Government control over business activity

Lesson Outcomes:• Identify need for intervention• Show understanding of the impact of

intervention in terms of business decisions e.g. what is produced and how

• Give examples of intervention both to support and control the impact of business activity on people, the economy and the environment

Government control over business activity

• Business activity produces goods and services which people wish to buy.

• It creates jobs and incomes for workers.• Government receives a great deal of its tax

income from businesses.

• The government enforces control for the good of consumers, workers, local residents and the community.

Business activities controlled by the government

• Control is usually achieved by passing laws which make certain business activities illegal.

• The main examples of business activities controlled by law include:

• Production of certain goods and services• Consumer protection• Competition policy: control of monopolies• Protecting employees• Location of industry

Business activities controlled by the government

• The main examples of business activities controlled by law include:

• Production of certain goods and services• Consumer protection• Competition policy: control of monopolies• Protecting employees• Location of industry

Production of certain goods and services

• Some products are so dangerous it would be unwise for a society to allow them to be made available to consumers.

• What type of product or services are illegal/restricted in Qatar? WHY?

• Goods which harm the natural environment can also be banned.

• Japan's 2011 Fukushima Daiichi nuclear disaster prompted a rethink of nuclear energy policy in many countries. Germany decided to close all its reactors by 2022, and Italy has banned nuclear power.

Following Fukushima, the International Energy Agency halved its estimate of additional nuclear generating capacity to be built by 2035

Business activities controlled by the government

• The main examples of business activities controlled by law include:

• Production of certain goods and services• Consumer protection• Competition policy: control of monopolies• Protecting employees• Location of industry

Consumer protection

• Consumers can be easily misled.

• Consumers need protection against businesses which could, unfortunately, take advantage of the consumers’ lack of knowledge and lack of accurate product information.

Examples of Consumer Protection laws:

1951 Weights and Measure Act

1968 Trade Description Act

1974 Consumer Credit Act

1979 Sale of Goods Act

1987 Consumer Protection Act

Sale and Supply of Goods Act 1994

• It states that the description must accurately describe the product being sold– For example, a 80GB hard drive should

have 80GB of memory

• For further details, research on the internet

80GB

Consumer Credit Act 2006

• This is aimed at consumers who buy goods/services on credit

• The act lays down rules covering:– The fact that consumers must have a full

understanding of the agreement, with terms and conditions clearly stated

– The method of calculating APR– The provision of an annual statement

• For further details, research on the internet/look in your text book

Consumer Protection (Distance Selling) Regulations 2000

• Businesses must provide clear details to customers where there is no face-to-face contact e.g. website or mail order catalogue

• Customers must have information about:– Business– Goods or services they are selling– Payment arrangements– Delivery arrangements– Consumers’ right to cancel their orders where

appropriate

Business activities controlled by the government

• The main examples of business activities controlled by law include:

• Production of certain goods and services• Consumer protection• Competition policy: control of monopolies• Protecting employees• Location of industry

Competition policy: control of monopolies

• Why would the government want to control monopolies?

• Disadvantages of monopolies:

They can fix high prices to make high profits They can prevent new firms from setting up to compete

with them As there are no competitors, the monopoly is not

encouraged to become more efficient or to introduce new products

Business activities controlled by the government

• The main examples of business activities controlled by law include:

• Production of certain goods and services• Consumer protection• Competition policy: control of monopolies• Protecting employees• Location of industry

Things that employers must do

Employers must…

• Pay their employees at least the minimum wage

• Ensure their workers are safe (health & safety laws)

• Give each employee a ‘contract of employment’

• Follow other employment laws– For example, give employees holidays

Employment Laws

• There are laws designed to protect workers from bad employers

• These laws can also protect the employer

Can you think of any laws which protect workers?

Law Main point

Equal Pay Act 1970 Ensuring men and women are paid the same amount for doing similar work

Sex Discrimination Act 1975

Preventing men and women being treated differently from members of the opposite sex

Race Relations Act 1976

Preventing people of one race, colour, nationality or ethnic origin being treated differently from those of other origins

Employment Laws

Law Main point

Disability Discrimination Act 1995

Ensuring that equal opportunities are given to disabled people

Employment Rights Act 1996

A firm must give a worker a “statement of particulars” within 8 weeks of starting work

Health and Safety at Work 1974

Employers must protect employees from dangers in the workplace

Minimum Wage Legislation

Prevents workers from being exploited by employers

Employment Laws Cont.

