Changes of Labour Market in Australia - Case Study Example

This paper provides a discussion on the major changes that have occurred to the labour market in Australia. It also discusses the issues raised by the labour market changes with regard to employment relations. It is worth noting that any organisation is made up of three basic resources namely; financial, human and physical resources. Of these resources, only one is leading, that is, human resources while others are non-leading. Therefore, human resources or people are the most significant resources within an organisation. This is because it is people that make all the difference within an organisation (Johnston and Clark, 2008). Therefore, this paper will be very important as it will address issues affecting such a valuable organizational resource. Australia is a developed country and has a very promising economy which attracts many people from the global labour market. The country has been experiencing migration of people to the country in such of employment. This movement impacts on the labour market of the country. Globalization also has a strong impact on the labor markets all over the world. For instance, a job that was earlier done in Australia and a host of other industrial countries is possible to be done somehow cheaply in underdeveloped countries. This is the case for both low-skilled jobs and jobs demanding very high technical skills. Many Australian have realized the nature of competition in the labor market in the world today and they are now willing to undertake these tasks at the prevailing wage rate. Unfortunately, it is likely that this trend will continue in the future. Of course, some Australian firms are setting up research and production facilities in many parts of Africa and employing African professionals. This is an indication that in the near future, most work will be performed in countries that are well equipped to produce goods and services more economically. Major changes have occurred to the labour market in Australia and this paper has made an extensive discussion below; High wages have been witnessed in most companies. This might have been prompted by the fact that there is high competition from industries to attract the best skills from the market. Many firms in Australia pay high wages and salaries to its workers in order to have a competitive edge over their competitors. This is mostly witnessed in capital intensive firms where technological, marketing and management know how is considered a valuable resources of the firm because it gives the firm a comparative advantage over their perceived competitors. Casio (1998) observes that technological knowhow enables the firm to build a better product that is highly competitive in the market. It also used to improve the production processes of the firm in comparison to those of its competitors. Marketing knowhow enables the firm to better position its products in the market. Similarly, the management knowhow with respect to factors such as planning systems, inventory management, organizational structure, human relations and control systems enable the firm to manage its assets more efficiently than its competitors. Other areas where these firms have applied the valuable management knowhow to build comparative advantage include branding operations, management of customer demands and loyalty. Therefore, most Australian firms are now viewing knowhow or expertise as a competitive asset hence the larger the extent at which the expertise is applied the greater the profits that can be earned. Increased hidden unemployment is another change that is prevalent in Australian labour market. Hidden unemployment is caused by persons who are of working age group that are not gainfully employed and are not actively seeking for a job. This means that the figure is not captured when determining the rate of unemployment in Australia as they are not considered counted as constituting labour force. There are many reasons which are attributable to such an occurrence. For instance, some people may give up the search for a job after they undergo a series of rejection in their struggle to get hired. This is also contributed by the existence of gender inequality in Australia (Delahaye, 2005). Family commitments have continued to discriminate against women. It is only fair if both men and women would take equal contributions in family issues and childcare in specific. Many Australian women do not make a come-back to their places of work after giving birth. Since they do not go looking for employment, the unemployment will be hidden. The labour market in Australia has also experienced a decline in labour union membership. Membership to labour unions has been on the decline since 1970. This has been due to changes in workplace relations. If this relationship is severed, an environment for workforce coming together is disrupted. A change in the labour market composition has also played a key role in weakening the labour union. There is shift away from industrial jobs and other employment sectors that were known to be highly unionized. It should be noted that labour unions are created out of a group of people who have some common goals and interests to pursue. Ordinarily, it is hard to unionize workforce from different sectors of the economy. This is also contributed by the employers reluctant to join their employees in a labour union. Employers fear the risk of strike should their staffs join a labour union. This makes most potential employers to have a preference for short term contracted workforce hence an indirect way of discouraging labour unions. This has meant that the number of persons who are registered in a labour union have declined significantly in the recent past. Australian labour market is today characterized by an increase in casual labour. Closely related to decreased union membership is ‘casualisation’ of labour. Many organisation are not offering permanent employment. There is high preference for casual labour as opposed to permanent employment. This has probably been occasioned by the high cost of production where employers feel that permanent staffs are costly to maintain (Gibb, 2008). The reason being a firm cannot pay good salaries and other privileges to its permanent employees without reducing its profits. This is the case because such privileges constitute a cost chargeable to the