Economics Australia And Labour Markets

1494 words - 6 pages

Labour and the Labour MarketLabour is the human element in the production process. The labour market is a factor market where the demand and supply of labour interact to determine the wage rate and the allocation of labour resources in the economy.Derived Demand for LabourThe demand for labour is derived from the demand for the goods and services that labour is used to produce. In a competitive labour market, the interaction of the demand and supply for labour will determine wage rates and the allocation of labour resources. However, governments intervene in the free operation of labour markets for a number of reasons- Establish minimum wage levels- Resolve industrial disputes- Set minimum conditions (health and safety)- Annual leave and superannuation paymentsSize and QualityGovernment Policies such as industrial relations, immigration, education and training affect the size and the quality of the labour market. Size of the labour market can be taken to mean the size of the labourforce. The Quality of the labour market refers to the general health, motivation, skills, and education and training levels possessed by those persons in the labourforce.Influences of the Australian Labour MarketDemand Factors Affecting the Size and Quality of the Labour MarketLabour Demand at a macroeconomic level will be influenced by the following:- The total level of economic activity or aggregate demand. If economic growth is high as it has been, there will be an increased demand for labour as spending and output have risen, increasing the demand for productive inputs including labour.- The productivity of labour will influence decisions by employers to hire workers. Rising productivity levels will lead to an increased demand for labour as employers are likely to hire more productive workers to increase output at a reduced cost.- The general wage rate will reflect the relative cost of labour to capital. If wage rates are lower than the cost of capital, employers will substitute labour for capital in production by hiring additional workers.+At the microeconomic level the demand for labour will be influenced by the following:- The nature and size of the industry. Large labour intensive industries such as textiles are likely to be big labour users as opposed to smaller more capital intensive industries such as mining.- The pattern of consumer demand will influence the demand for various industries output. Eg, a decline in the demand for steel may lead to a decline in demand for steel workers.- The wage rate offered in different industries will affect demand for labour. More profitable industries with high prospects will be more able to attract labour by offering higher wage rates and other benefits.- The rate of capital/labour substitution in various industries will influence demand for labour. Primary and Secondary industries have reduced their work forces as increased mechanisation and computerisation have eliminated much of the production once done by labour.Supply...

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