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Economics > TOPIC 4 ECO (chapter 9-11) > Flashcards

TOPIC 4 ECO (chapter 9-11) Flashcards

check the textbook summaries and recheck the info that may be missed.

1
Q

why is operation of labour market important?

A

determines how EASY to find edu & work, how much we paid, working conditions

for bus, how they can use labour most efficiently in operations

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2
Q

labour market

A

individuals seeking employment interact w/ employers who want to obtain most appropriate labour skills for their production process

many distinct in eco, 1 for each individual firm & industry, and 1 for local areas & occupations, each with own labour market outcomes (wage levels, employment opp, conditions)

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3
Q

how do firms demand labour

A

offer wages
-DERIVED DEMAND for g&s within eco
-consumers demand higher lvls g&s, firms forced to increase lvl output to meet
-mut higher more labour to produce more

ONLY demanded bc needed for firm to produce g&s and make profit

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4
Q

labour demand curve

A

downward sloping curve
as price of labour (wages) falls, firm will employ more labour

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5
Q

factors that determine how much labour a firm will demand at specific price & how it will respond to eco conditions

A
  1. OUTPUT of firm
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6
Q

how does output of firm affect labour demand

A

bc derived demand, level of output is msot sig influence
-higher sales –> ^ production –> ^ demand for labour

eco conditions affect lvl output (pattern of consumer demand + demand for g&s firm produces)

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7
Q

aggregate demand

A

total demand for g&s within eco

C, I, G and X
conumption, investment, GVT spending, net exports

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8
Q

hwo does general eco conditions affect output lvl of firm

A

strong growth, firm likely have higher sales –> need more employees

only few firms benefit from eco downturn and employ more (discount retailer)

always time lag
-tend to operate with excess capcity, dont always fully utilise resources
-hoard labour to avoid training new staff when production picks up

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9
Q

what happens when aggregate demand increases for firm

A

firms satisfy higher demand (short) by using existing labour & capital resources intensively (eg. ask overtime)

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10
Q

what happens when aggregate demand falls for firm

A

delay making staff redundant hoping conditions improve & avoid sig costs & risks of finding new staff when eco recovers
-usually retrench workers when facing SUSTAINED deterioration in eco conditions

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11
Q

3 conditions that affect output level of firm

A
  1. general eco conditions (aggregate demand)
  2. conditions in firm’s industry
  3. demand for a firm’s products
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12
Q

how do conditions in a firm’s industry affect its level of output?

A

change in consumer tastes & preferences for g&s –> change allocation of labour betw diff industries (labour is derived demand)

industry’s barriers to entry, lvl regulation/price comp affects demand for albour –> increase in industries w/ ^ demand for their products & decrease for those experiencing lower demand

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13
Q

how does demand for individual firm’s products affect a firm’s level of output

A

output ultimately determined by effectiveness in selling g&s in marketplace
-quality of products
-reputation & size of firm
-customer service
-marketing efforts

even overall decline in demand in industry, possible for firm to achieve growth in output if increases market share

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14
Q

how does labour productivity affect demand for labour

A

firm must determine how to organise production
-use labour more intensively/relying heavily on tech & automated processes
-productivity of labour & labour costs compared with other inputs (capital) determine extent firm uses labour in production

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15
Q

labour productivity formula

A

total output
/
labour input

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16
Q

what does labour productivity depend on?

A

quality of workforce
-lvl education, skill, health

how efficiently labour can be combined with FOP in production process
-eg investment in tech allows more produced for each hour of labour input

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17
Q

what does higher labour productivity in the short run indicate

A

fixed no. workers produce more g&s –> output of firm rising w/o firm increasing no. workers

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18
Q

what will the overall effect of an increase in productivity on demand for labour (short) depend on?

A
  1. current level of aggregate demand
  2. cost of other inputs (capital, including foreign operations)
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19
Q

if aggregate demand is rising, how will this affect productivity from demand for labour?

A

higher demand for g&s
-if rising faster rate than ^ productivity, higher demand > higher production from existing workers
-bus will increase demand for labotu to meet higher lvl of AD

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20
Q

if aggregate demand is unchanged, how will this affect the productivity & the demand for labour (short)

A

if labour productivity rising, existing workers producing more g&s BUT wont be any higher demand
-bus have EXCESS capacity & won’t need more labour

demand for labour decline
-higher productivity = bus cut on workers & still produce same output as before

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21
Q

if aggregate demand is FALLING, how will this affect productivity & demand for labour

A

AD falling but labour productivity RISING, demand for labour FALL MORE
-existing workers produce more output, still less demand for output in eco
-if bus maintain profits, lower demand for labour

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22
Q

how will higher labour productivity make labour a more attractive inut to production than the other FOP in LONG RUN

A

firm may shift towards labour production methods if more productive (capital too exp)
-increase labour demand

if prod labour < improv tech & capital, LD may decline
-new tech improve efficiency of capital investment & create cheaper alt prod methods, allow firms to reduce demand ofr labour while output levels same/increase