income statement thus reducing profit for the period. Using casual labour helps to reduce the cost charged against the profit made by the organization since the benefits entitled to permanent workforce are not charged against the profit of the organization hence improved profitability. The other major cause of preference for casual labour is the business cycle. The employer will prefer to contract workforce as casual labour so that the firms will only hire when a need arises. During a boom the employer will be in need of a large workforce in order to meet the production demand. However, he will not need these resources during a recession when the aggregate demand is low and production is also minimized. Casual labours do not call for compensation because of lost job, but permanent employees have to get retrenchment benefits. Structural unemployment is a common phenomenon in the Australian labour market. This is a type of unemployment which is occasioned when there is a fundamental change in technology during the production process (Harrison, & Kessels, 2004). For example, a firm may result to use a technology that saves on labour, for instance, the rampant use of ATMs throughout Australia have really reduced the number of employees that previously worked as bank tellers. Structural unemployment may also occur when new goods are substituted for customary goods, that is, a change in the economic structure. Boxall (1996) acknowledges that this results to reduction for some jobs and rise in the demand for other jobs. Low funding by the government to facilitate education and training may explain why some Australian are not equipped to undertake certain jobs in the market. Many firms are witnessed to use the latest technology in their production process as a way of keeping abreast with modern technology. Blanchard & Thacker (2007) notes that training the old employees on how to use the new technology is considered expensive and unwarranted if the firm has to maximize profits. This has meant that the firm will require new set of employees who are knowledgeable in the use of the adopted technology. The above changes in labour market have raised a number of issues for employment relations. Employment relations entail all resourcing employment aspects which include: staff acquisition, employee development, maintenance, and staff motivation (Bray, Waring & Cooper, 2011). Human resources differ from other organisational resources in many aspects apart from being living things. Human resources are heterogeneous in nature in the sense that they differ in personality, in perception, emotions, values, attitudes, motives and modes of thought. Their behavior towards stimuli is often inconsistent and unpredictable. In addition, while other resources depreciate human resources depreciate as time goes by. Viswesvaran (1996) observes that a well educated, better skilled, more aware of their interests and individual rights are some of the distinguishing features of modern workforce. This proves difficult for employers to use labour by instituting the same procedures and expect efficient and effective utilisation. The labour market is highly competitive, dynamic and complex in nature which makes it difficult for employers to attract and maintain qualified and competent labour force in their organisation. Hunt (1992), states that a contended body of employees will boost the production of the organisation thus sales and profit increases. Employers should embrace diversity in the workplace through incorporating both men and women in all organisational levels. There should be no specified duties for men and others for women – they are all part of human capital that can be utilised to achieve organisational mission and objectives. The discussion below will be based on the impact of labour market changes in Australia for employment relations. Shortage of skills: The high wages by some industries are very attractive to most experts. This leaves some sectors of the economy with shortage of skills hence most firms concentrates on poaching staffs from their competitor rather than developing their own human capital. This has also been contributed by the high cost of training employees. Increase in over employment: Labour cost in most firms in Australia is considerably high because of the demand for high wages by the workforce (Bailyn, 2006). Employers are reluctant to recruit more staffs despite increase in the volume of work. Therefore, most employees are left to work for long hours in order to accomplish the same tasks. In conclusion, the goals and objectives of a firm can be classified into three categories as economic objectives, which include profit maximization and creation of wealth to shareholders. The social objectives include corporate social responsibility and ethical behaviour, and cooperation with the government and creating employment. The rationale behind human resource objective is that any business activity is carried on by people (entrepreneurs) through people (employees) and for the people (customers). The business objectives under this category include welfare of employees, interest of customers and fair dealing with suppliers. Social responsibility calls for maximization of the welfare of employees in the business; however, a business cannot pay good salaries and other privileges to its employees without reducing its profits. This is true because such privileges constitute a cost chargeable to the profit and loss account thus reducing the profit for the business (Suzanne, et al., 2004). Furthermore, a business cannot give better salaries to its employees and at the same time cater for society’s needs as this will entail a double cost to the business, which will reduce the profit tremendously. References Bailyn, L., 2006. Breaking the mold: Redesigning work for productive and satisfying lives. Ithaca, NY: Cornell. Blanchard, P., & Thacker, J., 2007. Effective training (3rd ed.). New Jersey: Prentice Hall. Delahaye, B., 2005. Human resource development (2nd ed.). Minton Qld: John Wiley. Gibb, S., 2008. Human resource development: Process, practices and perspectives. New York: Palgrave. Harrison, R., & Kessels, J., 2004. Human resource development in a knowledge economy. Hampshire: Palgrave. Boxall, P., 1996. The strategic HRM debate and the resource-based view of the firm. 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