Syllabus: OCR - GCSE Economics
Module: 2. The Role of Markets and Money
Lesson: 2.7 The Labour Market

Introduction

This article focuses on Section 2.7 of the OCR GCSE (9–1) Economics (J205) syllabus, exploring “The labour market” as part of the wider theme “The role of markets and money”. The topic gives students a chance to see economics applied to real-world issues they care about: jobs, wages, and working conditions. It’s a key link between theory and life beyond the classroom.

For teachers and SLT, this unit opens strong opportunities for both cross-curricular relevance (e.g. careers education, PSHE) and curriculum coherence, connecting earlier concepts such as demand, supply, and price to the labour market. It also directly supports Gatsby Benchmarks by helping students understand how wages are set and how career choices relate to market forces.

Key Concepts

Students studying this topic should be able to:

• Explain the role and operation of the labour market, including how workers and employers interact.

• Analyse how wages are determined by supply and demand, including the concept of equilibrium wage.

• Identify and explain factors affecting labour supply and demand, such as skills, education, working conditions, and demographics.

• Explain and calculate gross and net pay, including deductions such as income tax, National Insurance and pension contributions.

These concepts help students understand the mechanisms that affect their own future job choices, earnings, and economic independence.

Real-World Relevance

This topic resonates strongly with students’ lived experience and current affairs:

• Minimum wage policy: The UK’s National Living Wage changes regularly. Debates about whether it keeps up with inflation or improves living standards are highly relevant and media-visible.

• Strikes and shortages: Teachers, nurses, rail workers—all have featured in recent strikes. These examples illustrate the interaction between labour demand, working conditions, and wage negotiations.

• Gig economy: Jobs at Uber, Deliveroo, and Amazon Flex demonstrate the impact of flexible contracts, automation and platform technology on wage determination and job security.

Discussing these real-world contexts helps bring abstract theory to life and supports deeper engagement.

How It’s Assessed

This topic is commonly assessed in the form of:

• Short-answer or define questions, such as “What is meant by net pay?”

• Data response questions, e.g. interpreting wage trends or employment rates.

• Analysis questions, like “Analyse how an increase in the demand for skilled workers would affect wages”.

• Evaluation questions, requiring balanced judgement, such as “Evaluate the impact of a national minimum wage on workers and employers”.

Command words include: explain, analyse, calculate, evaluate, and draw. Calculations are often based on pay slips, tax rates, or simple graphs. Students benefit from structured practice in interpreting pay-related data and applying logical reasoning.

Enterprise Skills Integration

The labour market unit is ideal for fostering decision-making, financial literacy and analytical thinking. These are core elements of Enterprise Skills’ Business Simulations, where students take on roles such as HR or operations leads and decide how many staff to hire, at what wage, and with what working conditions.

Students learn to:

• Balance wage costs against productivity

• React to labour shortages or strike risks

• Understand trade-offs between investing in people and controlling budgets

It moves them beyond textbook theory and into the mindset of real business decision-makers.

Careers Links

This unit directly supports Gatsby Benchmarks 2, 4, 5 and 6, helping students understand:

• How wages are set

• Why job markets differ across sectors and regions

• The real meaning of take-home pay

• How to compare offers and employment types

Relevant job sectors include HR, recruitment, employment law, trade union work, payroll administration, and economic consultancy. Teachers can easily link lessons to broader career questions such as “Which jobs are in demand?” and “What qualifications affect your earning potential?”.

Teaching Notes

Practical tips:

• Start with the familiar: Use real payslips (anonymised) or mock payslip tasks to explore gross vs. net pay.

• Visualise supply and demand: Apply earlier knowledge from product markets to wage setting, using diagrams and role play.

• Use recent news: Headlines about strikes or job shortages make excellent prompts for analysis or evaluation.

Common pitfalls:

• Oversimplifying wage setting: Students may assume wages are “decided” by employers. Emphasise the role of both demand and supply.

• Confusion between gross and net pay: Scaffold examples carefully and build in calculator use where needed.

• Forgetting the link to earlier learning: Reconnect to demand and supply topics—this isn’t a standalone module.

Extension ideas:

• Run a simulation: Use Enterprise Skills’ labour-focused activities within Business Simulations to explore hiring and retention decisions.

• Invite a guest speaker: A local employer or careers advisor can help demystify recruitment processes and wage offers.

• Research task: Students can look up average UK wages for different sectors and compare job requirements, benefits and take-home pay.