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23
Q

how do cost of other inputs affect demand for labour

A

firms have range of options for combination of labour and CAPITAL (equip)
-if new tech reduces costs, firms use more capital inputs in PP & less labour
-if labour costs fall, firms shift to labour > capital in PP

capital is sub for labour
-changes in price price of capital have similar effecto n demand for labour

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24
Q

when will a firm’s demand for labour be more ELASTIC (responsd more sharply to price changes)

A
  1. easy to sub betw labour & capital
  2. labour costs relatively high prop of total costs
  3. more diff for firm to pass increased labour costs as higher prices to consumers
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25
Q

labour-on costs

A

additional costs of employing labour
-sick leave
-holiday pay
-superannuation

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26
Q

ceteris parabus, demadn curve for labour reflects business will..

A

employ more labour when cost of labour declines

employ less labour when cost of labour increases

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27
Q

why is interest rate most important in cost of capital?

A

represents cost of borrowing funds to purchase new capital equip

represents opp cost if firm using own funds to finance capital expenditures
-could be earning returns on funds than investing back into bus operations

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28
Q

what are the factors determining the cost of capital

A

INTEREST RATES

tax system structure (special tax allowances might encourage greater bus investment)

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29
Q

besides labour & capital, what else may firms consider for its labour demand

A

shifting some operations overseas (engage w/ overseas contractors to manufacture goods/provide services offshore)
-esp if labour costs lower elsewhere

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30
Q

6 output factors influencing labour demand

A
  1. general eco conditions
  2. conditions in firm’s industry
  3. demand for indivudal firm
  4. productivity of labour vs other inputs
  5. cost of labour vs other inputs
  6. cost of labour bs cost of foreign labour
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31
Q

human capital

A

knowledge, skills, training, experience of workers contributing to PP

reflects quality of labour force

main influence on producitvity growth

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32
Q

what 5 factors influence the SUPPLY of labour?

A
  1. pay levels
  2. working conditions
  3. edu, skills & experience requirements
  4. mobility of labour
  5. labour force participation rate
  6. other factors
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33
Q

how do pay levels affect the supply of labour?

A

wage/salary paid to employees for labour for firm/industry
-higher pay offered, more ppl prepared to sacrifice leisure time & supply labour
-non-wage/salary incentives can be included in employee’s remuneration package
(superannuation benefits)

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34
Q

how do working conditions affect supply of labour?

A

attractive working conditions encourage higher supply of labour to workplace
-those offering flexible owrking hrs, opp to work from home, generous holiday leave entitlements & positive working environment attracts more labour

some jobs offer opp to travel, training opp & experience, higher lvl job satisfaction

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35
Q

how does education, skills & experience requirements affect supply of labour?

A

jobs require lvl training/experience or formal qualification/license (HUMAN CAPITAL)
-supply of labour limited by availability of human capital (no. ppl w/ appropriate skilsl for jobs)
-jobs with advanced skills –> labour supply shortages (acquiring skills can take years/sig costs)
-country’s edu & training system & skill-based immigration helps determine supply of skileld workers

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36
Q

hwo does mobility of labour affect supply of labour?

A

affected by responsiveness to changes in demand for labour in diff areas & industries

jobs & occupations require workers to relocate to distant locations with fewer educational & entertainment opps will receive lower supply of laobur
-employers in remote locations need to offer higher wages to attract workers

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37
Q

what are the 2 types of labour mobility

A

occupational & geographical mobility

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38
Q

occupational mobility

A

ability of labour to move betw diff occupations responding to wage differentials & employment opps
-degree depends on edu & skilsl required for certain occupation & time taken to gain credentials (hard for mechanic to become surgeon)

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39
Q

geographical mobility

A

ability of labour to move betw diff locations in response to IMPROVED wage differentials & employment opps

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40
Q

2 factors the limit geographical mobility of labour

A
  1. COSTS of RELOCATING
    -travel, transportation, real estate costs
  2. PERSONAL UPHEAVAL with moving
    -breaking familial ties & changing schools
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41
Q

working-age population

A

no. ppl in eco 14+

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42
Q

labour force/workforce

A

all employed & unemployed ppl in country at PIT

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43
Q

how does the labour force participation rate affect supply of labour?

