Supply side Policies

Most supply side policies aim to enable the free market to work more efficiently and attempt to promote employment, low inflation and economic growth. The main idea behind Supply side policies is to reduce Government interference.

Supply side policies include


Privatisation is the selling of state owned businesses to private individuals and groups. This increases the efficiency of these organisations as they face more competition. Profit motive increases the incentive to utilise the resources in the best possible way.


Deregulation involves reducing barriers to entry in order to make the market more competitive. It does away with unnecessary rules and regulations on business which results in reduced cost, increased output and lower prices. Moreover, it increases the competition in the economy, leading to higher efficiency for businesses.

Increased education and training

Improving the level of education, training and skills of the workforce will raise the labour productivity and increase the aggregate supply. Governments usually give a lot of importance to education and encourage more and more people to attend universities and colleges and enhance the skills of the workforce.

Labour Markets reforms

By controlling the actions of the trade unions the Government can ensure that there is least disruption in the business activities.