Should skilled workers be paid more than unskilled workers? (8 marks)

Skilled workers are likely to have higher productivity so the firm will gain more revenue. They can also demand more pay as they are inelastic in supply (can draw a diagram to show this however not needed), any increase in demand will lead to higher increase in wage. Also skilled workers have more bargaining power in a trade union due to their inelastic supply as their withdrawal from employment could be more detrimental to the firms than unskilled workers. Time spent in education and training should be compensated through pay.