Labour AoS 2 Flashcards
NAIRU
Non-Accelerating Inflation rate of Union is the lowest rate of unemployment that does not add to inflationary pressures (including rising wages).
Labour
The use of skills of different types of workers.
Labour Market
An institution where buyers and sellers of labour resources negotiate a price that is called a wage.
Disposable Income
Income available for spending after the receipt of welfare benefits and deduction of personal taxes.
Transfer Income
Derived from government cash welfare payments or income support for the neediest individuals with little or no income or wealth.
Unearned Income
Includes rent and interest, and is received for allowing others to use your property and savings
Real Income
Equal to a person’s nominal level of income after taking into account the inflation or deflation rate.
Earned Income
Comes from households selling their labour (i.e. supplying intellectual talents and/or physical power to businesses).
Deregulation of the Labour Market
Means that there is less government interference in how wages are determined in the labour market, and more reliance on the conditions of demand and supply of labour and
the process of enterprise bargaining.
Cyclical Unemployment
When individuals lose their job due to weak spending and a slowdown or recession.
Structural Unemployment
Occurs when firms change their production methods and use new technology to become more efficient.
Underemployment
When those aged 15 and over have a job and want to work more hours, but are unable to do so. They are not working to capacity.
The underutilisation rate
The extent to which the available labour is not working at its capacity. This is equal to the unemployment rate plus the underemployment rate.
Unemployed Persons
Those aged 15 and over who are actively looking for work but cannot find a job.
Expansionary Aggregate Demand Policies
Involve budgetary measures by the government’s treasurer (e.g. lower taxes and increased government spending) and monetary measures by the Reserve Bank of Australia (e.g.
lower interest rates ) designed to boost spending or AD, in turn lifting economic activity and GDP, and reducing cyclical unemployment.
he Fair Work Commission (FWC)
An independent government institution that manages industrial relations in Australia, monitors enterprise agreements and is responsible for setting the annual minimum legal award wage and conditions.
Derived Demand
When a resource is only wanted when another good or service’s demand that uses that resource as an input for its production increases.
Nominal Income
The amount recieved by an individual measured over a period of time.
Discretionary Income
The amount of disposable income that is left over after households have paid that essential bills.
Frictional Unemployment
When people are unemployed when finishing on job and starting another.
Hard-core Unemployment
The outcome of personal attitudes that are seen by some as hostile to effective employment. (eg, having a disability, race, criminal record etc)
Seasonal Unemployment
The termination of jobs due to regular change in seasons. (e.g can’t pick fruit when they aren’t ripe.)
Hidden Unemployment
People who would like to work but who are discouraged from seeking jobs for various reasons, such as a repeated failure to find work.
Disguised Unemployment
When individuals have jobs but are underemployed and not working to capacity, such as in part-time jobs with limited hours.
Goal of Full Employment
A government target that represents the lowest rate of unemployment that will not cause inflation to accelerate (NAIRU). There will be no cyclical unemployment due to weak AD or recession. However, around 4.0–4.5 per cent of the labour force will be naturally unemployed due mostly to structural causes and other changes in supply-side conditions.
Unemployment Rate
Number of people unemployed/Labour Force
Employment Rate
People employed/Labour Force
Participation Rate
People in labour force/People 15 or over
Labour Force
Employed + Unemployed
Non-Price Factors Affecting Demand of Labour
- Demand for final Products
- Business Confidence
- Business Profitability
- Efficiency of Labour
- Government Budgetary Policy
- More substitutes for Labour
Non-Price Factors Affecting Supply of Labour
- Population Size and Participation Rate
- Net Immigration Rate
- Work Life Balance
- Restrictions on entry into occupations
- Trade Unions
- Government Budgetary Policy
