Work is the effort that people contribute to the production of goods and services. Job resources include the work done by the waiter who brings your food to a local restaurant, as well as the engineer who designed the bus that takes you to school. However, the PIAAC estimates that imbalances between supply and demand for skills in the labor markets of OECD countries are widespread and coexist with high levels of unemployment. It was this segregation of the labor market that Piore and Doeringer called the “dual labor market”.
For this reason, demand may exceed supply in certain sectors, even if supply exceeds demand in the labor market as a whole. The macroeconomic view of the labor market can be difficult to capture, but some data can give investors, economists and policy makers an idea of their health. According to macroeconomic theory, the fact that wage growth lags behind productivity growth indicates that the supply of labor has exceeded demand. To better understand the political issues affecting skilled technical labor markets, the following two sections examine dynamics in two sectors with a large number of skilled technical occupations: health care and manufacturing.
Also known as the labor market, the labor market refers to the supply and demand for jobs in today's economy. When that happens, there is downward pressure on wages, as workers compete for a small number of jobs and employers can choose between the workforce. Microeconomic theory analyzes labor supply and demand at the level of the individual company and the worker. To better understand the separation defined by the dual labor market, it is useful to know how the labor market itself influences the economy.
These incentives, which are discussed in more detail in the following chapters, have important implications for labor market compensation, where demand matches supply, in specific locations and sectors. The labor market, in particular, includes the threat of automation as computer programs gain the capacity to perform more complex tasks; the effects of globalization, since improved communications and better transport connections allow work to cross borders; the price, quality and availability of education; and a whole range of policies, such as the minimum wage. Smart policy responses require local labor market analysis that current labor market information systems do not adequately support. Therefore, forecasts of future labor demand are used only to limit the problem and provide context, rather than to specify the exact number of workers who will be required in the future.
The unemployment rate is based on the percentage of people who are not employed but are actively looking for work, as a percentage of the total workforce. The labor market information system makes it very difficult to accurately measure changes in the skilled technical workforce.