AS Economics homework: Efficiency

1)

Up to 900 jobs could be lost at Zurich's general insurance company in the UK. The company is going to cut workforces by 10 % this year. The business employs 5,400 staff in 20 locations across the country but it is unclear which offices will be affected. The news comes on the same day as rival Aviva, owner of Norwich Insurance, said it would cut 1,800 jobs by 2010. Zurich said this actions would improve customer focus and help to achieve more sustainable growth in profits. It said that between 700 and 900 work places were likely to be lost. The business, which provides general cover for companies and individuals, operates from 20 sites, the largest being in Birmingham and Whiteley, Hampshire. "We recognize that there are difficult times ahead for our people," said Guy Munnoch, chief of the firm's general insurance arm. "However, it is clear that if we want to keep being  competitive, we must act immediately to increase efficiencies so that we can achieve our growth plans and safeguard the future of our business in the UK.

Aviva, the owner of Norwich Union, will cut up to 1,800 jobs by 2010 as it restructures its insurance operations. Aviva called the move "rationalization" but the Unite union described the job cuts as "brutal" (cruel) . "This news for staff that their jobs are now in jeopardy is truly devastating," United added. Norwich Union insurance operations will be shifted away from cities including Glasgow, Leeds, Sheffield, Liverpool, Birmingham, Bristol and Southampton. Offices in Dundee, Basildon, Ipswich, Exeter, and Worthing will also be affected. However the firm said other parts of its business would be still in those locations. Now the business of this company would operate in  Norwich, Perth, Bishopbriggs, Stretford, Manchester, Leicester and Southend. 
Andy Case of Unite said job losses had become 'a way of life' for Aviva staff.
"We want to deliver excellent, consistent and reliable customer service with market leading efficiency," said the chief executive of Norwich Union Insurance, Igal Mayer. "To achieve this we will need to fundamentally simplify our business, consolidating our expertise into seven insurance centres of the future in the UK."

Aviva was formed from the merger of Norwich Union and CGU in 2000.It provides savings, investments and insurance products. Earlier this year, Aviva, announced it was ditching the 200-year-old Norwich Union brand to forge a single identity to compete in international markets. Unite's deputy secretary, Graham Goddard, said Aviva was "rapidly withdrawing" commitment to local communities and was "isolating themselves in a small number of cities". 
"The suggestion that employees will be able to relocate appears to be inconceivable for most of those affected," he added.

2) 

http://news.bbc.co.uk/1/hi/business/7440733.stm - Zurich's company

http://news.bbc.co.uk/1/hi/business/7439589.stm - Aviva

3) Efficiency is the best way of using resources for the benefit of consumers. 

Allocative efficiency
Achieved when the value consumers place on a good (reflected in the price they are willing to pay) equals the cost of the resources used up in production (i.e. price = marginal cost.)
Another interpretation: Where resources are allocated to the production of the goods and services the society most values.

Productive efficiency
Refers to a firm's costs of production and can be applied both to the short and long run. It is achieved when output is produced at minimum AC
Productive efficiency includes
- The least costly labour capital and land inputs are used
- The best available technology and the most efficient production processes
- Exploiting economies of scale (getting close to minimum efficient scale)
- Minimizing the wastage of resources in their production processes

Dynamic efficiency
Dynamic efficiency occurs in a market over a period of time. It focuses on changes in the amount of consumer choice available in markets together with the quality of goods and services available
Dynamic efficiency can be boosted by:
- Research and development spending and a faster pace of invention and innovation.
- Investment in the human capital of the workforce leading to gains in product quality.
- Greater competition in markets and the transfer of knowledge and ideas across countries.

Social efficiency
Is where social welfare is maximised. Where social marginal benefit of production / consumption = social marginal cost. Markets need to take into account externalities for social welfare to be achieved.

X-inefficiency
X-inefficiency occurs when a business uses more inputs than are necessary for a given level of output. Libenstein (1966) pointed to potential cost inefficiencies arising from a lack of effective competition within a market e.g. companies that face little or no real competition often allow their fixed costs of production to rise.

4,5) I think that losing jobs are lead to productive efficiency, because workers are labour, it is part of production. Losing jobs will involve decreasing in cost of production, so the firms would, probably, increase their profit or spend money on another part of their business (especially during recession when they might have  debts).