Demand and Supply of Labour in Asia.

 Introduction

Workers prefer to work when the wages are high, and companies prefer to hire when the wages are low. The labour market equilibrium "balances out" this conflict in the desires of workers and firms and aids in determining employment levels and wages that are observed in the market. Based on an empirical review, it is held that in a well-functioning market, the demand for labor is inversely related to the price of labor, while the supply of labor is directly related to the price of labor (Nickell, 2007). The implication here is that the higher the price of labor, the lower the demand and the higher the supply. However, it was pointed out by Jones (2011) that the demand for labor is not only influenced by the direct cost, as the indirect costs also have their own influence.

In any case, this paper is focused on the discussion of factors that influence labor demand and supply in the Malaysian aviation industry and the sources of information required to ensure that labor demand and supply in this industry are clearly understood by organizations that operate in it. The company in review is AirAsia, a company founded in 2001 with the mission of allowing everyone to fly, and has since delivered world-class services at low fares to over 500 million guests across the Asia-Pacific region, proving that low cost doesn’t translate to low quality and air travel doesn’t have to be costly (AirAsia, n.d.).

AirAsia: Critical factors influencing labour demand in AirAsia

Based on a long-standing view within the context of the labour market, the demand for labour is mainly a product of an increase in the price of the said labour. That is to say, if other things are held constant, an increase in the wage for a given worker would result in a higher demand for the said worker and vice versa (Nickell, 2007). However, this is not always the case nowadays, as modern employees are concerned with more than just money.There seem to be other factors that influence their demand for labor, which include the ability of the company to aid their self-actualization, opportunities for growth and promotion, and other incentives that might not be money-based. Recently, focus has also been geared towards understanding the influence of work-life balance on labour demand (Nickell, 2007).

As pointed out by Revenga and Bentolia (2015), the demand for labor is also a product of the changes in the employment rate. The authors assessed a sample of 11 OECD countries and discovered that there was a significant difference in the link between employment and output in these countries, and that this relationship was also affected by the extent of competition in the labour market. However, what is generally held constant by these authors is that the demand for labour is affected by the production levels, as an increase in consumption, which would result in an increase in production, would also demand a subsequent increase in labour.

Roberts (2005) also pointed out, somewhat in support of the view held by Ngure (2012), that the demand for a job is also a product of the employment brand strategy that a company has. That is to say, when the company is able to communicate the value associated with working with them, the employees will potentially gain interest, and this would result in higher demand for their job. The company can do this by promoting their job options through different mediums. This is the major factor that is influencing demand for jobs in AirAsia, as the company has successfully created an employment brand strategy, one that has employees seeing them as the rightful place to work. For any employee, the aviation industry in general is very attractive because of the nature of work that is undertaken in this sector, which makes demand generally high. On the same note, the company promotes its job opportunities through different channels, leading to further interest from the labor market and making it easier as well as cost-effective for them to hire new staff and retain existing ones.

Critical factors influencing AirAsia's labor supply

Earlier on, it was pointed out that the supply of labour is a result of the cost of the said labour. That is to say, if the cost of acquiring a new laborer is low, the supply will be higher and vice versa. This view was supported by the work of Roberts (2005), where it was pointed out that there are some important costs involved when selecting people. These costs can come in the form of hidden costs associated with time and efforts that are put into sifting through the information on the new person as contained in their CV, assessing their references, and making plans for the official interview. They can also be the more visible costs of the time that is spent interviewing the successful candidates, or they could come in the form of the cost of test materials or other associated costs like that of relocating a new person (Roberts, 2005). Overall, the supply of labour is a product of costs, as companies will always look at the skills necessary for such.

