Why a large number of firms are employing temporary employees

Statistics show that since 1990, the number of people employed permanently has decreased by 50%, and temporary workers have taken their place. There are numerous reasons for the trend, including globalization, flexibility, the availability of new skills, cost-saving measures, hiring decisions that have purpose, and lastly morale-boosting measures (Segal, 2007).
The integration of several markets into the global economy is what links the various national economies together. As a result of globalization, new technologies are created that may have an effect on the job market. With the advancement of technology, there will be an increased need for highly skilled work, leaving those without it behind. With the continuous boost of technology, the corporation will require temporary employees while awaiting the development of skills. Also, the company can hire temporary employees to train them while evaluating them to take over the new technology.

The flexibility of the unstable economy provision

Companies need to adopt a team during the low and high seasons. Firing and hiring employees at such times is demoralizing as well as time-consuming. The temporary workers come in to provide the quick fix on the long-term leaves, sudden turn-over, and special projects. It is highly desirable for the business owners to bring more workers to the workforce in response to the flow of demand; hence, it becomes essential to take temporary workers rather than keeping hiring and firing. Hence, the companies hire temporary workers who can be easily let go when it is not stable.

New skill’s access

The temporary employees usually bring in new perspectives and skill which can be highly essential in increasing efficiency as well as streamlining production. If the corporation requires a new skill, the management prefers a temporary worker who will provide the new skill to keep the company moving. Hence, temporary employees are in demand when the enterprises are in need of a new skill.

Saves money

The logistics vary in businesses but hiring a temporary worker may be less compared to that of permanent which is very cost effective. The corporation adopts hourly rates rather than salaries which save a lot of resources and ensures that every coin is productive. The temporary workers ensure that there is the availability of the company perks as well as other benefits. Before corporation decides on hiring, they usually do their math which leads them to choose temporary hire. Hence, the companies may demand temporary workers rather than permanent since the process is cost effective.

Meaningful hire

Employing the workforce who is fit for the task may be a challenge. Temporary employment provides the employer for evaluating the workers over a longer period before committing to the permanent employment. The temporary hire will ensure the employer has ample time in recruiting the right hire (von, 2007).

It boosts morale

The temporary staffs boost the overall workforce mood since dividing the permanent and temporary staff 's hard. When the employees are forced to work during night shifts, have some extra responsibilities, the morale may decline due to the burnout or exhaustion. Offering extra help during the busiest period gives the employers more confidence which increases the productivity.

Hence, corporations prefer temporary hire since the labor available in the market will be well utilized and increase the morale leading to increased productivity.

The job market is vast, and there is a high rate of unemployment. Labor is readily available, and the labor force supply it on demand. Hence, due to the above reasons, the work force is always ready for the temporary employment. Some companies hire them for manual tasks, but they can be helpful to the organization a lot through the introduction of a new skill and adding morale towards work to the existing labor force.

b.

The national economy can grow through various factors that are inclusive of the monetary and the fiscal policies. The bank of England has taken a desperate move to kick start the flat economy by reducing the interest rate to 0.25%. The chancellor of exchanger as well reduced the taxation by 5% and increased the government expenditure by 10%. The move is meant to affect the growth of the economy which has been poorly performing. The monetary policies are the key determinant of the base interest rates which affect other related economic determinants.

The change in both the monetary and fiscal policies was influenced by some microeconomic objectives. First, England focuses on maintaining a stable framework of the macro economic level with low inflation. Secondly, is through the maintenance of sound public finance through increased investment leading to the economic growth. Thirdly, is the improvement of the cost effectiveness and quality of the public services. Fourthly, they focus on increasing the economy’s productivity and the expansion of the employment opportunities and economic growth which is through the competition, innovation, increased employability, enterprise, and innovation. Also, another key objective is to promote practical benefit and tax system which has incentives to save, invest and work maintaining a budgetary framework and accountability maintaining high standards of accountability. Another key objective is to secure an efficient market in the banking as well as the financial services with supervision which is fair as well as effective. Also, they focus on ensuring that management is cost effective to the foreign currency reserves, government debts and the supply of notes and coins. The final macroeconomic objective is to promote the UK’s economic interest and international financial stability through the international corporations as a way of increasing the global prosperity which seeks to protect the groups which are vulnerable. To achieve the above objectives, the changes were adopted. The shift in interest rate will affect the savings which will affect the spending and in the long run the household demand. The shifts in the government spending, taxation rate, and the interest rate are focused towards the achievement of the stated objectives.

