Labour Market Policies Flashcards

1
Q

All contracts in Australia must meet…

A

The 11 National Minimum Employment Standards
AND
The minimum wage

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2
Q

Which of the following is NOT a National Employment Standard?

a) Minimum wage
b) Flexible work arrangements
c) Redundancy pay
d) Paid holiday leave

A

a) The minimum wage: it is seperate from the 11 NES

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3
Q

Which of the following is NOT a National Employment Standard?

a) Paid holiday leave
b) Flexible work arrangements
c) Redundancy pay
d) Paid parental leave

A

d) Parental leave does NOT have to be paid leave

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4
Q

Which of the following is NOT a National Employment Standard?

a) Flexible work arrangements
b) Minimum work hours
c) Redundancy pay
d) Paid holiday leave

A

b) There are MAXIMUM work hours, NOT minimum

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5
Q

What is an award?

A

The minimum pay and conditions for employees in a particular industry

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6
Q

How are awards determined?

A

They are set by the Fair Work Commission, and are at least as good as the 11 National Employment Standards

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7
Q

What is an enterprise agreement?

A

A contract negotiated between a firm (or multiple firms) and a group of employees

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8
Q

How are enterprise agreements determined?

A

They are negotiated between the firm, union and employees, and then must pass the BOOT

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9
Q

In what circumstances can an employee negotiate an individual contract?

A

If the individual is a high-income earner (above $158,000 per year)

OR

There is no relevant award

OR

The contract meets all award conditions and then offers additional benefits

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10
Q

An individual contract must meet or be better than…

A

the 11 National Employment Standards

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11
Q

An enterprise agreement must be…

A

better overall compared to the relevant award

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12
Q

What is labour market decentralisation?

A

A reduction in government control of employment contracts

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13
Q

What are 3 benefits of labour market decentralisation?

A
  • Dynamic efficiency (labour will move to industries where labour is most demanded and wages are higher)
  • Labour productivity (employees will work hard to get a raise)
  • Avoids excessive inflation (because pay raises are constrained to specific workers and industries)
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14
Q

What is the main cost of labour market decentralisation?

A
  • Wider inequality (because high-skilled workers receive pay raises)
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15
Q

To what extent has the Australian Government decentralised the labour market?

A

The labour market was highly centralised until the 1990s, but now has a balance between decentralisation and some government intervention as a safety net:

  • In the 1990s the government introduced enterprise bargaining, and then some individual contracts.
  • In the 2000s, the government introduced WorkChoices to substantially decentralise the labour market
  • In 2009, the government introduced the Fair Work Act to reverse the most extreme aspects of WorkChoices
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16
Q

What are the main roles of the Fair Work Act?

A
  • sets a safety net for workers
  • allows for flexibility (EAs and individual contracts)
  • reduces the amount of industrial action (e.g. strikes)
  • standardised minimum conditions across most employees in most states (to reduce red tape for firms)
17
Q

What are 3 recent policy changes related to the Fair Work Act?

A
  • The FWA was amended in 2021 to increase protections for casual workers (especially the ‘casual conversion’ requirement)
  • In 2023, the FWC raised the minimum wage by 5.75% and award wages by 8.6% to keep pace with inflation
  • The Government is introducing a Same Job, Same Pay measure to ensure that labour hire staff (outsourcing) are paid the same as employees doing the same job
18
Q

How are industrial disputes resolved under the Fair Work Act?

A

Employees and firms can only take industrial action (e.g. strikes) if approved by the FWC.

The FWC helps resolve disputes by:

1) Mediation (a third party helps the firm and employees come to an agreement, without offering advice)
2) Conciliation (FWC provides advice and options for them to come to an agreement)
3) Arbitration (FWC makes a ruling on the agreement)

19
Q

What are 4 examples of employment programs by the Australian Government?

A
  • $100b on JobKeeper payments in 2020
  • $4b available for JobMaker (but only around 7000 people were hired)
  • Childcare: temporarily free in the pandemic, and the Albanese Government increased the subsidy in 2023 to increase female participation
  • Job matching services: Jobactive replaced with Workforce Australia in 2022 (to reduce the administrative burden on jobseekers)
20
Q

What are 3 examples of education/training programs by the Australian Government?

A

1) Gonski school funding (Federal Government school funding will double between 2015 and 2027 in a needs-based way)

2) HECS and VET loans: The Jobs and Skills Summit in 2022 led to $1 billion extra in joint federal-state funding for fee-free TAFE in 2023 and accelerated creation of 465,000 fee-free TAFE places

3) University funding changes depending on skills shortages (e.g. decreased subsidy for law and humanities, increased subsidy for nursing and teaching)

21
Q

How do labour market policies help to reduce the NAIRU?

A

1) Training and job-matching help to reduce structural and frictional unemployment
2) Decentralisation restricts wage rises to individuals rather than all employees, so unemployment can fall lower before wages and cost-inflation start to rise dramatically

22
Q

How does labour market decentralisation affect the unemployed and the employed?

A

The unemployed benefit because firms will be more willing to hire them

The employed will be worse off as they will have fewer minimum conditions and less job security. However, high-skilled workers may be able to negotiate a higher wage.

23
Q

How does labour decentralisation affect growth?

A

Increases efficiency and aggregate supply, increasing growth

24
Q

How does labour decentralisation affect inflation?

A

Increases efficiency and means only some workers / industries get pay raises, reducing inflation

25
Q

How does labour decentralisation affect unemployment?

A

Firms are more willing to hire people because there is less regulation of the conditions they must provide

26
Q

How does labour decentralisation affect external stability?

A

Increased efficiency leads to improved international competitiveness and exports

27
Q

How well has the Australian Government conducted labour market policies?

A

Labour productivity growth is falling, suggesting that more decentralisation and better education policies are needed.

However, the Fair Work Act does allow for decentralised contract negotiations while providing a safety net for workers. It has also reduced the frequency of industrial disputes. Therefore, overall the FWA has struck an appropriate balance between protecting workers and encouraging productivity.