Saturday, February 17, 2007

Labour Monopsony

[A "monopoly" of supply is called a monopsony.]

This article argues that labour market deregulation is bad for workers. Many unions (the world over) also make similar points.

When listening to these arguments one point should be kept in mind. There is a dichotomy between a nation's workers and its total workforce. In Indonesia just over half the workforce is unemployed or underemployed.

A more deregulated, properly working labour market would give a majority of the Indonesian workforce the opportunity to work hard and earn a decent living for their families.

One of the salient obstacles is that labour unions (who represent those in steady jobs) are better organised and have louder voices than the less fortunate majority.

The labour union's stance is perfectly understandable as their members are the ones with steady jobs, however their points are often disingenuous and one should keep in mind the broader picture.

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