A

some ppl wanna undertake further study, take care of family, concentrate on lesiure acitivites (rely on other forms of income)

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44
Q

trends in LFPR in AUS

A

overall risen slowly over past 3 decades

sig changes to male & female participation rates
-male DROPPED CONSIDERABLY
-females continued to increase over past 50 yrs, driven by ^ participation of married women in owrkforce
-gap betw participation rates shrunk over 30%

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45
Q

short term influences on participation rate

A

STATE OF ECONOMY
PR pro-cyclical
-times of prosperity & eco growth, ppl inclined to seek work to find better job)
-recession, ppl less optimistic abt job prospects, less inclined

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46
Q

long term influences of participation rate

A

AGEING POPULATION TRENDS & age of retirment
-overall PR will decrease as prop of pop over 65yo increases, majority in retirement
-however retire later, more jobs in less labour-intensive roles

SOCIAL ATTITUDES
-increase participation of women in workforce
-increased childcare support
-lower fertility rates
-increased age women qualify for age pension

INCREASED SCHOOL RETENTION RATES
-growing tendency for young ppl to remain at school longer & seek full-time tertiary education
-join workforce later in life

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47
Q

what are the ‘other factors’ affecting supply of labour?

A

GVT POLICY decisions/ collective action of those providing labour within industry

-AUS historically filled labour market gaps w/ immigration, policies heavily weighted towards skilled migrants

-professional associations eg. Law Society impose standards of edu, continuing training & professional conduct
-restricts supply of labour

GVT limit supply of labour to certain occupations by imposing certain qualification & licence RESTRICTIONS

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48
Q

when is a person calssified as employed

A

1/+ hrs of work per week

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49
Q

what are the 2 most important aspects of the workforce?

A

SIZE
-bigger workforce, greater contribution to producnig g&s

QUALITY of labour
-well educated, highly skilled workforce more productive

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50
Q

what 3 factors affect the size & quality of the workforce?

A
  1. size of population
  2. age distribution
  3. educational patterns
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51
Q

how does population size affect size & quality of workforce?

A

sets limit to which workforce can grow
-larger population, greater potential workforce

influenced by 1. NATURAL INCREASE 2. NET MIGRATION

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52
Q

natural increase of migration

A

births > deaths in pop over 1 year

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53
Q

net migration

A

excess of permanent new arrivals to country over permanent departures in 1 yr

strong eco grwoth, labour shortages prompt gvts to raise migration quotas, expanding aggregate supply > aggregate demand altho greater demand for housing & public services

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54
Q

aus demographic trend & why

A

over past few decades AUS’ natural increase DOWNWARD trend
-families have fewer children
-couples marry later age than previous generations
-both spouses in full time work

NET MIGRATION fluctuates considerably, strongly invluenced by level of eco activity
-depressed eco activity & high unemployment, gvt reduces migration to ease pressure on labour market
-main role of growth in AUS population

overall population expected to be slower

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55
Q

how does age distribution affect quality & size of workforce

A

prop workers in 15-65 age group declining
-exacerbate imbalance and skill shortages

growing no. ppl in retirement
-declining birth rates & increasing life expectancy (higher health & living standards)

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56
Q

how do education patterns affect size & quaility of the workforce (most imp for quality)

A

those acquire skills through years of training & studying have higher earnings, around 2x than dropouts

AUS spending on edu > OECD average
-extent of private funding to cover edu costs

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57
Q

overall demand for labour is most heavily influenced by _____ in an economy (lvl of eco activity)

A

level of eggregate demand

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58
Q

increase in PRODUCTIVITY of labour witll have ____ influence on the demand for labour , accompanied by ____ aggregate demand

A

positive

rising

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59
Q

change in realtive costs of capital and labour will influence demand for labour but can be overshadowed by

A

changed in lvl eco activity, of persistent declines in labour productivity & rises in relative cost of labour
-long term incentives for firms to sub labour for capital

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60
Q

labour markets that require high-level skill (medical specialists) more closed than requiring lower level skills. what supply curve does this have?

A

inelastic

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61
Q

what source of income produced by the labour market is most important for Australian households

A

wages & salaries

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62
Q

measures of wage outcomes

A
  1. average weekly earnings
  2. differences in wage outcomes
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63
Q

average weekly earnings

A

changes in average total earnings for all employees
-measures weekly gross rate of pay (before tax) to full/part time employees + overtime

employers can afford higher real wages if there’s strong increases in productivity
-grwoth REAL wages > productivity growth, REAL LABOUR COSTS rise and lower employer’s profits
-wage growth < inflation + productivity growth –> real labour costs fall, profits expand
-real labour costs rising , employers employ less labour and use tech in production (protect profit) –> higher rate unemployment

real labour costs have been falling

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64
Q

looking at changes in nominal (money) wages doesnt tell us whether ppl better off because

A

they dont account changes in price levels possibly occuring at same time

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65
Q

nominal wage

A

pay received by employees in dollars for contribution to PP, not injusted for inflation

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66
Q

real wage

A

measure of ACTUAL purchasing power of nominal wages adjusted for effects of inflation

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67
Q

in most years, %^ in nominal wages is less/greater than percentage increase in general price level

A

greater than > (real wages generally rising)

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68
Q

difference in wage outcomes

A

labour market made up of micro-markets (market for each occupation & individual enterprise), where wage rate differentials occur

