Topic 4 - Microeconomic policies Flashcards

Question

What is the purpose of privatisation?

Answer 1

Helps gov saves money and increase efficiency through opening up the market. It also allows for one off revenue, which can be used to find a budget deficit

Answer 2

Aims to promote competition in markets so that firms increase efficiency and lower prices for consumers (product market reform). It was formed in 1995

Answer 3

The national competition watchdog is Australian Competition and Consumer Commission (ACCC)

Answer 4

govts agreed to implement reforms that would increase comp in the sectors where they operated monopolies, such as electricity, gas, water and rail transport Govt also agreed to remove special provisions that gave publicly owned enterprises an advantage over private sector competitors (competitive neutrality principle) Workable competition - to achieve IC, no of firms may need to decrease --> remaining firms can operate on larger scale --> lowest possible LRAC Converted practices are also banned; they include actions such as sending price information to competitors, even if there is no formal agreement to collude to raise prices Business are banned from reducing competition in the market by lowering prices, refusing to supply goods or services or other behaviours

Answer 5

Monopolisation - firm uses its dominant market position to eliminate competition eg through temporary price cutting Price discrimination - firm sells the same type of g/s in different markets at different prices (for reasons not related to diff. costs e.g. for transport) Exclusive dealing - firm sets conditions for S that exclude retailers from dealing with other competitors Collusion and market sharing - firms get together to fix prices or agree on a market sharing arrangement that reduces effective comp between firms

Answer 6

The labour market policy covers public interventions in the labour market aimed at reaching its efficient functioning and correcting imbalances. The primary target groups are those people unemployed or employed at risk of involuntary job loss.

Answer 7

Aus has traditionally regulated its labour market through a mix of federal and state laws, with significant overlaps between the two different systems.

Answer 8

Over time, Aus developed separate industrial relations system - with six different state systems plus the federal system

Answer 9

These systems establish minimum wages and conditions for employees through a system of industrial awards for employees, based on their industry or their occupation. Some awards are made at a Commonwealth level, while others could be made at a state level.

Answer 10

Inefficiency of separate state and federal systems --> fair work act 2009 creation

Answer 11

Enforcing the Fair Work Act, which covers 9/10 workers in Aus, however WA is the only state that has not referred any powers to the federal government Commonwealth replaced most state based awards with simpler federal awards, and also established a national system of occupational health and safety legislation, replacing separate state systems

Answer 12

State and territory regulation of the labour market is now limited mostly to state gov employees and to a smaller range of specific issues such as the regulation of workers’ compensation, public holiday and long service leave.

Answer 13

minimum employment standards Minimum wages Awards Enterprise agreements Employment contracts for high income earners

Answer 14

These are a set of 11 minimum entitlements for employees covered by the Fair Work Act 2009, and applies to all national system employees and employers. It creates a safety net entitlement for all national system employees.

Answer 15

Maximum weekly hours of work Right to request flexible working arrangement Leave Notice of termination and redundancy pay

Answer 16

Parents or carers may request a change in working arrangements to assist them for caring for a child, such as changes to start and finish times, split shifts, job sharing and working from home. Employers can only refuse on ‘reasonable business grounds’

Answer 17

Employees have the right to paid annual leave, public holidays and carers and compassionate leave. They further have the right to unpaid parental, community service and long service leave

Answer 18

Employers are required to give between one and four weeks of notice of a job termination, determined by how long a person has been employed. Workers are also entitled to redundancy pay, determined by duration of employment

Answer 19

A minimum wage is the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract A national minimum wage provides a safety net for any employee not covered by an award, and prevents the DOYW being too bad

Answer 20

National minimum wage- As of 1 July 2023, minimum wage is $23.23 per hour. An increase of 5.75%

Answer 21

minimum employment standards Minimum wages Awards Enterprise agreements Employment contracts for high income earners

Answer 22

Awards are a set of pay conditions that are specific to an employee’s work or industry sector They provide a safety net of minimum wages and conditions Instead of having a single minimum wage rate, Aus has different minimum pay rates in different awards Modern awards extend the protections of the NES, with provisions tailored to the needs of the specific industry or occupation. Includes types of employment, arrangement for when work is performed, superannuation, overtime and penalty rates, annualised wage or salary arrangements, allowances, leave related matters, and more

Answer 23

minimum employment standards Minimum wages Awards Enterprise agreements Employment contracts for high income earners

Answer 24

There are 121 awards now, which is a reduction from 4300 awards prior. However, some states continue to operate some awards They are mainly based on an industry classification as opposed to occupational classification

Answer 25

It is a new clause in the modern award which: ENables individual employees and employers to vary the effect of an award to meet their individual needs without negotiating a separate agreements Clause must leave employee better off and can only vary certain specific award terms such as overtime rates, penalty rates and leave loading It may be rejected and no discrimination may ensue as a cause of it

Answer 26

Enterprise agreements are workplace agreements which are negotiated between employer and a group of employees, usually through a union All agreements must comply with NES and cannot offer pay rates below that mandated by the equivalent award

