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ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business

A government introduces a law requiring all employers to contribute to a compulsory workplace pension scheme for their staff. In PESTEL terms, which factor is this primarily, and what is the most direct effect on businesses?

This is primarily a legal factor, because legislation obliges employers to act. Its most direct effect is to raise employment costs and create compliance duties such as administering contributions. It does not directly reduce inflation, change consumer tastes or cut carbon emissions.

  1. ALegal: it increases employment costs and compliance obligationsCorrect
  2. BEconomic: it lowers the general rate of inflation
  3. CSocial: it changes consumer tastes in the market
  4. DEnvironmental: it reduces businesses' carbon emissions

Explanation

A law imposing a duty on employers is a legal factor. Its direct effect is higher employment costs and administrative compliance. Inflation, tastes and emissions are not directly altered by a pension contribution requirement.

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