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69
Q

wage differentials betw diff occupations

A

diff occupations require diff lvls edu & skills
-wage diffs betw workers reflect diff lvls edu & skills to perform jobs
-some occupations naturally involve working conditions less appealing (dirty), paid higher for compensation

occupational mobility influences occupational wage rates
-OM high = supply of labour to occupation high –> less need for employers to raise wages to attract labour

70
Q

occupational mobility

A

ease which LABOUR can move from one occupation to another

71
Q

wage differential stats betw diff occupations

A

income distribution unequal across 8 major occupation groups

MANAGERS highest paid group (higher lvl experience required)

SALES workers lowest paid group

72
Q

wage differentials in the same occupation

A

various degrees of experience
-higher qualifications & experience paid more (valuable)

GEOGRAPHIC MOBILITY
-employers in remote locations have to pay higher wages to attract labour than city where supply of all types labour plentiful

PRODUCTIVITY OF LABOUR
- employees often gain higher wages at individual enterprise level for increasing productivity

CAPACITY OF FIRM TO PAY
-some firms more profitable, greater capcity for higher wages
-firms with market power (hence ability to set prices and earn higher profits) able to pay higher wages than ones facing greater competition in their product markets

73
Q

geographic mobility

A

ease which labour can move from one AREA to another

74
Q

age in wage outcomes

A

incoem remains highest 25-64

15-19 lowest
20-24
35-54 highest

less education & experience

75
Q

gender in wage outcomes

A

discrimination by employers against certain groups –> fewer job opps, lessa ccess to higher paid jobs –> lower earnings (women, ATSI, disabilities)

diff bet male & female earnings
-many women forced to reduce paid work hours to fulfil unpaid maternity roles
‘GLASS CEILING” invisible barrier for women to access top paying positions
-earn 71% of men weekly

HUMAN CAPITAL FACTORS
-past attitudes of role of women in society, fewer opps for edu, skills, qualifications, still earn less in similar jobs

76
Q

migrant status & cultural background in wage outcomes

A

1/3 aus workers born overseas
-avg income of AUS workers with MIGRANT bg 1% < national avg, integrate into workforce quicker than most countries (aus migration targets skilled workers)
-skilled migrants hae higher lvls skills than avg AUS workforce
-in highest-paying occupational categories (managers) migrant workers earn > avg taxpayers
-lowest-paying occupations, (sales, labourers) AUS born higher paid
-receive lower rewards for edu than AUS born (weaker english proficiency than discrimination)

ATSI longer-term & higher lvls disadvantage, 33% lower weekly income

77
Q

enterprise bargaining

A

negotiations betw employers & ees/their representatives abt pay & work conditions at lvl of individual firm

78
Q

trends in distribution of income from work

A

1980s employee wages determined by INDUSTRIAL ‘award’ decided centrally by FWC (GVT appointed industrial tribunal)
-diffs in wage outcomes between & within occupations smaller

early 1990s shift to ENTERPRISE BARGAINING
-employers & ees negotiate wage increases at workplace lvl
-greater diffs in wage outcomes for diff industries & individuals

since mid 1990s, relative household incomes only changed slightly
-reflects increased family benefits for lower-income earners have OFFSET increased WAGE DIFFERENTIALS

79
Q

DISTRIBUTION OF INCOME stats

A

considerable INEQUALITY in distribution of income in AUS, GROWN slightly over past decade

top 20% incomes account ~40% total income
-avg weekly incomes >5x higher than avg of bottom quintile

share of total income to bottom 40% of income recipients relatively constant

2000-2020, highest income earners gained extra percentage pt of incoem share while share of almost every other group shrunk
-highest income earners gaiend incoem share at expense of middle quintiles

80
Q

why are diff wage outcomes across diff industries also result of changes in STRUCTURE of ECONOMY?

A

emerging industries that require skilled labour (maybe short in supply) likely to pay higher wages than declining industries experiencing lower profits & falling demand for their g&s

81
Q

icnoem distribution within occupations

A

recently increase in dispersion of earnings within occupations & among employees with same skill lvls/educational qualifications
-shift AWAR from centralised wage determination (early 1990s)
-declining lvl union membership in AUS
-higher rates of union membnership create similar wage outcomes for workers doing similar jobs in diff firms & industries

82
Q

non wage outcomes (not in avg weekly earnings stats)

A

benefits many employees receive in addition to their ordinary & overtime payments (sick leave, super) to work from home for part of week

83
Q

several types of non-wage outcomes

A
  1. SALARY PACKAGING
    -wages & benefits/assistance supplemented w/ other benefits (gym membership) from employer
  2. BONUS CASH PAYMENTS on TOP of employee’s NORMAL WAGE
    -payments made as PERFORMANCE BONUS based on COMPANY’S PROFIT /employee’s INDIVIDUAL work performance
  3. improving FLEXIBILITY for employees in their WORK PATTERNS
    -extra parental leave, extended leave w/o pay
84
Q

economic benefits to inequality ELMEC

A

(increase productive capacity of resource & increase real GDP per capita mainly derived from INCENTIVE effects of inequality)

  1. encourages labour force to increased EDU and skill levels
  2. encourages labour force to work LONGER and HARDER
  3. makes labour force more MOBILE
  4. encourages ENTREPRENEURS to accept risks more readily
  5. created POTENTIAL for higher SAVINGS and CAPITAL FORMATION
85
Q

how does inequality encourage the labour force to increase education & skill levels?

