Labour Market Policies

Question 1

Define labour market policies

Answer 1

Microeconomic policies that are aimed at influencing the operation and outcomes in the labour market (e.g. industrial relations policies; training and education etc.)

Question 2

What are the objectives of labour market policies?

Answer 2

LT objectives focus on: U WIPY

• Productivity
• Inflation
• UE rate
• Y distribution
• Workforce skills

Question 3

Describe a centralised labour market

Answer 3

Government or industrial tribunal determines wages and working conditions for all employees, regardless of which firm they work for

Question 4

Describe a de-centralised labour market

Answer 4

System in which wages and working conditions are determined through negotiations between individual firms and their employees (at enterprise level) with limited role of industrial tribunals

Question 5

Identify and outline the benefits of a decentralised labour market

Answer 5

Acronym: IRI

• Improves allocative efficiency of labour and promotes structural change (more successful bizs attract skilled labour)
• Increases productivity (increase incentives as labour rewarded with higher wages > decreases inflationary pressures)
• Reduces unemployment (downward wage flexibility > acts as a shock absorber)

Question 6

Identify and outline and disadvantages of a decentralised labour market

Answer 6

Acronym: WIL

• Increases income inequality (low skilled workers have less bargaining power)
• Wage-push inflation (occurs when economic growth is strong and labour market close to full employment)
• Limits policy tools of the govt

Question 7

How are disputes resolved in our industrial relations system?

Answer 7

Through industrial tribunals (FWC) > oversee the industrial relations system and attempt to prevent or resolve workplace conflict between employers and employees

Question 8

What are the benefits of education and training?

Answer 8

• Increase skills, increase the quality of the workforce, increase productivity (technical efficiency), increase adaptability to changing economic conditions (dynamic efficiency)
• decrease in structural UE
• Increase in EG

Question 9

What are labour market programs?

Answer 9

Assist unemployed people, particularly those who are long-term unemployed or hard-core unemployed or have language barriers, gain employment and are often integrated with the receipt of welfare payments

Question 10

What are the benefits of labour market programs?

Answer 10

Acronym: BII

• Increases incentives to work and reduce reliance on welfare
• Increase in sustain in participation in the workforce
• Boost productive capacity and economic growth