In any case, the view of Roberts (2005) is only applicable within the conventional labour market and in a traditional company. In the aviation sector, and in AirAsia in particular, the supply of labour is not entirely a result of the cost associated with such labour. This is because the company operates in a special service industry where skills and competencies are considered pivotal. In the aviation industry, the major focus of airlines is creating efficiency through quality service to the customers, and this quality service demands extraordinary skills and competencies as well as the ability of the company to ensure the overall safety of the passengers when travelling. Therefore, it is possible that the company might look beyond price and be willing to employ staff at an expensive cost in order to provide the consumers with their demanded service options (Ngure, 2012). There are clear standards that each company in this industry is mandated to follow, and adherence to such is not something that they can do by employing unskilled or poorly skilled staff, which means that they will have to look beyond the concept of price (although it is still put into consideration).

Information and data are necessary for understanding labour demand and supply

In the work of Mei-Tai (2011), it was pointed out that the first step a company should take to understand labor demand and supply is to forecast it. In forecasting, the company is trying to visualize its demand for labor and the supply of such labor as well as the surplus and shortage associated with it in the future. In the event that there are surplus demands for its labour, the company is at an advantage because it can better negotiate the price of the labour. The reverse is the case in the event of a shortage demand for its labour.

Snell et al. (2016) pointed out that companies can source this information internally or externally. Normally, companies have a dedicated website for the submission of CVs, and this is an internal source of data for them. On the same note, they have recruitment service providers at their disposal, and this represents a source of external data for them. Finally, they can also engage in numerous research and assessment projects to understand the factors that are influencing the demand and supply of labour within their industry and company in general. This is also the same case for AirAsia.

Conclusion

Overall, this paper has looked at the factors that influence labour demand and supply in the aviation industry by focusing on AirAsia. Based on the above discussions, these factors are now beyond the traditional view held by Roberts (2005), where it is noted that the demand and supply of labour is a product of the price of labour. That is to say, there will be higher demand and lower supply in the case where employees earn more and vice versa. In the case of AirAsia, it was pointed out that the demand for labor is being affected by other incentives beyond money, like: opportunities for self-actualization, growth, and promotion, as well as the employment brand strategy of the company that has now positioned them as the right place to work in the minds of the labour market. In terms of supply for labour, it was also pointed out that price is not always that important (although it is considered during recruitment) in AirAsia because they operate in an industry that is highly technical and the job of providing quality services and safety assurance for customers is not something the company can toil with. Thus, the company can sometimes compromise on price in order to have the right labor for their work. In conclusion, it was pointed out that in order to understand labour demand and supply, the company can source information through different channels. For instance, they can conduct research in the labor market, review their present capabilities, forecast required future capabilities, and assess demand and supply opportunities (such as voluntary job switching) within their sphere.

References

AirAsia (n.d). About us. Retrieved from: https://newsroom.airasia.com/about-us [Retrieved on: 4th April 2019].

Jones, E.B. (2011) “Union/non-union differentials: Membership or coverage?‟, Journal of Human Resources 17(2)

Mei-Tai, Chu. (2011) ‘Human resource planning and human resource information systems.' In : Human resource management : strategy, people, performance / Robin Kramar, Tim Bartram and Helen De Cieri. 4th ed. North Ryde, Sydney : McGraw-Hill Australia Pty Limited, 2011. Chapter 7, pp. 211-253

Ngure, W. A. (2012). Determinants of labour turnover among the micro finance institutions in Kenya (Doctoral dissertation).

Nickell, S. (2007). “Unemployment and labour market rigidities: Europe versus North America”, Journal of Economics Perspective, 11(3), 55-74.

Revenga, A. & Bentolila, S. (2015) „What affects the employment rate intensity of growth?‟, Working Paper 9517, Banco de Espana, , 5-19.

Roberts, G. G. (2005) 'Attracting People' In : Recruitment and selection. Gareth Roberts. 2nd ed, London : Chartered Institute of Personnel and Development, c2005. Chapter 11, pp. 88-97

Snell, Scott A., Morris, Shad S., and Bohlander, George W. (2016) 'Strategy and human resources planning.' In : Managing human resources / Scott A. Snell, George Bohlander, Shad Morris. 17th ed. Australia : Cengage Learning, 2016. Chapter 2, pp. 38-86