A

those w/ higher qualificaqtions & skills reap higher income rewards
-new entrants & existing participatns in labour force encouraged to improve edu & skill lvls
-as long as low-incoem recipients can afford to pay edu & training, income inequality encourages increase in quality of labour force

86
Q

how does inequality encourage the labour force to work longer & harder?

A

potential to earn higher incomes produces incentvie for workers to work overtime, enhance eco growth
-only willing to give up lesiure when feel extra income is more valuable than leisure time
-if ^output rewarded through higher pay, encourages improved labour productivity

87
Q

how does inequality make the labour force more mobile?

A

higher incomes act as incentive to encourage labour to move where needed most
-mobile LF –> more efficient allocation of resources & higher eco growth rate

88
Q

how does inequality encourage entrepreneurs to accept risks?

A

prospect of considerable income rewards encourages entrepreneurs to undertake investment
-unless received extra reward for risk taking, fewer entrepreneurs & businesses
-lower rate of eco grwoth
-fewer jobs
-reduced productive capacity in economy

89
Q

how does inequality create the potential for higher savings and capital formation?

A

higher income individual earns, greater prop of income saved
-greater income inequality encourages increased savings in eco bc greater no. higher income earners
-increased savings reduces AUS reliance on foreign capital by providing domestic funds for investment

90
Q

6 economic costs of inequality UEICPW

A
  1. reduces overall UTILITY
  2. reduce ECO GROWTH
  3. reduce CONSUMPTION and INVESTMENT
  4. creates CONSPICUOUS consumption
  5. creates POVERTY and SOCIAL problems
  6. increases cost of WELFARE support
91
Q

how does inequality reduce overall utility?

A

ppl higher incomes gain less utility from increase in income > lower incomes
-diminishing marginal utility (as more of good consumed, provides progressively less utility to consumer)
-equitable distribution of income increase overall lvl satsifaction in society
-hard to measure accurately tho

92
Q

how can inequality reduce eco growth

A

slows rate of eco growth
-low income earners spend higher prop of income, contribute to growth
-unequal socieites undermine edu opps for children from poor backgrounds –> less productive, less skilled workforce

93
Q

how does inequality reduce consumption & investment

A

low income earners spend higher prop of income than rich
-cost of necessities takes higher prop income
-inequality = less income towards consumption
-lower eco activity, employment, investment, living standards

94
Q

how does inequality create conspicuous consumption?

A

inequality creates ‘lesiure class’ of higher income earners in society
-large prop of money towards ‘conspicuous consumption’ (consumption of expensive g&s to display wealth & status
-culture where individuals sense of worth depends on lvl of weath compared to others

95
Q

how does inequality create poverty & social problems

A

poverty contributes to development of underlclass of low-income earners w/ limited access to edu opp, suffer health disadvantages reducing LFP and create self-perpetuating cycle of disadvantage
-reduces edu opp & lowers self esteem
-ppl dont work to full capcity/at all

96
Q

how does inequality increase cost of welfare support

A

gvts provide net income support for unemployed, aged, disabled
-demand on gvt revenue

97
Q

4 factors why inequality of opportunity exists in AUS

A
  1. inequality in distribution of income
    perpetuates inequality of opp (pay for edu & uni)
  2. everyone has diff mental & physical attributes and potential to acquire income
    -manual work talented lower paid
  3. acquire health through inheritance greater opp to build wealth through investments than those with none
  4. ppl dont have access to same networks of ppl for new opp
    -new migrants diff to access social & bus networks,
    -diff to overcome bc barriers exclusion eg. similar social background
98
Q

3 main social costs of inequality (social class divisions, poverty, lower levels of wellbeing)

A

(social class divisions, poverty, lower levels of wellbeing)

99
Q

how does inequality affect wellbeing

A

-advanced ecos, social problems (crime, life expectancy, mental illness) related to country’s lvl inequality than changes in lvl national income
-best long term strat to reduce social problems & low trust within society were reducing inequality (not increasing eco growth)

100
Q

how does inequality affect social class divisions

A

societies divided into working, middle & upper class
-become entrenched when ppl w/ diff income lvls become isolated from each other
-ppl similiar income levels cluster in same subrurbs w/o diff backgrounds
-entrenched class divisions limit opps & social mobility betw classes

