Changes in the Australian Labour MarketTo begin with, let’s describe a Labour Market. It is where individuals seeking employment interact with employers who want to obtain the most appropriate labour skills for their production process. Labour markets are significantly affected when wages rise, as they create an increase in unemployment or an increase in employment or have no effect at all, causing economic growth. When wage rates increase, it increases the quantity of labour supplied, as firms can no longer afford to pay all its employees the increased rate, therefore employers need to make a decision in dismissing some employees.
This is because firms need to accommodate to the higher costs of paying employees a higher wage. This can lead to higher unemployment levels, as too many wage increases will result in higher cost within businesses that don't change their employees' structures. For the past two decades, it is clear that successive governments have looked towards labour reform for growths in productivity. It must be clear though that labour reform has not always been the mantra of the day. The commencement of Labour Market regulation began in 1907 when the President of the Commonwealth Court of Conciliation and Arbitration (Now the AIRC), Justice Higgins', made a decision on the fixed wages of workers.
The Harvester judgement' established the first precedent for wage fixing in Australia. Since that decision, regulation in the economy has begun to become greater and more complex in nature. Since the 1980's however, there has been a greater emphasis on de-centralised bargaining as Governments have looked for greater labour productivity. (Norris, 1986, 44-49)It was recognised that in order to increase productivity, changes had to be made in labour regulation and legislation and later (with coalition governments) with the disruption of unfettered union power. Prior to 1983, the increases of wages caused uncertainty for many businesses, wages would increase during boom periods however would slow with the onset of recession (Burgess, and Watt, 1999, 87).
In 1983, the government recognised that the many economic policies of the state must be brought under the same arm, which led to the creation of the first Accord (Mark I, 146), which attempted to create incentives for business to employ more staff and increase productivity.
However this approach did not realise the growth it expected (Burgess, and Watt, 1999, 87). The next target of reform under the new coalition government was the Australian Industrial Relations Commission (AIRC). This method of centrally controlling wages was believed to cause problems as the increases did not reflect the conditions of the individual workplace or employee. The government sought to increase the flexibility of workplaces by the creation of tailored agreements for individual workplaces. The introduction of several acts such as the Workplace Relations Act 1996 the Workplace relations and legislation amendment (more jobs, better pay) Bill 1999.
Various other acts led to the diffusion of union power and greater labour reform. With these reforms the Australian Workplace Agreements were introduced in order to suit the needs of the workplace. With this reform, individual businesses could make individual contracts with their employee(s). This has since supposedly led to greater flexibility and productivity in the workplace.