The oligopoly model is a form of market structure wherein a few firms dominate the industry by controlling most of the market share. In this model, wage levels are determined by competition among businesses and other factors such as labor supply and demand (Furman & Sheiner, 2018). Before the Covid-19 pandemic, wages were generally low in many industries due to high levels of competition. This was because businesses were competing for workers to fill their positions and had no incentive to pay higher wages if they could get away with offering lower rates.
Furthermore, in some sectors where there was limited competition or lack of bargaining power from employees due to unions not being present, much lower wages than average would have been offered (Lusardi & Mitchell 2007). The coronavirus pandemic has tried to balance out these inequalities by introducing measures such as ‘furlough’ schemes which have allowed companies to retain their workforce without having to pay them fully (Harrison et al., 2020). This has resulted in government subsidising a portion of those salaries so that individuals can still survive during this period while they wait for the return of normal trading conditions.
According to the prediction of the oligopoly model discuss how high/low wages of the workers were before the Covid-19 pandemic
However, it should be noted that despite these efforts there are still issues with regards to inequality when it comes to wages paid before the outbreak. For example, research shows that poverty rates worsened prior to the crisis due mainly because real earnings growth had been declining since 2006 and then stagnated between 2013-2018 (Garner et al., 2019). This means that those at risk were already living on very low incomes before they faced further income losses amid Covid-19 related job losses – an issue which unfortunately persists even now during recovery phases across different countries.
Additionally some sectors such as construction reported increases in hourly wages prior Covid-19 but only from 2014 onwards when employment grew faster than output prices throughout most western markets (Schnorbusch et al., 2021) . However this sector alone does not offset any decreases seen elsewhere especially when considering overall trends over time – for instance data from Oxfam showed that real median wages fell below 2015 levels back in 2017 for workers aged 16–64 years old across all industries except education and health services (Power 2020) .
Overall therefore it can be argued that despite economic resilience since pre-Covid times amongst certain sectors within economies worldwide – overall wage levels remain relatively low compared with previous years suggesting significant room for improvement once business activity returns more closely towards normality post pandemic(Furman & Sheiner 2018; Garner et al., 2019; Lusardi & Mitchell 2007 ; Power 2020; Schnorbusch et al., 2021; Harrison et al.,2020 ).