Labour market

Labour market

The interaction between employers demanding labour and workers supplying labour to determine wages and employment levels.

Derived demand

The demand for labour that depends on the demand for the goods and services it produces.

Human capital

The skills, education, training and experience possessed by workers.

Occupational mobility

The ability of workers to move between different jobs or occupations.

Geographic mobility

The ability of workers to move between different locations for work.

Participation rate

The percentage of the working-age population either employed or actively seeking work.

Workforce

The total number of people employed and unemployed in an economy.

Employed

People aged 15 and over who are working for pay, profit or unpaid in a family business.

Unemployed

People aged 15 and over who are not working but actively seeking and available for work.

Unemployment rate

The percentage of the labour force that is unemployed.

Underemployment

Workers who are employed but want and are available for more hours of work.

Full-time work

Employment involving standard full-time hours, usually around 35–40 hours per week.

Part-time work

Employment involving fewer hours than full-time work.

Casualisation

The increase in casual employment with fewer leave entitlements and less job security.

Outsourcing

The practice of contracting work to external businesses or overseas firms.

Contractor

A self-employed individual hired to provide services under a contract.

Sub-contracting

The practice of a contractor hiring another business or person to complete part of a job.

Income from work

Earnings received by individuals in return for labour services.

Wage rate

The price paid for labour per unit of time (e.g. per hour).

Wage outcomes

The level of pay received by different groups of workers.

Income distribution

The way income is shared among individuals or groups in an economy.

Gender pay gap

The difference in average earnings between men and women.

Non-wage outcomes

Benefits from work other than pay, such as job satisfaction, flexibility or leave entitlements.

Equitable distribution of income

A fairer sharing of income across society.

Arguments for income equality

Reasons supporting fairer income distribution, such as social cohesion and reduced poverty.

Arguments against income equality

Reasons supporting income differences, such as incentives for effort and productivity.

Union

An organisation that represents workers’ interests in wages and working conditions.

Employer association

An organisation that represents employers in negotiations and industrial matters.

Enterprise agreement

A negotiated agreement between employers and employees about pay and conditions.

Modern award

A legally binding document outlining minimum wages and conditions for specific industries or occupations.

Fair Work Commission

The independent government body that regulates Australia’s workplace relations system.

Minimum wage

The lowest legal wage employers can pay workers.

Industrial relations framework

The system of laws, institutions and processes that regulate employment and workplace relations in Australia.

Australian workforce characteristics

Features such as ageing population, higher female participation, increased service sector employment and cultural diversity.

List factors that influence the demand of labour

firm’s output, labour productivity, cost of other inputs (especially capital), pay

List factors that influence the supply of labour

pay, working conditions,qualifications, labour force participation rate

List characteristics of affecting au workforce

population size, age distribution, education

impact of population size on workforce

determine potential labour supply

impact of age distribution on workforce

determines share of working age population and strain on public services

Impact of education on workforce

affects job opportunities, income and productivity

Pro of migration for workforce

helps to fill in labour shortages by bringing in specialised skills

Con of migration for workforce

places strain on public services and housing

How to improve labour productivity

• Better education

• Improved training

• Better tech

• High motivation

How does occupational mobility affect labour supply

more transferable skills = more people

How does geographic mobility affect Labour supply

If workers can move around, labour force can quickly be adapted for regional shortages

Factors influencing participation rate

Economic conditions
Retirement age
Increased participation of women
Education
Government policies

Factors affecting wage outcomes

occupation, age, gender, background

how does age affect wage outcomes

older people with more experience can go for higher paying jobs

List Economic Costs of Inequality

Reduced Overall Utility,Lower Consumption,Reduced Productive Capacity,Increased Welfare Expenditure

How does inequality cause Reduced Overall Utility

Higher-income earners have a lower marginal utility for each extra dollar compared to low-income earners, meaning inequality reduces total satisfaction in society

