Labour Market and Policy - Research Paper Example

The issue of “labour market” and the policy itself seemed endless especially now that we are in the midst global economic downturn. We could easily delineate what labour market is but going through the set of policies itself is comprehensive that one might actually mistaken it as a conventional dogma for future economic undertakings, when assuming, it really gives an overview of policies to improve the state’s employment programs . Moreover, this paper aims to briefly discuss the main and institutional framework of the Australian labour market and how these things function in the midst of industrial relations system. When we first look at the term “labour market”, one would instantaneously relate this in the field of “microeconomics”, in which neither of them seemed understandable at first glance. Hall and Lieberman (2003) defined labour market by emphasizing “labour” as a commodity – something that you could bought or sold in a marketplace. However, they pointed out that labour ‘is still different from other things that are traded. First, seller of wheat do not care who buys their product, as long as they get the market price. Sellers of labor, on the other hand, care about . . . wage rate . . . working conditions, friendly co-workers . . . possibilities for advancement, prestige, a sense of fulfillment . . .’ (p. 311). Furthermore, it has been said that competitive labour market should have the buyers and the sellers – there should be a seller of labour as well as a buyer so both elements could efficiently use up the power and capacity stored in a labour market. Simply put, it is inevitable that there will be a demand for labour or work force to fulfill certain economic activity and accomplish competitive cycle between the seller and the buyer. What I mean by the phrase ‘demand for labour’, is that we, humans need physical strength and work to produce or generate certain end products, which means that a demand for it corresponds to the demand for an input in production. On the other hand, “product market” exhibited another quite simple definition – anything you consume and used are products – chocolate, soap, blanket, couch, television etc. All of these things are part of the so-called “product markets” wherein firms manufactured and created them to sell it to households, therefore, households demand products for consumption. Of course, a certain products will never be a product at all if the firm that produced it didn’t used the economy’s sources such as the labour, capital and natural resources. In this case, labour or manpower is literally an element in a product market, and the latter will never be produced without raw materials plus as well as labour force. However, Hall and Lieberman (2003) argue that there are cases when firms compete in the same product market as well as the labour market. With the world’s present status, it seemed impossible for it to happen now since several countries are on their peak of adjustment with regard to product supply and demand as well as employment programs for our ballooned population. Nevertheless, there still instances when competing firms operate in the same labour market but not in the product market (p. 313). Supposed that two automobile company in Australia such as Ford and Toyota are both confined in producing Sports Utility Vehicle (SUV) for the upperclassmen, but differs in the labour market where Ford would prefer hiring Australian nationals while Toyota company would rather go to accepting people in Asia, specifically China which has a bigger population (and probably strong work force). In this case, Ford and Toyota share a common product market but differ in labour market preference. Eventually, if both automobile companies happened to lessened the production of automobiles because of lower demand for cars among the upper-class population, there would be an automatic change in the in production as well as the demand for labour. These companies may opt to cut off working hours, or worse, reduce the total number of workers, which will directly affect both Australian and Chinese labourers. This phenomenon resulted from lower demand in product, thus cutting off the number of commodity and slashing the labour market. This is what Hall and Lieberman (2203) called “derived demand” – where demand for labour ‘arises from, and will vary with, the demand for the firm’s output’ (p. 313). This phenomenon is not a new fashion for the Australian economy as well as other countries around the globe. Demand and supply curve inevitably moved upward and downward, which may directly or indirectly affect the production and the labour force itself. However, twenty five years after WWII, the change in labour market policy created a good impact for the economy and thus opened up new opportunity for employment and the Australian labour force itself where it witnessed ‘high wage growth and integration of low skilled workers’ (Frijters & Gregory, 2006, p. 1). Many critics argue that long after the repression and devastation of Second World War, Australian policy makers had come to realize that there is a need for