Economics Essay - The Australian Labour Market

Essay by akmorrisonHigh School, 11th gradeA-, November 2009

download word file, 4 pages 4.0

Factors of the Australian Labour Market have changed over time, and can be expected to further evolve in the future. These factors include:the relationship between employer & employeelabour force participation rateaverage weekly earningsindustrial disputesannual labour underutilisation ratesAccording to 2008 ABS statistics, the labour force participation rate has grown 0.4%, the average weekly earnings of an adult working full-time have increased 4.5%, the working days lost per year through industrial disputes have risen 517.6%, and the annual labour underutilisation rate has decreased -0.8% since 2007. These changes occur due to economic conditions and are influenced by the industrial relations system - the actions of trade unions, employer associations and industrial tribunals.

Trade UnionsTrade unions are associations of workers with the same objective – to improve their working conditions and wages. Since the 19th century, trade unions have played an important role in the labour market. They are usually established for particular occupations, industries, firms or a mixture of these.

Trade unions influence the labour market by restricting the supply of labour or negotiating using their bargaining power. Restricting the labour supply shifts the supply curve to the left, which increases the wage rate. However, it also reduces the quantity of employed workers. This method is somewhat inefficient and less effective now than it was in the past, as industrial relations laws and rules limit strikes and the restriction of labour. A more effective means of improving employees’ wages is by taking advantage of the numerous members of the union, and uniting to form a strong front against an employer. It is very difficult for an employer to replace an entire workforce, if they were to go on strike, so the employer is forced to pay a higher wage rate in order to keep their employees satisfied. If unions can convince employers to pay higher than the equilibrium age rate, it changes the shape of the supply curve. Bargaining with employers can be a gamble, as the employer may choose to allow striking and the employees are then without work.

In 2009, trade unions have targeted and resolves such issues as:Unfair dismissalPaid maternity leaveConstruction site safetyMinimum wageOH&SThe ‘Your Rights at Work’ campaign of the Australian Council of Trade Unions defends the rights of Australian workers and has provided employees with:genuine rights for employees to collectively bargain and be represented by their unionunfair dismissal protection for all workersa robust new safety net of awards and national standards, along with a fair and transparent process for setting minimum wagesan industrial umpire with the teeth to safeguard workers’ rightsa ban on all new Australian Workplace Agreements.

Employer AssociationsEmployer associations are organisations that aim to represent the employers of a business, through industrial relations and pressing the government for political action. The members of these associations do not usually have as similar interests to those in trade unions, and they are sometimes in direct competition with each other. This means that employer associations are less coordinated and organised than trade unions, which means their actions can be less directly effective.

Employer associations play an important role in the labour market. They provide employers with assistance in managing industrial relations issues, and lobby the government in order to improve industrial conditions.

Employer associations influence the labour market by securing Australian producers with a larger sector of the domestic market for their output. They achieve this when they persuade the government to take action on industrial relations policies – protecting them from foreign competitors. Industry protection increases the demand for labour, which also increases the wage rate, and the quantity of labour employed. The demands of employer associations are less successful now than in previous years, as governments have restricted their industrial assistance and limited protection levels.

In 2009, employer associations have addressed issues including:workplace relationsOH&Sworkers compensationeducation & trainingworking environmenttrade & exportIndustrial TribunalsIndustrial tribunals are government agencies that aim to prevent or resolve conflict between employees and employers, and also attempt to manage the industrial relations system. Similar to trade unions and employer associations, government legislation determines the extent to which their actions will influence the labour market.

A tribunal known as the Australian Industrial Relations Commission has played an extremely important role in the evolution of industrial relations in Australia. The AIRC aims to set a minimum standard for work conditions and wage levels, through setting awards. For much of the 20th century, it began a process of increasing annual pay levels to account for the changes in the cost of having an average Australian lifestyle. The introduction of awards in the Australian workforce means that when an employer and employee are negotiating work and pay conditions, they must meet the minimum award conditions. This prevents workers from being exploited and underpaid.

In 2006, there were changes to the industrial relations system, with individual contracts becoming more important than awards. However, these changes were unpopular among employees, because they allowed employers to reduce their workers’ benefits, particularly by removing penalty rates and overtime allowances. In 2007, the Howard Government recognised this contempt and altered the laws so that the AWAs had a more positive effect.

The above organisations are all based around the relationships between employers and their employees, and the satisfaction of employees. The government plays a major role in evolution of the Australian Labour Market. By limiting the effectiveness of trade unions, employer associations and industrial tribunals with government policies and legislation, they control the degree of influence the organisations can have on the labour market. Trade unions and employer associations are both less effective now, than they have been in the past. This is because the government determines the extent of their powers, and has begun to enforce strict rules that aim to limit them. However, when we consider the ABS survey results, it is evident changes or improvements are evolving the labour market regardless. Australia’s industrial relations system has experienced major changes since 2006, resulting in the economy’s current state. Developments are expected to continue until January 2010, when the government intends to introduce an extensive change to Australia’s industrial relations system, resulting in further evolution of the Australian Labour Market.

BibliographyAustralian Bureau of Statistics – 2008 Labour Market SummaryMarket Economy 2009 textbookAustralian Council of Trade Unions – www.actu.asn.auAustralian Industry Group –