Labour Supply and Demand Relationship - Coursework Example

Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Table of Contents INTRODUCTION 1 LABOUR DEMAND AND SUPPLY 2 Labour demand 2 Labour supply 7 Labour supply and demand relationship 9 Conclusion 9 REFERENCE 10 INTRODUCTION Human resource planning and development is one of the key factors in achieving organizational goals. Therefore, there is need to concentrate in determining the best strategies and measures to ensure that there is sufficient control in human resource department. Planning is essential element in human resource since company need to plan effectively to ensure there are enough employees to undertake company business effectively. In addition, we need planning in order to ensure that increasing or reducing will improve company profits without affecting quality of customer service delivery (Wieling & Borghans, 2001). Human resource planning is therefore essential in identifying company labour demand and analysis of the desired employee to fill in vacant position. Human development is another important factor of human resource. The main resource of human resource development is to increase employee knowledge and skills in order to enhance their productivity. Consequently, it improves employee self-esteem and satisfaction in the company which is an important factor in reducing labour turnover thus company will be able to retain employee expertise and cut cost on recruitment and selection (Stone & Deadrick, 2008). Emerging issues in the Australian labour force has led to rise in various labour union bodies and concerns by government through Australian Public Service Commission (APSC). The corporate bodies has developed ways of minimizing labour turnover, increasing attractiveness in labour market and reducing legal actions against the firm with regard to violation of employees rights. The report therefore looks at the issues in the labour demand and supply in Australian labour market basing on Air New Zealand. The analysis will touch on the current development in labour market and effect on the labour demand and supply, and players in labour market (Fairwork.gov.au, n.d.). LABOUR DEMAND AND SUPPLY Labour demand Labour demand is a function of human resource planning. The human resource department is tasked with the responsibility of determining the firm need for more employees in order to meet its requirements and ease amount of work done by the current employees. The major steps in determination of labour demand is analysis of the current activities of the firm such as if the employees are able to finish work within the stipulated time, demand for firm’s products or services, expansion and employees leaving the company due to retirement or through resignation. Analysis of labour demand is essential and thus need to carry out due care in order to develop an ideal job post and description to meet the required expertise. This is important in ensuring that the company attracts employees with knowledge and expertise to fill the gap in the company. Air New Zealand has important policy regarding human resource planning where it uses help of external agencies such as Lawson Williams’s specialist recruitment and human resource department to determine labour demand of the institution. The human resource department is required to prepare monthly report to the top management majorly focusing on concerns of employees and firm’s position in terms of the availability and sufficiency of the current workforce (Stone & Deadrick, 2008). Matching labour demand with clients demand for services and products is essential in ensuring quality service delivery which is one of the key objectives of Air New Zealand to be the best Airline service provider. Air New Zealand is currently having 11,000 employees both full time and part-time who are tasked to serve 13.7million passengers per year and 104 fleets with daily departure of 523. Airlines industry is always affected by seasonal variation of passenger traffic for example traffic increases during festive season and off peak seasons. Therefore to cut on human resource cost due to idle labour in off peak seasons, reduce work overload and overstretching of human resource during peak season, Air New Zealand employee part of their employees on contractual basis in order to reduce instance of idle labour and poor service delivery during peak season. Employment contract always gives the company an avenue to reduce number of employees and increase according to movement in labour demand without violating Australian employment laws and Australian Public Service Commission (Stone & Deadrick, 2008). The major milestone in labour demand analysis in organizations is the emergency of computer based programs which aims at reducing work of human resource manager and arriving at an accurate conclusion due to elimination of biasness. Many organizations have embraced human resource management system (HRMS) due to its contribution in cutting down cost in human resource department due to reduced work. The major contribution of the system is the fact that the system is able to compare customer traffic and labour demand in the organization which cannot be easily be determined use of the old human resource management strategies. It also eliminates instance of being overstaffed due to inefficiencies of some workers since the software provides reports of every employee and eliminate ghost workers. This enable firm to determine exact situation on the labour demand of the