The change in the interest rate affects the repayment of debts to the firms and households with mortgages which ensures that they have more cash to reinvest again after they repay the loans. Hence, the decline in the interest rate, taxation, and increased government expenditure leads to change in the household’s and firms cash flow. Also, the decrease in the interest rate encourages borrowing which leads to the increased borrowing. The shifts in the monetary policies will affect the business and consumer confidence which will, in turn, increase the spending. The asset value will be affected by the increased firm profitability leading them to pay higher dividends to the shareholders. Also, the decreased level of interest rate will make the properties more attractive and savings less which will lead to increased household wealth. Finally, it will affect the exchange rate that influences the export demand. It pushes the export prices up and the overseas demand down, it affects the import prices down which will affect the inflation rate. Hence, the changes in the interest rate, taxation, and the government expenditure are expected to change the macro economic variables such as the financial stability, inflation, employment rate and the overall economic growth. Hence, by affecting the above variables, they will be able to influence the aggregate economy.

Consumers need different goods and services for their daily survival (Chamberlin, 2008). They need basic needs as well as the luxuries which are provided by the firms that provide the particular services or goods. Sainsbury, London Underground, the McDonald’s restaurant, and the hairdresser are some companies which supply the services that are in demand. The firms operate under the monopolistic competition market structure (Ditix, 2007). The firms produce goods and services which are different and sell them in response to the rival’s prices. The consumer demand for these various products, hence, preens in a number of them. With the different firms offering non-substitute products, they have some degree of control over the prices. Sainsbury is the second largest chain in the supermarket in the United Kingdom. It provides products such as fuel, groceries, has some cafes other essential commodities. Their products are in high demand from the primary consumers which they supply efficiently (Ditix, 2007). The McDonald is the fast food restaurant chain. The London underground is the railway transportation industry in the UK. It is highly used by people for transportation to and from work as well as for luggage carriage. The hairdresser is an individual who is responsible for cutting or styling another’s hair meant for maintaining their image. A citizen living in the UK will demand a product from each firm without any substituting the other. For example, UK citizen will need their hair to be done, transportation through the rail line, food and other basic items (Ditix, 2007). The firms provide different products which cannot substitute each other. The market structure is the monopolistic competition characterized by product differentiation, many firms in the market, no restriction to entry and exit, there is no perfect information between the buyers and the sellers. Hence, the consumers demand different good s and services which need to be supplied. On the other hand, the firms are ready to provide products and services that are upon request from the consumers.

Question 2

Financial activities are essential and complex matters in the business. Hence, a manager is essential in the decision making and the necessary activities. A manager is a person who oversees all the financial activities of the organization. Their action directly affects the growth, goodwill, and the profitability in a firm. The manager is responsible for raising fund for the business. Since they make essential decisions in the company, in conjunction with the financial manager, they are capable of deciding the equity debt rate which is necessary to balance.

It is v role of the manager to ensure that the financial statement adheres to the GAAP (Generally Accepted accounting principle)in ensuring that there are information continuity and presentation across the borders. The manager is responsible for ensuring that there is accuracy for investment, financing as well as taxation. The manager provides that the statement is frequently audited by the firms, accountants, and the financial agencies for the funding purpose.

The manager as well oversees the capital budgeting. It is the process by which a particular business determines potential investments as well as expenses which are significant. The projects are inclusive of the long-term ventures, buildings construction for v new plant or others. The manager oversees the investment appraisal which is the assessment of the lifetime inflow and outflow which determines whether the returns will meet the sufficient target benchmark.

The manager as well is crucial in the financial planning which is the comprehensive evaluation of the current and the future financial state through the use of known variables for the asset valuation, withdrawal plans, and the future income predictions. The process entails making a budget for the individual finances organization and also plans on how to plan on savings and spending in future. The method allocates the future incomes to various reserves in the long and short-term. It can be referred as the investment plans or in personal finance can incorporate areas such as college, states, risk management or retirement.

Finally, it is the manager's role to see that the internal funds are well controlled internally. It comprises the accounting as well as auditing meant to achieve the organization’s objectives in the operational effectiveness and efficiency, compliance with the policies, laws, and regulations as well as the reliable financial reporting. The process maximizes on the control of the organization from any possible risks. The manager oversees the direction, measuring and monitoring of significant resources in the firm. The process plays an essential role in the detecting and preventing any possible fraud as well as the prevention of intangible or physical resources.

