Task 4 Business Leaders often say that there is a Shortage of Skilled Workers
How do unregulated markets cure a “labor shortage” when there are no immigrants to boost the labor supply?
Unregulated labor market refers to situation where the forces of demand and supply are allowed to determine the wages without external interference. Generally, workers will always go for better pay while employers will always seek to engage the most skilled employee. When the supply of skilled labor is high, the employers tend to offer lower salaries Cassey et al., 2018). On the other hand, when there is a shortage of skilled workers, the few qualified workers tend to demand higher salaries. If immigrants are not allowed to boost the labor supply, the available skilled labor continue to enjoy higher wages for a considerable duration. The high salaries motivate more people to acquire the necessary skills and join the labor force. As a result, the labor supply increases and the compensation reduces until the point of equilibrium is established where labor supply is equal to demand Brady et al. (2016)
Why are businesses reluctant to let unregulated markets cure the shortage?
Businesses are reluctant to allow unregulated markets to “cure the shortage” of labor because they do not like paying higher wages. Instead, they would rather seek labor from foreign markets. Moreover, businesses that are still struggling to grow are reluctant because higher wages to their employees means an increase in their expenditure. It also means businesses may be forced to raise consumer prices on their goods or services or reduce the costs of business (Howell & Kalleberg, 2019). Their reluctance is based on the possibility of business failure in the long run.
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