101
Q

how doesi nequality affect poverty

A

trap families in vicious cycle of low incomes & limited eco opp
-increased crime, suicide, health risks, reduce life expectancy

102
Q

need to satisfy 3 criteria of being unemployed, ‘actively seeking work’

A
  1. regularly check ads from diff sources for available jobs
  2. willing to respond to job ads, apply w/ employers, attend interveiws
  3. registered with employment placement provider member of Workforce Australia Online (gvt funded employment service platform)
103
Q

unemployment rate formula

A

% = no. unemployed
/
total labour force

x100

104
Q

types of unemployment
CSLSFHHU

A

cyclical
structural
long-term
seasonal
frictional
hardcore
hidden
undermployment

105
Q

cyclical unemployment

A

caused b DOWNTURN in bus cycle
-demand for labour is derived
-demand for g&s falls
-firms forced cut back production, retrench workers to maintain profit levels

reduced when UPTURN
-aggragate demand rises –> increasing demand for firm’s g&s –> increase demand for labour to increase prod levels –> more jobs available and unemployment falls

106
Q

structural unemployment

A

mismatch betw skilsl demanded by employers & those possessed by unemployed
-restreucturing of eco from old to emerging industries
-introduction of technology increases this
-old skills inappropriate in newer industries

107
Q

long term unemployment

A

unemployed for 1 yr/+
-longer person out of work, harder to get job
-eg. cyclical unemployed then upturn didnt grow quick enough to eliminate all CU
-lose job-related skills & employers reluctant to hrie someone out of work for long

108
Q

seasonal unemployment

A

changes in labour amrket regularly yrly due to jobs seasonal nature
-tourism, christmas

109
Q

frictional unemployment

A

as ppl change jobs
-takes time to move betw jobs, must search for employment opps, attend job interviews, complete administrative details

improving efficiency of job placement services can reduce

110
Q

hardcore unemployment

A

unsuitable for work bc personal reasons (mental illness, drug addiction)

111
Q

hidden unemployment

A

not counted in official undemployment figures bc gave up actively seeking work/back to school
-rises udring prolonged eco downturn
-slower growth in AD –> prospects finding job low –> some discouraged from continuing to seek

rise reflected in fall in LFPR

112
Q

underemployment

A

part time/casual jobs like to work more hrs /week
-underutilised labour resources due to labour market conditions

113
Q

recent unemployment trends AUS

A

past 40 yrs sig eco policy challenge
-sharp upward trend avg unemployment 70s-90s
-severe RECESSION early 90s peaked
-AD collapsed, cutbacks in production & closure of firms –> shedding of labour, increase unemployment

early 90s structural change (MICROECONOMIC REFORM)
-many lost jobs in declining industries during recession
-unable to obtain new jobs in emerging industries (job vacancies required higher/diff skills)

93-2008, gradual downward trend
-GFC milder in AUS
-quick recovery 2010

2010s stayed 5-6%, below avg for adv ecos
-COVID, highest in 20+ yrs, better than most tho
-recovered 2021

114
Q

structural changes

A

pattern of production in eco altered over time

certain products, production processes, industries disappear while others emerge

115
Q

AUS unemployment & geography

A

diff unemployment rates betw cities, regions, remote areas
regional tend higher than metropolitan
-NSW vs tasmania and SA

116
Q

3 reasons why labour market undergoing substantial change recently,

mention changes in bus practices

A

-changes in business practices
-eco conditions
-gvt policies

for work practices: shift away from full time to work arrangements giving business more flexibility
-part time, casual, outsourcing, individual contracts

117
Q

part time employment

A

employees regularly working > 35 hrs/week
-dont follow set pattern
-most insecure, uncertainty of work in future
-grown dramatically over decades + casualisation of work

118
Q

casualisation of work

A

growth of casual employment & relative decling of full-time jobs as prop of total workforce

119
Q

why is part time employment so big in AUS

A

part time allows flexibility to balance responsibilities (family commitments)
-more women (greater share of child raising responsbilities)

sometimes employers choice, not own
-greater flexibility in managing labout costs with employees not employed on full-time basis
-busier, can increase hours for staff, dont face extra overtime costs/costs hiring add stuff
-avoid responsibilities for full time, (holiday leave, long service leave, redundancy pay)

120
Q

changing employment structures for labour market

A

shift away from direct employment arrangements –> use contractors, outsourcing, sub-contracting arrangements
-flexible, less secure work arrangements allow bus to change staffing levels easily & often as bus conditions change

121
Q

why would firms engage CONSTRACTORS (changing employment structures)

A

provide specific service for bus (specialised consulting advice)
-diff from employment arrangements as governed by COMMERCIAL LAW than EMPLOYMENT law
-often not genuinely in control (uber)

122
Q

outsourcing/sub-contracting as development related to growth of employment contracts (changing employment structures)