Question 3

a. Amortization is the process of the loan payments which is done in the fixed schedules over a particular period. It can be referred as the spread of intangible asset’s capital expenses over a specific period for the tax and accounting purposes. The process breaks the payment of principal and interest which vary in a particular amount. The process is helpful a lot in mortgages.

s



The amount paid is calculated by the formulae below:

With A=the payment amount per period

P=loan amount/ initial principal=$60000

r=interest rate per period=5%

n=the total payment periods=3

We want a loan repayment for the following credit. The borrowed loan is 60,000 which is repaid on three year interval at a 5% rate. The annual interest rate converted into decimals is 0.05. we can as well use the following formulae for calculation since the previous one is based on monthly payment levels.



Where I=0.05 and N=3

0.05*$ 60,000/1-(1+0.05)-3=22032.51

The payment will be made for the first and the second year with the arrears amounting to 18934.98. The total amount paid will be 63000. Hence, from the same, the $60000 is the principal and the $3000 is the interest to be paid extra. The amortization under this case spreads the capital expenses equally into three pieces making it payable and affordable. Hence, it reduces the payment burden into a longer duration helping to pay more easily.



b. Annuity is the investment which provides a series of payment.

On the specific question there are three payment periods, year 1- $400, 2=$300 and 3=$250



FV=future value

RP= regular payments= $400, $300, $250

i=the interest rate=5.5%

N=the number of payment=3

Fv= future value

Z= 1+r

Under the question given below, the cash flow is an even; hence, the formulae will not be strictly used. The following is the formulae which will be used.

year

total amount

1







P+RP=400

2

P+RP(z)+rp2=(400*1.055)+300=722

3

722(1+r)+rp3=(722*1.055)+250=1011.71

By the end of three years, the investor will have a total of $1011.71 in their savings account. The annuity is a product that is helpful in the growth of the personal finance from an individual level. The finances saved grow at continuous rate though uneven. The product enables the savings to yield an interest in the long run.

C

Year

Project a

Project B



0

($50,000)

($50,000)



1

15000

0



2

15000

0



3

15000

0



4

15000

0



5

15000

99500





C0=total initial investment cost

Ct= Net cash flow during period t

R=Discount rate

t=number of time periods

For project A

NPV=(15000/(1.0735))+(15000/(1.0735)2)+15000/(1.0735)3+15000/(1.0735)4+15000/(1.0735)5-50,000

=159,594.8

Since the results are positive, it indicates that the investment will yield to v net profit in five years’ time. The net profit value is expected to be $159,594.8, hence, recommendation to invest on the project. But to make the decision, the second, project NPV need to be calculated.

For project B

NPV=(0/(1.0735))+(0/(1.0735)2)+0/(1.0735)3+0/(1.0735)4+99500/(1.0735)5-50,000

=91851.83

The positive results indicate that the investment is expected to make a net profit.

Despite project B failing to yield any returns at the first three years, it is less preferable since its net present value is lower than the project A. It will take longer to return the investment back but its value will still be there in the long run. The two projects are viable at the rate of return of 5.75% since their NPV is positive. Unlike the discounted payback method which does not consider the time value of money, the NPV put more consideration on the longer and the short-term basis. Hence, the first project is more profitable in comparison to the second one due to the net benefits it yield more than project a. We use the present value of the present since the future one is not that worth. The NPV is helpful to the managers in the determination of the capital budgeting as well as the profitability analysis of the investment project. Hence, the future cash flow of project A will be higher than that of B, hence, more preferable.

Hence, there is a lot of literacy in economics which needs to be understood. From the above information, it is now clear that temporary employees are essential in the economy due to globalization, the labor market and the demand of work. Secondly, macroeconomic policies and objectives are critical in a firm, and economic factors are easily changed towards the goal achievement. Thirdly, for personal survival, consumers need right from different companies which are non-substitutes for the satisfaction of human needs. Fourth, due to the complexity of financial matters in the firm, a manager is essential especially in overseeing the capital budgeting, financial statement, control, and planning of essential capital. Finally, NPV, annuity, and amortization are necessary tools in financing which should be efficiently utilized.









































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