change and elevation in social and economic policy goals for the general welfare. Such phenomenon created huge impact in foreign relations, trade industry and the market labour in general, resulting to some changes or reform in the Australian economy. In a written report by Frijters and Gregory (2006) entitled From Golden Age to Golden Age: Australias "Great Leap Forward"?, they argued that the Australian labour market produced extraordinary outcomes in the 60s in terms of absorbing 3 million immigrants despite of poor English language skills, ‘maintaining an almost full employment, as well as increasing average real wages at around 2-3 % a year’ (p. 3), and therefore conceived such changes as the Golden Age of Australia’s labour market. Eventually, positive outcomes have soon diminished in the scene. Several issues pertaining to the elements that affect labour market and the Australian economy have been discussed in the international domain, various researches and reviews have been published, and up to this day, debates and policies over employment continue to heat up, in expectation that perhaps, change or reform in employment might finally come. Historically, Australia was the first country to get the 8-hour working day in 1856. However, there came an issue of Australian women occupying roles in the labour industry, working for various job categories but seemed weak in pursuing collective agreement as well as for other safety measure and benefits in the workplace. Similarly, unemployment became the primary concern of the government as recession during the early 80s and again in the 90s ‘and the persistence of unemployment during the following periods of expansion’ (Organisation for Economic Co-operation and Development (OECD), 2001, p. 69) started to create an impact for the jobless and the economy in general. There was a high percentage of unemployed so as the recipients of unemployment benefits in the past, automatically affecting the Australian labour force. In a review created by OECD in 2000, entitled Innovations in Labour Market Policies: The Australian Way, it noted that unemployment in the1990s rose to a higher peak than was experienced in the1980s and ‘the persistence of long-term unemployment has been even more pronounced than that of total unemployment’ than in the preceding decade (p. 69). Eventually, recipients of unemployment benefits increased due to a staggering number of unemployed Australians in the 1990s. Unemployment benefits in the country are just assistance benefits, wherein beneficiaries include several people who would be handled and case managed by municipal social workers. Whether you have worked temporarily or part-time, you must be accepted to go through the process and receive the enlisted benefits. OECD (2000) elaborated this concern, stating: ‘ . . . United Kingdom’s system of in-work benefits and Canada’s SSP experiment, provide additional incentives only for a transition to full time (or high-hours part-time) employment. In Australia by contrast, net income varies continuously as status varies between unemployment and full-time work. This leaves increased scope for high-hour workers to reduce hours in order to become more dependent on benefits . . .’ (p. 26). Not only at this present decade, that Australia is experiencing a downturn in creating more jobs and offering more benefits to millions of employees in its territories, it actually experienced a decline in employment during the 70s. There was a downshift in the male employment during the 70s, the fact the labour industry is dominated by male population simply because it requires physical strength, vigor and stamina to accomplish heavy tasks However, there has been a twenty-three percent decline in the total population of male workers (from 87 percent to 67 percent) in the 70s, although this shift has slowed down by the early 1990s. Additionally, the same report released that the economic growth between 1996 and 2002 did produce more full-time jobs for the male population, though mostly were in-line were high-skilled jobs (Frijters & Gregory, 2006). And by 2002 – 2005, employment for the so-called less-skilled workers begun to increase, providing them the place for growth and opportunity in various job category. Back in the early days, when we generally speak of employment, men apparently fulfilled the term manpower of an economy. The male populace obviously dominates the labour industry, resulting to the creation of women organizations and unions that advocate women welfare and protection as well as voicing out their rights and privileges in the mainstream. Another issue that the Australian labour market is currently facing is the minimum wage allegedly offered differently to ‘skilled’ and ‘low-skilled’ workers, professional and labourers, and collar workers against blue-collar workers. Apparently, there has been a long debate as to whether educational attainment mattered over what one had gained in the course of working in a certain industry. This statement is still enclosed in a big question mark for several decades, not to mention that several protests and rallies by trade unions around the world