How does inequality cause Lower Consumption and Aggregate Demand

Low-income earners have a higher marginal propensity to consume, so concentrating wealth at the top can lead to lower overall spending in the economy

How does inequality cause Reduced Productive Capacity

Inequality limits access to education and health for lower-income groups, preventing the economy from reaching its full potential human capital

How does inequality cause Increased Welfare Expenditure

Significant income gaps place a larger fiscal burden on the government through transfer payments, creating an opportunity cost for infrastructure or education spending

List Economic Benefits of Inequality

Incentive Effect for Labour Force,Encourages Innovation and Entrepreneurship,Increased Savings and Investment, Increases Labour Mobility,

Explain economic benefit of inequality - Increased Savings and Investment

High-income earners have a higher marginal propensity to save, providing the funds necessary for business investment and capital accumulation

Explain economic benefit of inequality - Increases Labour Mobility

Wage differentials encourage workers to move to geographic areas or industries where labour is in high demand and skills are most valued

List Social Costs of Inequality

Reduced Social Mobility,Social Division and Instability,Health and Wellbeing Issues,Increased Poverty Levels

Explain social benefit of equality - Reduced Social Mobility

Significant inequality can create "poverty traps," where a lack of access to resources prevents children from lower-socioeconomic backgrounds from achieving their potential

Explain social con of equality -Health and Wellbeing Issues

Societies with higher inequality often face higher rates of mental illness, obesity, and lower life expectancy across the total population

Explain social con of equality -Increased Poverty Levels

High inequality is often linked to higher rates of relative poverty, leading to social exclusion and a lack of participation in standard community life

List Social Benefits of Inequality

Hard Work Ethic,Philanthropy,Diversification of Services,Incentive for Higher Education

Explain social benefit of inequality - Diversification of Services

A range of income levels creates demand for a wide variety of goods and services, supporting diverse niches in the labour market

Cyclical Unemployment

Unemployment as a result of the stage of the business cycle, such as job losses during an economic downturn

Structural Unemployment

Unemployment as a result of a mismatch between the skills possessed by workers and those demanded by businesses

Frictional Unemployment

Unemployment as a result of a worker being between jobs due to time delays in finding new employment or switching jobs

Seasonal Unemployment

Unemployment that occurs at certain times of the year due to industries lacking demand year-round or seasonal peak periods

Underemployment

A situation where workers are employed but would like to work additional hours

Hidden Unemployment

Unemployment that occurs because workers have become discouraged and have given up actively seeking work

Long-term Unemployment

Unemployment where the worker has been unemployed for more than 12 months

Hard Core Unemployment

Long-term unemployed people who may be considered unemployable by employers because of personal circumstances

Pros of outsourcing

Business can focus on core operations
Improve efficiency
Reduce costs

Cons of outsourcing

Less secure employment
Loss of control over that function
Could be unethical
High staff turnover
Contractors charge higher hourly rates

Reasons for union membership decline

decentralised Wage determination to enterprises, industry growth, more part - time = less full time

Benefits of unions

Better pay + working conditions
Legal advice
Improve workplace safety
Improved benefits
Restricting supply of labour to artificially boost salaries.

Au workforce fun facts

14.7 mill employed

almost a third part-time

almost half female

Wage outcomes based on age

as you get older, earnings + because of education and experience

After middle age, earnings - due to pursuing less stressful roles and other minor things

causes of gender pay gap

discrimination, glass ceiling, overrepresentation of females in lower paying industries

define glass ceiling

a metaphorical barrier that prevents females from reaching senior management positions

define bamboo ceiling

prevents Asians and other minorities from reaching senior positions

Wage outcomes based on culture

1/3 of Au are born overseas

on average, migrants earn 13% less

Skilled migrants earn above the national average, especially in already high paying jobs

new migrants earn less

Why more part time and casualisation?

provides flexibility for employee by providing more time and employer by providing lower labour costs

more accessible due to internet

more women in the workforce