Contribution to Graphical Representation of the Selected Issues of the Labour Market

Abstract

Purpose of the article: A correct understanding of mechanisms governing the market is crucial for proper functioning of the labour market. The market structure phenomenon, so far most frequently described in the imperfect competition theory as a bilateral monopoly, occupies a unique position in this respect. The purpose of this paper is to specify the complexity of market structures in terms of the demand for labour and the consequences on wage rates and the number of employed labourers.

Methodology/methods: Applying the method of graph theory.

Scientific aim: This paper aims to compare the resulting wage rate agreed upon by a trade union monopoly and oligopsony (both cooperative and non-cooperative) of employers, or a trade union monopoly and monopolistic competition of employers in contrast with a bilateral monopoly while using graphical tools.

Findings: In the Czech labour market context, 13 per cent of all employees, which means less than 700,000 people, are unionized. In 2023, 14 of the 15 largest employers in the Czech Republic had unions that bring together the employees of these companies. The food industry and the five basic foods – butter, milk, eggs, chicken and flour – illustrate the oligopolistic market structure and the distribution of market power across the vertical: among farmers, in food production and in trade.

Conclusions: The impact of market structures on the resulting wage rate and the number of employed labourers is very noticeable and differs under monopsony, oligopsony, and monopsonistic competition The type of market structure significantly affects the manoeuvring space for trade unions to negotiate a final wage rate in their position of an assumed labour supply monopoly.