have been implemented to raise the issue of minimum wage offered to almost everyone, concluding it unfair and unsatisfactory. And so who would determine the state’s minimum wage and how? The role of Australian Industrial Relations Commission (AIRC) is crucial in setting federal minimum wages for several industries and occupations. Although OECD (2000) noted that the Australian “federal minimum wage” is not based on any legislation and that ‘the very process of setting the minima does not quite seem correspond to the avowed “minimum safety-net” approach, in that minima are not only set for low-skilled, low-pay workers but there is a whole ladder of minima including for high-skilled workers with above-average pay’ (p. 49). Assuming that majority of the Australian population may argue that discussing a legislated minimum wage or determining the minimum pay will still concludes a standard and coherent fee for every worker and employee in the country. Furthermore, the notion of minimum wage is generally considered in any collective agreement wherein two parties (employer and union) must come to an agreement with regard to minimum pay, benefits, paid holidays, paid vacations and other financial help specific to a bargaining unit or trade union. Both parties must abide to common rules until the end of the contract and must strictly adhere to the signed policy. In 2005, AIRC was replaced by the Australian Fair Pay Commission (AFPC), established under the Workplace Relations Amendment Act 2005 which will be responsible in setting the standard federal minimum wage for the coming years. The third element to take into consideration is the Industrial Relations (IR) Reform, which covers wide array of organizational life such as pay rates, working hours and conditions, leave and holidays, training & development as well as organizational restructuring. This has been a major component among Australian political parties for it taps the desire of various industry and employees towards good labor management and programs. The integration of previously separated policy areas with relation to employment policies and workplace relations signaled a progressive and advanced emphasis on employment opportunities and good labour-management. Recent changes have been implemented to improve labour market efficiency, increase employment, productivity and living standards. And all of these will only be achieved through determining wage levels and conditions of employment by means of collective and individual bargaining either in the workplace or enterprise/activity level (OECD, 2000, p. 43). Moreover, the creation of strong union, which is one among the institutional feature of the labour market played significant role in industrial relations system. Present objectives of union can be traced back in Europe where labourers in a specific craft or industry formed an organization to voice out concerns with regard to wage bill, employment for all its members as well as maximizing income for a limited number of union members. This gives way to the tenured and senior members as well as high skilled workers who are vying for an increase salary rate. Moreover, they could also affect the demand for union labor by way of increasing productivity of the members themselves, resulting to an increase for the demand of labour. However, it could also be in reverse: they could lessen the supply of labor (cutting of the number of members) to gain higher wage rates. One way to influence this increase is through collective bargaining. The conception about collective bargaining did not changed except for the fact that it goes through different levels of agreement formally signed by group of employers or employers and union. Grolier Encyclopedia (1995) defined collective bargaining as ‘a process by which unions and employers negotiate terms of employment’ (p. 131). These terms are set forth in a written agreement covering five important main sections: (1) Wages and Wage Supplements; (2) Job Rights; (3) Union Rights; (4) Management Rights, and (5) Enforcement. The first section which spoke of Wages and Wage Supplements literally tackles specific wage provision regarding how much an employee would be paid (minimum wage) in relation to the type of work that he rendered. In addition, it covers paid holidays, paid vacations, overtime rates, sick leave, health insurance and pensions. The second section spoke of Job Rights which covered specific rights and/or privileges of an employee in voicing out work conditions and ‘protect them from arbitrary acts of their superiors. Workers have the right to complain to management without fear of reprisal if they have reason to believe that some provision of the collective agreement has been violated (p.131). It also gives them the seniority rights, the right to promotion and be considered when determining layoffs and transfers While Union Rights established “union security provision” that speak of the group’s recognition as long as it will cover majority of employees in the bargaining unit. Simply put, in any agreement or decisions, majority of members of a certain union or bargaining unit must take into