Answer 27

Employers can be required to engage in bargaining discussions if a majority of employees vote in favour of seeking a collective agreement

Answer 28

A common law contract is an individual agreement between an employer and individual employee that sets out pay and conditions for work. These are commonly used by small businesses and high income earners not covered by awards However, employers must still comply with all award requirements that apply to employees

Answer 29

This is because awards are done to provide safety nets for low income earners, however, hgih income earners dont need as much protection, so they have higher freedom of negotiation

Answer 30

For people earning over $162 000 a year (set in 2022-23)

Answer 31

A common law contract which is an individual agreement

Answer 32

Industrial dispute occurs when employers or employees take action to disrupt the prod process in order to highlight a disagreement b/w employers and employees Disputes can arise because of disagreements over issues such as changes to wages, work conditions, business restructuring and specific actions of employers that employees consider wrong or unfair.

Answer 33

Strikes, where employees withdraw their labour and refuse to work Work bans, where employees refuse to undertake a certain aspect of their work Lockouts, where employers refuse to give employees access to their workplace until agreements are reached

Answer 34

Industrial relations refers to the laws, conventions and institutions that help regulate workplaces

Answer 35

Conciliation and Arbitration

Answer 36

Firms and employees meet to discuss their differences in presence of third party (such as industry tribunal) who attempts to bring parties to an agreement. Tribunals do not legally impose a resolution, but once the parties reach an agreement, they may undertake proceedings with the tribunal to formally implement the agreement

Answer 37

This is where industrial tribunal hands down a legally binding rule to firms and employees. This occurs after the tribunal has given both parties a chance to state their arguments Used where conciliation is unsuccessful to resolve disputes and return employees to work

Answer 38

Yes, due to costs associated with conciliation and arbitration

Answer 39

Compulsory dispute settlement terms bargaining in good faith resolving industrial action

Answer 40

FWA requires all awards and enterprise agreements must include a term explaining the process the parties will adopt if they have a dispute relating to their agreement. Outlines that if parties cannot resolve by themselves, they must refer it to a 3rd party org

Answer 41

Obliges employers and employees to adhere to certain provisions when at the bargaining table. It aims to reform the conduct of negotiations. Aim of bargaining rules is to put pressure on both parties to reach an agreement If some FWC obligations arent fulfilled, then the FWC can make legally binding orders (although those are rarely issued)

Answer 42

Participating in all meetings Disclosing relevant information Giving genuine considerations to all proposals Refraining from conduct that would undermine collective bargaining

Answer 43

Industrial action is only permitted during process of enterprise bargaining FWC able to intervene to suspend/terminate industrial action if special circumstances exist (when significant threat to the economy, or for extended periods of time)

Answer 44

Help to resolve disputes that have become deadlocked between employers and employees, reducing the length of strike action Faster resolution can limit the damage of industrial action to firms (stops prod and undermines profits) and employees (loss of work and income) Can balance the interests of employers and employees An economy can avoid disruptions to supply that can cause damage to other sectors of the economy or to its international rep if supply delays from a strike cause disruption to trade

Answer 45

A centralised labour market is one which wages and other labour market outcomes are primarily determined by a govt, or a govt-appointed tribunal such as the Fair Work Commission

Answer 46

A decentralised labour market is one where wages and other labour market outcomes are determined at an enterprise/workplace level between an employer and an employee Market forces of supply and demand for labour, as well as the individual firm’s capacity to pay, play a greater role in determining wage increases→ ensures more flexibility

Answer 47

Aus is a hybrid of both, as it has centralised aspects such as a minimum wage and awards set out, however, it also has decentralised aspects through having the opporuntitiy for enterprise bargaining and invidual contracts

Answer 48

More efficient allocation of resources Promotes productivity Keeps UE at a lower rate in times of negative shocks (wage flexibility)

Answer 49

Employees are given the incentive to work more efficiently as they can be rewarded directly for their productivity improvements through arrangements at the workplace level A centralised wage determination system means employees are already guaranteed uniform wage increases, regardless of whether or not they improve their skills → no incentivisation to improve productivity

Answer 50

Firms that are more efficient can pay more and therefore attract higher skilled employees In contrast, centralisation can slow down the pace of structural change. If the same wage increases across all industries, wages in one industry are less likely to change significantly in comparison with other wages in another industry. This means profitable/growing industries are less likely to attract more high skilled labour from less profitable and declining industry- slowing structural change

Answer 51

Assists the LM to adjust when economy is adjusted by negative shocks E.g. if recession causes fall in AD, a flexible labour market can allow fall in wages while keeping people in jobs This may help minimise job losses or minimise decrease in firms’ profits during downturn

Answer 52

Decentralisation increases wage dispersion→ greater inequality May increase vulnerability to emergence of wage-push inflation when EG is strong and LM is close to full E Centralised wage determination provides govt with an additional policy tool to use in achieving its eco objectives such as lower inflation and reduced UE- e.g. restrain wages growth to avoid cost push inflation Enforcement of wage entitlements becomes more difficult under a decentralised system

Answer 53

Workers doing the same job in different industries may receive different pay rates and working conditions Wage reflects bargaining power of employees, thus industries or firms where unions have less power are less likely to achieve wage increases Low-skilled workers are easier to replace and so have less ability to demand pay rises All contribute to greater inequality

Answer 54

When full employment, supply of labour is limited, and employers have no alternative except to listen to demands by employees Bargaining power in demanding substantial wage rises leads to inflationary spiral

Answer 55

These policies aim to increase participation in the workforce, improve the productivity of the workforce and prepare workers for future changes in the labour market.

