Economics and Business of Insurance Assignment Example | Topics and Well Written Essays - 2000 words - 1

Economics and Business of Insurance - Assignment Example The minimum wage law formulated by the government in London sets the wage above that dictated by market forces. This results in employers hiring few labourers than what they would have employed without the prefixed minimum wage. Examples abound in hotels, restaurants and catering outlets marked by high number of vacancies (Munday 60). Another point that has been identified by Toporowski is that the city politics in U.K. has often led to inefficient resource allocation, thereby resulting in a sub-optimal path of capital accumulation and industrial development (Toporowski 143). According to Economic and Research Council Report 2004-2005, productivity performance of U.K. is not very impressive. U.K. has been haunted by productivity gap for a long time, compared to other countries of the European Union. A number of reasons have been upheld by the Council, which are considered as probable reasons for this less productive nature. They are investment and innovation failure; poor labour relations; over-regulation of business; and lack of entrepreneurship. These factors have kept productivity of the labour low; which in turn has adversely impacted growth of the nation. The problem of productivity gap can be divided into three stages of time; the first phase occurred in 1945, the second in 1973 and the final one in 1990s. This productivity gap exists in the present scenario. The comparison with other European Nations had revealed that in countries like, France and Germany, the capital invested per worker is higher than in U.K. The labourers in these countries also possess higher level of skills compared to U.K. The works of Stephen Broadberry and Mary O’Mahony suggest that long-run stable investments in physical and human capital are necessary for productivity growth. Labour productivity can be hugely boosted if these areas are worked on properly. This report also highlights a host of factors that can contribute to