7C001 current labour market trends in the supply of and demand for skills


Question 8

Explain how the management of people tends to vary depending on whether a labour market is tight or loose. Illustrate your answer with examples from your own observations and your reading.


The scope in which management of people tend to vary based on tight or loose labour market is informed by the demand and supply of labour. In George (2021) factsheet, the labour demand is measured through the use of number of people in work (employment), how much they work (hours) and the number of unfulfilled job opportunities. The supply is identified through the employment and the individuals number sourcing for work opportunities. Adopting the definition of Eeckhout (2022), the tight labour market is characterized by an economy close to full employment and recruitment becoming a challenge leading to an upward pressure on wages. Conversely, the loose labour markets prevail in an event there are more underemployed/unemployed candidates compared to available job openings. For instance, Office for National Statistics (2021) note that as a result of the prevalence of COVID-19 pandemic, the UK labour market is currently all time tightest in all decades. For Saudi Arabia where Almarai organization operates, Alhamad (2014) identify the market as being loose as 30% of the Saudi Arabia population is 27.3 million being immigrants. Hence, in UK, since the labour is in high demand, labour market is significantly tight with unemployment rates being low with multiple unfilled job opportunities. Hence, the employers are prompted to increase their competitiveness for employees and demanded skills. In Saudi Arabia on the other hand, the high rate of labour supply leads to loose markets with less opportunities and immense job seekers. Hence, the employers leverage in an increased power and skills are plenty in supply.


In both tight or loose labour markets, the management of people tend to vary. In supporting this view, George (2021) factsheet found that the economic conditions which determine whether a labour market is tight or loose offer background of daily operations of people practice professionals. In Almaria for instance, their operations in GCC region is influenced by occurrences in the macro economy. In the current COVID-19 pandemic, the loose nature of KSA business environment has altered their resourcing approaches, retention and development for clients demands attainment.

Strategies in Tight Labour Market

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