Answer 56

These aim to improve people’s readiness for the labour market and increase participation and productivity It essentially assists the u/e in gaining employment and increases incentives to work and reduces reliance on welfare, ultimately increasing the LFPR

Answer 57

Many of these programs address the individual circumstances that might make it harder for a person to find suitable work, including; a disability, mental illness, language barriers or having been out of the paid workforce for a long period of time

Answer 58

Environmental Management Policies are designed to address environmental sustainability issues such as preservation of natural environments, addressing pollution and climate change, and managing the use of renewable and non-renewable sources. They aim to influence the behaviour of individual households, businesses and industries.

Answer 59

Targets are short term goals which the government seeks to achieve in order to make progress towards longer term objectives in relation to environmental protection.

Answer 60

These are the traditional policy tools for achieving environmentally sustainable goals. Regulations are rules and laws that govern eco behaviour by either: Prohibiting a person from doing something that causes environmental damage, such as littering or producing polluting chemicals Specify how a good or service is produced or consumed, such as rules and environmental procedures relating to agricultural or mining techniques

Answer 61

Market-based policies involve financial incentives or disincentives (subsidies or taxes respectively) to influence the behaviour of households and firms and discourage environmentally damaging activities

Answer 62

These policies aim to address failures in the price mechanism by changing market price and quantity demanded and supplied. Through these policies, positive and/or negative externalities of the production and consumption of G+S are taken into account, thus influencing the market. Market-based response include levying a tax or fee on production that is approximately the same as the environmental costs associated with this economic activity- shifts supply curve leftwards, increasing the market price and reducing the amount consumed in the economy Likewise, govts can provide subsidies to consumers or producers to encourage production of environmentally beneficial G+S- subsidies are grants provided by govt to producers with aim of reducing costs of production and promoting environmentally beneficial activities

Answer 63

Agreements across countries to ensure collective action for environmental management. Collective action through international cooperation is necessary for environmental management polices as nations cannot successfully address global environmental problems on their own. If other nations are not willing to impose strict environmental regulations on their own economy, individual nations are often reluctant to impose them too

Answer 64

time lags global influences political constraints

Answer 65

Refers to the time lag from when govs implement policies to when it generates results. Two types: Implementation time lags Impact time lags

Answer 66

Implementation time lags exists when it takes time for the govt to make change to or to introduce new policies

Answer 67

Impact time lags exists where it takes time for a new policy or a policy change to have an impact on the eco

Answer 68

Short term implementation time lag, as once the deciison is made by the RBA, it has an instant effect on CR. BUT 6-18 months impact time lag (time it takes for transmission mech + change consumer/business behaviour). Thus medium term impact time lag.

Answer 69

Medium term implementation time lag (annual budget) Short term impact time lag (impacts felt in a few months)

Answer 70

Implementation time lag long term (because it takes few years of extensive planning + negotiating change with support of states and territories) - a few years Impact time lag Long term (up to 20 years). Structural change takes a while as resources are allocated to diff sector and full effect on costs, business profits etc is felt later

Answer 71

A Gov can face difficult trade offs in making decisions that are consistent with their commitments and compatible with eco conditions, and that will be passed through Parliament For example, a gov relies on public support, own political party support etc, and needs to satisfy them using eco policies --> vested interests On top of that, there are special interest groups (lobbyists) which attempt to influence gov policies bc of potential financial impact. For example, unions are close to Labour

Answer 72

Conditions in global eco have more immediate impact on us bc globalisation. It can be hard for govs to pursue diff policies to those being adopted in the IBC and RBC Overseas IR: rising in other countries means more attractive to save there than here → outflow of funds + ↓AUD → inflation + undermine confidence ∴ must respond to changes in IR overseas IBC: hard for one eco to grow in global downturn bc ↑growth = ↑Ms but ↓Xs (other countries can’t afford to buy) → ↑CAD → force govt to slow down eco risking more severe recession Int Orgs - WTO can influence individual trade policies. It can place trade sanctions on those countries who dont obey obligations. On top of that, there is the Washington consensus, which is not bbeneficial for all countries G7/G20 having a growing scope --> big influence over global eco --> hard for smaller countires to adopt diff macro stance to those adopted by the bigger ecos

Topic 4 - Microeconomic policies Flashcards

(97 cards)