What is the National Minimum Wage?

National Minimum Wage

• It applies to nearly all workers and sets the minimum hourly rates of pay– For workers aged 22 and over it’s

£5.80 an hour– For workers aged 18-21 it’s £4.93 an

hour– For workers aged 16-17 it’s £3.57 an

hour

Is the minimum wage a good thing?

Hint: think about employers and employees

Health and Safety

• Employers have responsibilities for the health and safety of their employees

• They are also responsible for any visitors to their premises such as customers, suppliers and the general public

Group Activity – Perform a risk assessment to spot health and safety hazards in this office and discuss

what you notice

Why is health and safety important?

Why health & safety is important

• On the night of Dec. 2nd and 3rd, 1984, a Union Carbide plant in Bhopal, India, began leaking 27 tons of the deadly gas methyl isocyanate

• None of the six safety systems designed to contain such a leak were operational, allowing the gas to spread throughout the city of Bhopal

• Half a million people were exposed to the gas and 20,000 have died to date as a result of their exposure

• More than 120,000 people still suffer from illness caused by the accident and the subsequent pollution at the plant site

Why health & safety is important

Charlotte Thompson (left) and Olivia Bazlinton, two teenage girls hit and killed by a train at a level crossing at Elsenham, Essex in December 2005. Network rail admit liability.

Costa ConcordiaCaptain error and poor evacuation due to poor H&S training.

ChenobylThe Chernobyl accident in 1986 was the result of a flawed reactor design that was operated with inadequately trained personnel.

Think about a local shopping centre… what is in place to ensure your

safety?

Before you accepted a new job, what information would you like to know?

Write down at least five things

Contract of employment

• This is a written document that explains what is expected of the employee AND the employer

• It includes:– Salary details– Hours/days of work– Job title– Job description– Who your line manager is– Dress code– Disciplinary procedure– Etc.

Is it good to have a contract of employment?

What happens if employers break the employment laws?

Employment tribunals

• Tribunals are courts which deal with laws relating to employment

• If a worker sues an employee, the tribunal will hear evidence from both sides

• If the employer is at fault they will receive bad publicity and may have to pay a fine

Can you name any companies which have made people redundant?

Redundancy

• When a worker’s employment is ended because the work they do is no longer needed.

• People might get made redundant due to;– Firm using machines instead of labour– Firm is producing less– Firm has gone out of business

• Look at the BBC News website at recent articles about redundancies

Activity• Good Sports is a small firm that

manufactures sports clothes

1. Recommend 3 ways in which Good Sports could inform its workers about health and safety matters in the factory. Give reasons for each of your recommendations. (6 marks)

Extension2. Explain 3 ways in which employment laws,

other than health and safety at work laws, affect the employment of workers (6 marks)

Business activities controlled by the government

• The main examples of business activities controlled by law include:

• Production of certain goods and services• Consumer protection• Competition policy: control of monopolies• Protecting employees• Location of industry

Location of industry

• Two types of measures are often used by governments to influence where firms locate:

• Planning controls- will legally restrict the business activities that can be undertaken in an area

• Regional assistance- given to businesses to encourage them to locate in undeveloped parts of the country

Laws and regulations applying to almost all businesses

Category Examples

Business formations and operations and the payment tax

Partnership Act, Companies Acts

Health and safety in the workplace Health & Safety at work act, Workplace (Health Safety & Welfare) Regulations, Health & Safety (Display Screen Equipment) Regulations

Employing staff and discrimination Employment Act, Employment Relations Act, Working Time Regulations, Race Relations Act, Disability Discrimination Act, Sunday Trading Act

Paying staff National Minimum Wage Act, Equal Pay Act

Information and data Copyright Act, Data Protection Act

Selling goods and giving credit Sale of Goods Act, Consumer Protection Act, Trade Description Act, Consumer Credit Act, Distance selling regulations

Government control over business activity

Lesson Outcomes:• Identify need for intervention• Show understanding of the impact of

intervention in terms of business decisions e.g. what is produced and how

• Give examples of intervention both to support and control the impact of business activity on people, the economy and the environment