consideration before deciding for the entire body. Not only that unions should have these kind of rights, Management Rights section emphasized the “management’s right to manage” from union penetration. This means that they hold certain rights or protection against unauthorized strike or protests from unions without concluding that a certain rule or agreement had been violated by either of the party. Lastly, Enforcement dictates action – the action to efficiently and fairly enforce or enact all the written provisions, policy or agreement signed by both parties (p. 132). Additionally, there is also a concern for welfare reform system which covers improved education and training programs. This system also applies to Australian who have been experiencing long-term employment to not to rely too much on unemployment benefits and tax, instead encourage them to move out from welfare and go into work. All of these concerns are continuously being raised by several unions in Australia and as years passed, industrial relations reform has been continuously being recognized especially that it now emphasized wage-setting and encouragement of enterprise bargaining. Employees, trade unions as well as employers had now finally found a place where they could freely communicate their concerns and requests pertaining to their rights and benefits. Through ‘Australia’s “collectivist” legacy, the 1996 Act introduced the Australian Workplace Agreements (AWAs) that gives employees and employers more choice . . . of agreement-making and to increase the scope for direct employees participation’ (OECD, 2000, p. 46). Moreover, recent reforms back in 2000 covered multi-skilling, flexible-working time, as well as determining actual pay through bargaining systems (p. 45). OECD presented a review in 2001 entitled “Innovations in Labour Market Policies” which enlisted some statistical indicators of the impact of institutional shift of labour relations and wage determination: ‘(1)Less than a quarter of current employees still have their actual pay determined by awards . . . for 35% of employees, pay is determined by registered collective agreements, and for an additional 2% by registered individual agreements . . . (2) The trade union density rate has declined from over 50% in the mid-1970s to about 25% currently . . . decentralized bargaining system seem to have played an important role . . . (3)The Australian strike rate (number of workdays lost per 1,000 employees) is much lower today than in the 1980s or early 1990s . . .’ (p. 46). Trade unions in Australia had successfully performed their tasks to contend and manage what they believe is true and fair for their part. Labourers have struggled for many decades with aims to gain their rights in fair salary, granting of pensions and other benefits, as well as increasing their individual and collective bargaining power in line with the power that their employers had. Some things may really be paid off, apparently with the creation of Australia Workplace Agreements (AWAs) formed between the employers and employees to set forth both parties’ issues and concerns with regard to negotiating pay and conditions of employment. From the downfall in the 70s, the labour market together with the Australian economy tried to recuperate from such depressing situation and started to create another new world for employment and the demand for labour supply. However, trade union membership had changed in recent years. In an online article posted in bized.co.uk, some of these reasons were as follow: ‘(1) a dramatic fall in the number of jobs in manufacturing companies where union membership was traditionally high (2) larger numbers of unemployed people (3) a fall in traditional full time employment and an increase in part time and temporary workers who are less likely to join unions, and (4) an increase in the proportion of the workforce employed by small companies where it is often difficult for unions to organize . . .’ (biz/ed, 2009) Despite the fact that union membership decreased, objectives and conventional practices among unions around the world will continue to live – for the rights of each employee and for the progress of labour market in Australia. If the government as well as with cooperation of firms and trade unions will attempt to create an open communication for employment programs, there is a greater chance for a reform in today’s labour market policy. References Anon. 2009. How has trade union membership changed in recent years?. Retrieved 16 August, 2009, from http://www.bized.co.uk/compfact/tuc/tuc15.htm. Anon. 1995. Labour Union. Grolier Encyclopedia of Knowledge, 11:130-134. Frijters, P. & Gregory, R. 2006. From Golden Age to Golden Age: Australia’s “Great Leap Forward”. Retrieved 16 August, 2009, from http://eprints.qut.edu.au/3626/1/3626.pdf. Hall, R. & Lieberman, M. 2003. Microeconomics: Principles and Applications, Updated 2nd ed. Mason, Ohio: SouthWestern College Publication. Organisation for Economic Co-operation and Development (OECD). 2001. Innovations in labour market policies. Retrieved 16 August, 2009, from http://213.253.134.43/oecd/pdfs/browseit/8101111E.PDF. Read More