A

organisation pays another business to perform function doesnt regard as core bus focus
-immprove efficiency, allowing bus/gvt agency focus on areas of specialisation while leaving other companies specialisign in other functions to do tasks
-shorter-term employment arrangements bc workers usually work on short-term contracts & employed by diff org

eg. gvts outsource most of info tech operations (processing tax returns to external firms)

123
Q

what do the changing employment structures (outsourcing, contractors/sub-contracting arrangements?) benefit to firms

A

firms have staff w/o obligations of normal employment arrangements (paying award wages workers compensation, leave entitlements)

flexibility also beneficial for some workers but ‘permanent casuals’ less job security & lower incomes

124
Q

downsides of employers having fewer employees & more contractors in workplace

A

-loss of staff loyalty to business
-higher rate staff turnover
-less experienced/less highly skilled workforce
-usually hpay higher hrly rate for contracters & outsourced employees to reflect costs no longer paying directly

125
Q

3 casualisation of work advantages

A
  1. FLEXIBILITY for EMPLOYERS to change staffing levels as bus demands change
  2. employers avoid paying non-wage costs
    -penalty rates, redundancy entitlements

3 FLEXIBILITY for EMPLOYEES w/ other commitments

126
Q

3 disadvantages of casualisation of work

A
  1. less JOB SECURITY
  2. more DIFF for EMPLOYEES to plan for FUTURE, obtain home loans, etc w/o secure income
  3. LESS STAFF loyalty & less DEVELOPMENT of workforce skills
127
Q

outsourcing & sub-contracting trend

A

orgs pay PRIVATE SECTOR COMPANY/individual to do non-core functions
-contract based (limited time period) bc jobs only exist until contract expires

128
Q

WORKPLACE/industrial relations system

A

laws, institutions & processes established to manage relationship betw employers & ees.

structure of IRS determines process of wage determination & conflict resolution in AUS labour market
-sets rules how LM operates

129
Q

relationship between employees & ers is known as

A

workplace/industrial relations

130
Q

AUS GVT historically played important role in WAGE DETERMINATION through

A

independent industrial courts & tribunals

131
Q

4 institutional forces affecting labour markets TEIG

A

trade unions
employer associations
industrial tribunals
GVT

132
Q

trade union

A

association of workers aims to advance interests of its members by improving WAGES and WORKING CONDITIONS

133
Q

main role of unions

A

represent members interests by negotiating wage increases

BUT ALSO

present employees interest in issues in workplace eg. safety and organisational changes as company restructures

134
Q

4 types of unions O(IF)G

A

Occupational
industry-based
firm-based
general

135
Q

occupational unions

A

draw members from workers who posess certain skill set regardless of industry/firm they work

136
Q

industry based unions

A

cover workers in particular industry REGARDLESS of type of work they do

137
Q

firm based unions

A

only represent workers of 1 SPECIFIC ENTERPRISE
-very RARE

138
Q

general unions

A

cover WHOLE RANGE of workers with many DIFF SKILLS across VARIOUS industries

AUS Workers Union

139
Q

ACTU 1927

A

Australian Council of Trade Unions

national trade union voice

140
Q

roles of ACTU

A
  1. coordinate wage claims & industrial action across AUS
  2. conducting CAMPAIGNS and RESEARCH
  3. provide input to GVT POLICIES
141
Q

AUS experienced large rise/fall in union membership

A

fall

142
Q

highest lvl union membership vs lowest

A

education sector vs agriculture

143
Q

union membership among older workers is much lower/higher than younger workers

A

higher

144
Q

WIN factors that contributed to decline in union membership

A
  1. changes in WAGE DETERMINATION
  2. changes within INDUSTRIES
  3. changes in NATURE of EMPLOYMENT
145
Q

how do changes to wage determination decline union membership

A

movement away from centralised (GVT) wage determination to ENTERPRISE BARGAINING (employees vs ers) reduced influence of unions over wage outcomes

146
Q

how do changes within industries decline union membership

A

industries experienced greatest growht recetnly dont have history of high union membership
-bus & domestic services, retail trade sectors

sectors with traditionally high union membership
-manufacturing & GVT owned business SHRUNK as share of total EMPLOYMENT

147
Q

how do changes in nature of employment decline union membership

A

UM always highest among permanent full-time workers, who declined recent decades while casual & part time grown

148
Q

EBS role of unions

A
  1. represent employee interests
  2. exercise bargaining power in negotiations with employers
  3. restrict supply of labour
149
Q

how do unions represent employee interests?

