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1.1 Background of the Study


Labour economics seeks to understand the functioning and
dynamics of the markets for wage
labour. Therefore, wage
labour is defined as delivery of services by person for payment. Wage labour is the socioeconomic relationship between a worker and an employer, where the worker sells his or her labour power under a
formal or informal employment contract. These transactions usually occur in a labour
market where wages are market determined. A labour market is
the place where workers and employees interact with each other. In the labour
market, employers compete to hire the best, and the workers compete for the
best satisfy job. A labour market in an economy functions with demand and
supply of labour. In this market, labour demand is the firm’s demand for labour
and supply is the worker’s supply of labour. The supply and demand of labour in
the market is influenced by changes in the bargaining power. The viewpoint that
the entire economically active population (the employed plus the unemployed)
are participants in the labor market has become widespread among domestic labor
economists in recent years (Kotliar, 1998). In the past two decades, active labour
market policies have been widely adopted in developed capitalist countries,
especially OECD countries, to combat unemployment and economic inactivity  (Chris et al., 2013).

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the mixed economic situation, both of the public sector and private sector
conduct in the labour market. The
private sector is the part of a country’s economic system that is run by
individuals and companies, rather than the government. Most private sector organizations
are run with the intention of making profit. The segment of the economy under
control of the government is known as the public sector and also that portion of an economic system that is
controlled by national, state or provincial, and local governments. private
sector is larger in free enterprise economies, such as the United States, in
which the government imposes relatively few restrictions on businesses.

moving is more comprehensive in understanding when comparing movement of
employment one to another. Labours who work in private
sector attempt to move from the private sector to public sector or vice versa. Sector
switching is de?ned as when people move from the private to the public sector
or vice versa. (Bozeman and Ponomariov, 2009). Sector switching is of great
relevance to our understanding of public and private differences (Bozemanand
and Ponomariov, 2009). Which is an area with a lot of studies, but little consensus
on ?ndings (Baarspuland and Wilderom, 2011). Most studies on sector switching
have focused on the motives and consequences of switching from the private to
the public sector (Bozeman and Ponomariov, 2009; Su and Bozeman, 2009). This
research focus on to identify the movement of public sector to private sector. The thinking of switching from the
public sector to the private sector then the usual considerations of pay, job
location, the fit with career goals and the reputation of the potential employer
are some of the issues that will be evaluating (Kotila, 1998).



High standard of











Figure 1.1      Flow of the Workers

Source: Constructed by the



main objective in the private sector is Profit maximization.
A process that companies under go to determine the
best output and price levels in order to
maximize its return.
The company will usually adjust influential factors such
as production costs, sale prices,
and output levels as
a way of reaching its profit goal.
There are two main profit
maximization methods used, and they are marginal cost

marginal revenue method
and total cost
and total revenue method. Profit maximization is a good thing for a company,
but can be a bad thing for consumers if
the company starts to
use cheaper products or
decides to raise prices.
The resources available to maximize their profit and the firms have
opened until they have profited.  Also
the private sector reduces their redundant labours. But in the public sector do
not concern about the profit and always attempt to do high standard of service
to the society.

There are some factors to motivate the labour movements and it can be
happen in two ways. The push method which refers the factors affect to push
labours from the private sector to the public sector. On the other hand the
full method manipulates to full labours from public sector to the private
sector. The factors influencing to push method are working hours, number of
holidays, debt for labours, etc. and the factors influencing to full method are
wage, ethics in the companies, efficiency and etc. Public
service motivation was not a signi?cant factor in sector choice for the
unemployed workers, compared to the employed workers who cited the job
usefulness to society as a reason to join the public sector employment (Jin,

            The labor movement may
represent as follows. PSLM refer public sector labour
movement and pslm refer private sector labour

More labors may move from the
private sector to the public sector.

> pslm

More labors may move from the
public sector to the private sector.


More labors may move from the
public sector to the private sector.


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