organization thus cutting cost and ensuring employees are able to meet the business requirements of the business. Air New Zealand is using advanced Human Resource Management System which has ability to generate human resource budget, payroll, employee history and employee register linked to biometric device which is used by employees to sign in and sign out, and this reduces instances of lateness and absentee employee. The implementation of the device has improved company service delivery due to improved accuracy in determination of the real labour demand of the company. The major element affecting labour demand status of an organization is Labour turnover. It is the rate at which employees leave the organization every year due to different circumstance within and outside organization control. Labour turnover is a great expense to any organization due to the cost of replacing the employee which might not guarantee that he/she will meet the qualification and skills of the previous employee. According to Northern Territory Government data we are able to note that in year 2011-2012 there was labour turnover of 7% for permanent employee, 23% of both permanent and temporary employees with 2710 resignation across northern territory. The report estimates that labour turnover results to 50%-150% expenditure based on the current salary (Australia, n.d.). The trend of rising labour turnover is worrying since it raises labour demand that will be hard and expensive to fill. In order to curb the above trend most organizations have adopted various strategies to ensure that the rate of labour turnover is as low as possible. These strategies includes use of employee compensation schemes, human resource development, paid leaves, employees team building functions and other forms of incentives to ensure employees are comfortable and feel to be part of the organization. The major contributing factor to increase in labour demand in the market has been attributed by the increase in the number of business activities due to changes in government policies regarding incorporation companies, improvement of entrepreneurial culture and globalization which has led to increase in multinational and international companies entering Australian market. The rise in labour demand has brought in changes in the ways of recruitment, selection, development and employees’ treatment in work environment has also improved since the firm aims at maintaining employee despite the rising labour demand in the market. There are unethical practices though associated with increase in labour demand which include pouching of employees where one firm persuade employees from another company to leave the company in return of better pay or job group (Australia, n.d.). According to Air New Zealand annual report (2014), we are able to find out that the company provides various incentives to its employees in order to keep labour turnover in control despite the rise in staff turnover in Australian labour market due to competition and rising labour demand in job market. The measures taken by the company to reduce staff turnover includes use of share based retirement benefit plan where employees are given opportunity to be part of the company even after retiring and earn benefits through dividends and share growth the strategy reduces employees leaving the company to more attractive deals due to rising labour demand. The incentive is carried out under employee share-based compensation, the company made a purchase of 3% of its shares in order to be used in the scheme. This will enable company to maintain its employee despite the rise in labour demand in the Australian job market. Consequently, Air New Zealand provides a minimum of three weeks holiday for its employee yearly and paid leaves for employees to enjoy sometime with friends and employee. The strategy aims at improving its position in maintaining workforce due to the current rise in staff turnover across various industries in Australian economy and also complying with government requirements on employees’ entitlement for holidays. In addition, the company working hours for each employee is 38 hours per week which is within Australian labour requirement and uniform in various industries thus enabling the company not to lose employees due to high labour demand in the industry (Fairwork.gov.au, n.d.). According to above arguments, it is therefore noted that labour demand analysis in a given organization is important in ensuring human resource requirement are met at a cost effective means and also ensuring knowledge and expertise is retained in the organization by putting in strategies that enables the company to be the best employer in the industry thus avoidance of losing employees to other institution due to rising labour demand Australian job market due to effect of government policies, globalization and technological advancement. Labour supply Labour supply is referred to the number of employees in a country or organization that are willing to work in a given work environment at a given wage rate. Labour supply is a major factor in determination of the wage rate, employee incentives and organization employment policy. The government also adjusts their employment regulation in order to ensure institutions labour demands are met by the available labour supply. Government incentives to increase labour supply involve improvement in the education system in order to ensure qualified and enough qualified potential employees are released to the market. In