Labour Market Outcomes Flashcards
What kept wage equality smaller in the past?
In the 1980’s employees generally had their wages centralized by “Fair Work Commission”
What has made the gap larger in income since the 1990s?
The shift towards enterprise bargaining
Enterprise bargaining
Refers to negotiations between employers and employees (or their representatives) about pay and work conditions at the level of the individual firm
Income distribution
Refers to the way in which an economy’s income is spread among the members of different social and socio-economic groups
Trends that have occurred since the 1990s in wage outcomes
- Inequality distribution growing
- Top 20% of income recipients account for 40% of total income (x5 bottom quintile)
- Top quintile has grown taking away from middle quintiles
What is a cause of income distribution within occupation?
Decline in union membership
Salary packaging…
Additionally benefits such as a company car, laptop, child care subsidies, gym
Superannuation
Is a form of saving that individuals cannot access until they reach retirement age.
Non-wage outcomes
Are benefits that many employees receive in addition to their ordinary and overtime payments, such as sick leave, superannuation, a company car, study leave or arrangements for hybrid working
Bonus cash payments…
Are on top of the employees normal wage and are a bonus coming from company profit performance or employee’s individual work performance
Improving flexibility in work patterns…
Working from home which saw a 1/3 of global population during COVID
Study leave, parental leave
Nominal Wage
is the pay received by employees in dollar terms for their contribution to the production process, not adjusted for inflation.
Real wage
is a measure of the actual purchasing power of money wage (that is, nominal wages adjusted for the effects of inflation)
Labour Productivity
refers to the quantity of output produced in a production process per unit of labour per unit of time.
Who is not given leave?
Younger workers
Part-time employees
Those working in accomodation, food services, forestry, fishing
Why is inequality good for the economy?
Increase in productive capacity which increases real GDP per capita.
- Encourages increase in education / skill levels
- Encourages labour to work longer / harder
- Makes them more mobile
- Encourages entrepreneurs to accept risks more readily
- Potential for higher savings and capital formation
Costs of a inequality in the economy?
- Reduces overall utility
- Can reduce economic growth
- Reduces consumption + investment
- Creates conspicuous consumption
- Create poverty + social problems
- Increase the cost of welfare support
Inequality of opportunity
- Perpetuate inequality of opportunity
- Not everyone has the same mental and physical attributes
- Wealth through inheritance
- Networks (migrants don’t)
Costs of a inequality socially?
- Wellbeing (crime, health, mobility)
- Social Class division
Unemployment
This refers to a situation where individuals want to work but are unable to find a job, and as a result, labor resources in an economy are not utilized.
What do you look at to see if people are better off over time?
The real wages
What will happen when the growth in real wages is higher than productivity growth?
The high labor costs will go into the business profits as the employees are not producing enough money to address the growth in labor costs.
Why might different occupational groups get different wages?
- Education / skill
- Working Conditions
- Occupational mobility
Why might the same occupational groups get different wages?
- Various degrees of experience
- Geographical mobility
- Productivity of labour
- Capacity of the firm to pay
What are the 3 main factors contributing to unequal pay in gender?
- Discrimination (glass ceiling)
- Interpruations in working life
- Working in lower-paid ‘segregated’ industries (childcare, nursing, teaching)
What are the factors explaining the 2022, stat that women earn 70% of men
- More women work part-time
- Human capital factors - past attitudes about the role of women in society, females had fewer opportunities to acquire education, skills and qualifications.
How much more do men earn on average in the same full-time occupation?
14.1% in 2022 which has dropped since 2014 at 19%
What are the types of sources of income?
- Wages/salaries
- Government pensions + allowances
- Superannuation
- Investments
How does education affect wage outcomes?
- Higher wage
- Rewards
- Long time to obtain education which is reflected in wage
Migrants in the Australian workforce
- Higher salary than the national average
- A higher level of skill
- Recently migrated earn lower incomes than average Australians
- Receive lower levels of rewards
- Migrants from English-speaking backgrounds are likely to earn 10% more than average
Indigenous Australians in the workforce
- Less than average
- 37% of the Indigenous population in the bottom quintile
- 9% of the Indigenous population in the top quintile
Why are there different wage outcomes?
- Changes in the structure of the economy
- New industries requiring new skilled labour which are willing to supply more to these workers than in a decling industry
Why is there wage inequality within the same occupation?
- Declining numbers of union membership
-Shift away from centralized pay / ‘award’ pay
List non-wage outcomes
- Sick leave
- Holiday leave
- Bonus cash payments
- Superannuation
- Salary packaging
- Flexibility
What is salary packaging?
When the business gives employees:
- Company car
- Laptop/phone
- Childcare subsidies
- Gym membership
What may be included in improving flexible working patterns?
- Allowing time for study
- Extended leave without pay
- Leave to look after a sick family member
- Allowing employees to share jobs
-Extra parental leave
How many employees were working from home during COVID?
1/3 globally
Economic benefits of inequality:
- Encourages the labor force to work longer and harder
- Encourages the labour force to increase the level of education and skill
- Makes workforce more mobile
- Encourages entrepreneurs to accept more risks more readily
- Creates a higher potential for savings and capital information
Economic costs of inequality:
- Reduce economic growth
- Creates poverty and social issues
- Reduces overall utility
- Reduces consumption and investment
- Increases the cost of welfare support
- Creates conspicuous consumption
Social costs of inequality:
- Social problems (crime, suicide, mental illness, less mobile, lower life expectancy)
- Poverty
- Social class division
What is included in the inequality of opportunity?
- Wealth from inheritance
- Not everyone has the same mental/physical capabilities
- Network
Someone that is actively seeking work must:
- Regularly check advertisements from different sources for available jobs
- Willing to respond to job advertisements, apply and attend job interviews
- Be registered with any employment placement provider - Workforce Australia online
Unemployment rate
The number of unemployed persons expressed as a percentage of the total workforce
What are the 8 types of unemployment?
- Cyclical
- Structural
- Seasonal
- Hard-core
- Hidden
- Underemployed
- Frictional
- Long-term
What causes cyclical unemployment?
Decline in the business cycle and the demand for labour is derviered
What causes structural unemployment
A mismatch between the skills demanded by employers and those possessed by unemployed people. (old and new industries)
Who is classified as having long-term unemployment?
People unable to find work for a 12-month long period or more
What is fricitional unemployment?
People moving between occupations and jobs, this takes time.
What is hard-core unemployment?
People who cannot work due to illness, physical disabilities or drug addiction.
Who is counted as hidden unemployment and what causes this?
People who have given up on looking for a job or have returned to school.
Represented more in a reduction in the labour force participation rate rather than an increase in unemployment
Rises during a prolonged economic downturn
What is under-employment
Indiviuals who have part-time / causal jobs but would like to work more hours per week. They represent as under utilised resources.
Rising due to increasing due to sharing of jobs
How did Covid-19 effect employment? How did the goverment help?
- Lead to a shutdown of bsiness -= sudden surge of unemployment
- Peaked at 7.5% compared to US 15%
- Goverement provided wage subsides fro around 3.5 million workers
Part-time and casual employment
Part time: Emplyess regualry working less than 35 hours per week
Causual: Emplyees have occasional working hours but no set pattern
Casualtion of work
The growth of casual employment as a propation of the total workforce.
Benefits of part-time work for emplyees
- Allows felxibility to balance other repsonbilites - family commitments
Benefits of part-time work employer
- Flexibility in amging labour costs
- During busier times they can increase hours of staff without overtime costs
- Dont need to give holiday, long serivce and sick leave + no reduant pay
3 other types of works?
- Contractors
- Outsourcing
- Sub-contracting
