3.3 Workers

2026 Syllabus Objectives

By the end of this topic, you should be able to:

  • 3.3.1 Explain the wage and non-wage factors that affect an individual's choice of occupation
  • 3.3.2 Explain how demand and supply, relative bargaining power, and government policy (including minimum wage) determine wages
  • 3.3.3 Explain why there are differences in earnings between skilled/unskilled, primary/secondary/tertiary, male/female, and private/public sector workers — and draw, label, and interpret labour market diagrams showing changes in demand and supply
  • 3.3.4 Explain the advantages and disadvantages of division of labour and specialisation for workers, firms, and the economy

3.3.1 Factors Affecting an Individual's Choice of Occupation

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When a person chooses a job, many things influence their decision. These can be grouped into wage factors (money-related) and non-wage factors (everything else). In reality, most people weigh up both before deciding.

There are also limiting factors — things that restrict which jobs a person can even choose from in the first place.

Wage Factors

Wage factors are all the financial (money) rewards a worker receives. These include:

  • Wages — Money paid per hour or per week. For example, if you earn $10 per hour and work 6 hours a day, 5 days a week, your weekly wage is $300. Wages are a variable cost for the firm — they go up or down depending on hours worked.

  • Salary — A fixed annual amount (e.g. $12,000 per year) divided into equal monthly payments ($1,000 per month). The number of hours worked might vary, but the pay stays the same. Salaries are a fixed cost for the firm.

  • Piece rate pay — Workers are paid a fixed amount for every unit they produce. For example, if a worker is paid $1 for every bat they make and produces 10 bats, they earn $10. This encourages workers to produce more.

  • Commission — A percentage of the value of a sale. For example, if an estate agent sells a house for $100,000 and earns 5% commission, they receive $5,000. This is common in sales roles and motivates workers to sell more.

  • Bonus — A lump sum (one-off payment) on top of a salary. It is usually paid when a company makes high profits or when a worker performs exceptionally well.

  • Overtime pay — Extra pay for working more than the standard working week, usually at a higher rate than normal pay.

  • Performance-related pay (PRP) — Payment based on how well you perform. Two workers doing the same job might earn different amounts depending on their results.

  • Share options — Workers are given shares in the company they work for, in addition to their salary. The value of shares can rise and fall, so this is a way of linking pay to the company's success.

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