addition, Australian government can ease the expatriates rules and regulation to encourage emigrant which in return increase labour supply (Narazani, n.d.). The government can also tighten the rules and regulation in order to discourage expatriates thus reducing labour supply as a way of preserving available jobs to Australian citizens. According to HSBC Global Survey (2012), we are able to note that Australian government is working towards achieving stable and sufficient labour supply in order to meet the labour demand requirement. The survey carried out by HSBC Global Survey identified Australia to be number one destination for expatriates and 10% of the global expatriate always prefer Australia other than other countries. Increase expatiates not only increase the labour supply in labour market but also have positive effect on local companies since they are able to bring in new expertise the organization and improve employment conditions since increase in demand results to decrease in wage rate and other incentives thus reduction in operational cost. Due to encouraging environment for expatriates, Air New Zealand has adopted global recruitment initiative by advertising job opportunities in other countries thus enabling them to get accessed to a larger pool of knowledgeable and skilled labour supply. This enables the company to negotiate for better employment terms rather than carrying out recruitment drive in a small labour market (Narazani, n.d.). Labour supply is also a function of population and increase in population results to increase in labour supply though if not controlled it might lead to increase in unemployment rate which can result to negative consequence on inflation rate of the country. According to government statistics, population increased by 433,300 people from 30th June, 2013. The trend above shows that labour supply in Australia has been on a rise which is an advantage to companies but have a long term consequence to the government. Air New Zealand has been able to carry out recruitment easily due to the accessibility of enough pool of labour supply thus improving its service delivery in case of employees’ retirement or resignation. As mentioned earlier, education system affects the labour supply in different sectors of economy since the school is always tasked in training and equipping citizens with the required knowledge and skills that allows them to cope up with the working environment (Stone & Deadrick, 2008). Undiversified education results to unbalanced composition of labour supply in the market. For example, Air New Zealand found it hard in procuring aviation expertise in the recent past due to few institution offering aviation quality courses and competition for the available labour demand. The government has put in place measures on education sector in order to ensure qualified graduates are channeled to the labour market and others creating employment thus reducing and maintaining labour supply within acceptable limits. Labour supply and demand relationship Labour demand and supply are inversely related therefore, rise in labour demand results to reduction in labour supply. Increase in labour demand or supply beyond certain limit have negative consequence to both company and economy therefore, Australian government keen in maintain balance or equilibrium in order to achieve desired economic effect (Wieling & Borghans, 2001). Conclusion In conclusion, we are able to note that there are various current factors affecting human planning and development which positively or negatively affect labour demand and supply. Air New Zealand has been able to maneuver rising challenges in the labour market by coping to the changes by carrying out environmental scanning through which they were able to adopt current human resource management system, adoption of global recruitment via their website and countering competition in job market in order to meet their labour demand. REFERENCE Air New Zealand,. (2014). Annual report. Retrieved 19 March 2015, from http://www.airnewzealand.com.au/assets/PDFs/2014-annual-financial-report.pdf Australia, N. Office of the Commissioner for Public Employment - Workforce Planning and the NTPS. Ocpe.nt.gov.au. Retrieved 19 March 2015, from http://www.ocpe.nt.gov.au/workforce_planning Australia, N. Office of the Commissioner for Public Employment - Workforce Planning and the NTPS. Ocpe.nt.gov.au. Retrieved 19 March 2015, from http://www.ocpe.nt.gov.au/workforce_planning Fairwork.gov.au,. Hours of work - Fair Work Ombudsman. Retrieved 19 March 2015, from http://www.fairwork.gov.au/employee-entitlements/hours-of-work-breaks-and-rosters/hours-of-work HSBC GLOBAL SURVEY,. (2012). AUSTRALIA THE #1 DESTINATION FOR EXPATRIATES. Retrieved 19 March 2015, from http://www.hsbc.com.au/1/PA_ES_Content_Mgmt/content/australia/about/news/archive/2012/120202.pdf Narazani, E. Evidences on Household Labour Supply: When Labour Demand is Not Perfectly Elastic. SSRN Journal. doi:10.2139/ssrn.1959803 Stone, D., & Deadrick, D. (2008). Introduction to the special issue: Critical issues in human resource management theory and research. Human Resource Management Review, 18(3), 101-102. doi:10.1016/j.hrmr.2008.07.010 Wieling, M., & Borghans, L. (2001). Descrepancies between Supply and Demand and Adjustment Processes in the Labour Market. Labour, 15(1), 33-56. doi:10.1111/1467-9914.00154 Werner, J M. & DeSimone, R L. (2012). Human Resource Development 6e.6th Ed. Mason, Ohio: South-Western, Centage Learning Read More