A

broader role in influencing labour market outcomes, provide collective voice for workers when management implements organisational changes
-issues affecting workers
better access to training & edu
-improve safety standards in workplace
-easier to combine work & family responsibilities

150
Q

how do unions exercise their bargaining power in negotiations with employers

A

employees act alone, unlikely substantial influence on employer bc limited bargaining power, easy to replace
-join together (strike), sig power diff replace entire workforce
-negotiate higher wage rate than market forces determine

BUT if strong unions convince eployers to pay higher than equilibrium wage rate, quantity labour supplied > quantity of labour demanded
-employment < og equilibrium wuantity
-excessive wage demands in 1 industry may contribute to higher lvl unemployment by pricing labour out of a job
-may face trade-off when unions bargain with employers for wage adjustments to maintain current lvls employment

151
Q

how do unions restrict the supply of labour

A

unions w/ very high membership lvls can restrict SOL to firm/industry on ONGOING basis
-increase wage rate
-restrict hiring employees –> lower supply labour + higher pay

152
Q

although larger employers have greater financial resources than unions, employers are generally not as well coordinated. why?

A

already have greater bargaining power

many instances in direct competition w/ each other

larger employers deal with unions directly than undergoing employer association

153
Q

employer associations

A

typically operate as sector-based/general business lobby groups representing business interests on eco policy issues
-taxation
-regulations
-industrial relations

help employers manage relationships with employees & unions

154
Q

3 most important employer associations at federal level AUS

A
  1. business council of australia BCA
  2. Australian industry group AIG
  3. Australian chamber of commerce and industry
    ACCI

provide national voice for employers
-debate over labour market policy changes

155
Q

employer associations main focus

A

influencing industry/economy-wide changes

eg. FWC’s annual min wage decision

156
Q

how do employer associations benefit both employers & ees

A

lobbying the GVT for protection from:
-foreign competition
-tax exemptions
-industry assistance

to secure larger share of domestic markets for AUS producers

157
Q

4 main roles employer organisations play in the labour market

A
  1. sometimes negotiate wage agreements cover large no. members
    -but multi-employer wage negotiations limited under Fair Work Act
  2. provide ADVICE, TRAINING, DIRECT ASSISTANCE to employers
  3. LOBBYING GVT for changes to GVT POLICIES
    -esp industrial relations (FWC for min. wage change)
    -skills training
  4. represent employers’ INTERESTS in hearings in industrial tribunals
158
Q

FWC fair work commission

A

GVT agency regulates industrial relations AUS(sets minimum standards (wage), resp;ves disputes)

combines functions of industrial tribunal (eg Industrial Relations Commission) w/ role of education & promoting enterprise bargaining

159
Q

how has AUS’ workplace relations framework evolved over past 3 0 years?

A

highly CENTRALISED WAGE DETERMINATION SYSTEM to one allowing more room for wage levels & work arrangements negotiated at individual firm level

allowed wages & working conditions take account specific characteristics of workplace

160
Q

what is AUS’ industrial relations system governed by?

A

Fair Work Act 2009

161
Q

what 3 main streams in the labour market established by the Fair Work system (overseen by FWC) determine the pay & conditions of employees?

A
  1. modern awards
  2. enterprise agreements
  3. common law contracts
162
Q

4 NES National Employment Standards

A
  1. MAX weekly hrs work <39 hrs/week + reasonable hrs of work
  2. right to request FLEXIBLE WORKING ARRANGEMENTS
    -55+, parents, disabled can request change in working arrangements
    -hrs, working from home
  3. LEAVE
    -employees right to paid annual, sick, compassionate leave + holidays
    -right to unpaid parental, community survice, long service leave
  4. CASUAL CONVERSION
    casual employees worked for employer (not small bus) 12+ months MUST offered option to convert to FULL/PART time employment
163
Q

national min wage provides safety net for employee not covered by an ___, responsible by the ___

A

award

FWC

164
Q

awards

A

establish min. wage & working conditions for employees

set of pay & conditions specific to employee’s wrk/industry
-abs min rates of pay & entitlements

extend protections of NES w/ provisions tailored to needs of specific industry
-types of employment
-arrangements when work performed
-overtime & penalty rates
-annualised wage/salary arrangements
-allowances
-leave-related matters
-procedures for settling disputes

165
Q

most common method of wage determination in formal industrial relations system

A

ENTERPRISE AGREEMENTS
workplace agreement negotiated collectively through enterprise bargaining betw employer/s & ees usually represented by UNIONS

166
Q

minimum for enterprise agreements

A

must comply with NES
cannot offer pay rates BELOW equivalent AWARD

167
Q

collective (enterprise) agreements

A

cover all workers to management level in company

168
Q

what issues do collective agreements normally cover?

A

-wage increases (declined under CA over yrs)
-loadings for additional work hrs
-travel arrangements
-other changes relevant to specific sector/occupation

169
Q

common law contracts/individual arrangements

A

not part of formal industrial relations system but comply with all minimum standards

simple agreements often used in small businesses
-add-ons to relevant awards
-cant offer pay rates & conditions below equivalent award unless offer high rates of pay above 167.5 thousand

enforced through ordinary law courts than industrial tribunals which require greater expense for employers/ees.

170
Q

short term work contract

A

contracts which workers employed by labour hire company that sells their labour hire services to another company

Economics (12 decks)

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