thumb|upright=1.6|The [[Economic activity rate|labour force participation rates of developed nations as of 2021]]

In macroeconomics, the workforce or labour force is the sum of people either working (i.e., the employed) or looking for work (i.e., the unemployed):

<math>\text{Labour force} = \text{Employed} + \text{Unemployed}</math>

Those neither working in the marketplace nor looking for work are out of the labour force.

The sum of the labour force and out of the labour force results in the noninstitutional civilian population, that is, the number of people who (1) work (i.e., the employed), (2) can work but do not, although they are looking for a job (i.e., the unemployed), or (3) can work but do not, and are not looking for a job (i.e., out of the labour force). Stated otherwise, the noninstitutional civilian population is the total population minus people who cannot or choose not to work (children, retirees, soldiers, and incarcerated people). The noninstitutional civilian population is the number of people potentially available for civilian employment.

<math>

\begin{align}

\text{Noninstitutional civilian population} &= \text{Labour force} + \text{Out of the labour force} \\

&= \text{Employed} + \text{Unemployed} + \text{Out of the labour force} \\

&= \text{Total Population} - \text{People who cannot work}

\end{align}

</math>

The labour force participation rate (LFPR) is defined as the ratio of the civilian labour force to the noninstitutional civilian population.

<math>\text{Labour force participation rate} = \dfrac{\text{Labour force{\text{Noninstitutional civilian population</math>

Formal and informal

thumbnail|Workers leaving the [[Tampella factory in Tampere, Finland in 1909]]

Formal labour is any sort of employment that is structured and paid in a formal way. They are paid formally using payrolls paper, electronic card and alike. Unlike the informal sector of the economy, formal labour within a country contributes to that country's gross national product. Informal labour is labour that falls short of being a formal arrangement in law or in practice. Labour inherit may come as formal or non-formal, an employee old enough but below retirement age bracket passing on to his children. It can be paid or unpaid and it is always unstructured and unregulated.

Informal labour

The contribution of informal labourers is immense. Informal labour is expanding globally, most significantly in developing countries. According to a study done by Jacques Charmes, in the year 2000 informal labour made up 57% of non-agricultural employment, 40% of urban employment, and 83% of the new jobs in Latin America. That same year, informal labour made up 78% of non-agricultural employment, 61% of urban employment, and 93% of the new jobs in Africa. Particularly after an economic crisis, labourers tend to shift from the formal sector to the informal sector. This trend was seen after the Asian economic crisis which began in 1997. According to the ILO's 2016 employment analysis, 64 percent of informal employment is in agriculture (relative to industry and services) in sub-Saharan Africa. and are also prevalent among owners of micro, small, or medium-sized enterprises (MSMEs).

Globalisation of the labour market

The global supply of labour almost doubled in absolute numbers between the 1980s and early 2000s, with half of that growth coming from Asia. At the same time, the rate at which new workers entered the workforce in the Western world began to decline. The growing pool of global labour is accessed by employers in more advanced economies through various methods, including imports of goods, offshoring of production, and immigration. Global labor arbitrage, the practice of accessing the lowest-cost workers from all parts of the world, is partly a result of this enormous growth in the workforce. While most of the absolute increase in this global labour supply consisted of less-educated workers (those without higher education), the relative supply of workers with higher education increased by about 50 percent during the same period.

thumb|263x263px|[[Convergys call center in Baguio, the Philippines (example of a third party outsourcing firm)]]

Under the "old" international division of labor, until around 1970, underdeveloped areas were incorporated into the world economy principally as suppliers of minerals and agricultural commodities. However, as developing economies are merged into the world economy, more production takes place in these economies. This has led to a trend of transference, or what is also known as the "global industrial shift ", in which production processes are relocated from developed countries (such as the US, European countries, and Japan) to developing countries in Asia (such as China, Vietnam, and India), Mexico and Central America. This is because companies search for the cheapest locations to manufacture and assemble components, so low-cost labor-intensive parts of the manufacturing process are shifted to the developing world where costs are substantially lower.

But not only manufacturing processes are shifted to the developing world. The growth of offshore outsourcing of IT-enabled services (such as offshore custom software development and business process outsourcing) is linked to the availability of large amounts of reliable and affordable communication infrastructure following the telecommunication and Internet expansion of the late 1990s.

See also

References

Sources

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  • About the difference, in English, between the use/meaning of workforce/work force and labor/labour/labo(u)r pool