characteristics of the supply of labour: the people who are workers or potential workers in the market. It also provides information on demand: job opportunities in the market and the needs of employers. Future needs of existing employers and of new employers who will enter the market are also considered within LMI.
Often, a wide range of information must be collected and analysed to describe important features of the labour market. LMI often gives historical, current, and forecast information.
The labour market participation rate and the supply of labour are influenced by demographics such as the number of working-age people. The conditions of the economy in general and in the labour market, the likelihood of finding work, education levels and a host of other variables influence the participation rate and supply of labour.
Excerpts from: The Labour Market Handbook: An Introduction to the Labour Market, South West Observatory Skills and Learning Module, 2010.
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