Employers have several functions on the labour market. They determine the demand for labour, affect wage formation and create work environments. Knowledge about what affects the employers’ actions is important in order to understand the functioning of the labour market, overall as well as at the individual level.

Recruitment and wage formation

Employers’ demand and labour supply meet on the labour market. What happens when there is a sudden change in supply or demand? Under what forms are recruitments made? Research shows that recruitment is often made through networks and other informal channels rather than through the Employment Agency.

There is an increase in the importance of temporary work agencies, while permanent positions become less common. The recruitment patterns are connected to wage formation. Here, employers have an impact both at the local and the central level where employers’ organizations make collective agreements and act in accordance with the labour legislation.

Work environment

Employers also create work environments. Among other things, research is here dealing with the work environment as a means of competition – by making investments in the work environment, health and the possibility of developing one’s skills, the employer can make the work place attractive to certain groups of job seekers. This might, for example, take place through investments in the physical work environment, by development of the employees’ skills (staff training) and by investments in the health of the employees. Such measures might also be of interest for the employer since they can also have an effect on the profitability of the firm.


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