New IR laws (1 Viewer)

[z600]

I was given a question in eco to describe the changes of "unfair dismissal laws" under the new IR laws. Our teacher also gave us the PM's speech on the new IR laws, he said that if companies with 100 or less employees are exempted from the law and he reasons that the exemption will create new jobs, but HOW IS THIS DONE??


thanks

 

[Conspirocy]

there are two ways to look at this

you have the old system which was basically a minumum wage and union action whenever a dismissal took place

so this was like having a price floor in the labor market - so you would have supply and demand for labor and then a floor price fixed that is above equilibrium - this acted to prevent the minimum wage from falling, and inflated the price of employment to the point where there was excess supply and diminished demand
so basically more people want work, and at the same time employers want to hire less

this was pretty bad policy on a number of levels because it means that the economy cannot adjust to shocks to aggregate demand through wages and incomes policy since the minimum wage is fixed so a negative shock would result in unemployment as the minimum wage cant adjust to lower to keep people employed

so under the new rules - which then went backwards due to the fiarness test hence sorta making them a minimum wage again (although more flexible and still lower than the previous miniumum wage) - the costs of employment have fallen, hence there is greater demand for employment so there is a rightward shift of the demand curve - or there could be a lowering of the minimum wage - depending on how u argue it

or it could be a combination of the both - obviously this policy has the desired effect of reducing unemployment

another way it increases employment is increasing the demand for part time workers through flexible working hours

anyway thats the economic theory behind it, again it's subject to political spin so i would be careful what i write - prolly ur best bet would be to go, this is what it is aiming to do, but then question whether it actually has done that and both parties would be pleased i guess

 

[Sparcod]

Employees of businesses employing up to 100 staff no longer come under the protection of unfair dismissal laws (which were introduced by the Keating Labor Government in 1993)

Unfair dismissal protection had existed before this: either in Awards themselves, or through state industrial relation commissions. Employees of larger businesses are not protected if they are dismissed for 'bona fide operational' reasons.

What Conspirocy is said is a bit confusing to me.

I was given a question in eco to describe the changes of "unfair dismissal laws" under the new IR laws. Our teacher also gave us the PM's speech on the new IR laws, he said that if companies with 100 or less employees are exempted from the law and he reasons that the exemption will create new jobs, but HOW IS THIS DONE??

The threadstarter's question is also a bit confusing. I don't think that that question is in the course though it may've been added since this IR stuff is very recent. I guess that the employers have greater power in determining who gets what.

 

[Conspirocy]

ummm how to explain it for hsc students

well the new industrial laws make unfair dismissal only applicable to businesses with 100 plus - as was stated

so basically the question had a speech where john howard claimed this would reduce unemployment - so i take the question as being how would this policy make unemployment fall

i basically gave reasoning for the whole policy and its overall effect, but if you want to rationalise the specific question individually then you would argue the following points:

you could view the change in policy as having the following effects on the labor market


1. increasing demand for labor - this is because the cost associated with hiring workers is less (ie no costs for unfair dismissal) and so this increases the marginal product per worker

2. if we assume that australia has a minium wage, we could factor in that the minimum wage was reduced overall for the market, and hence any excess supply the minimum wage creats falls as well

just draw the diagrams for a labor market

point 1 is more likely, point 2 is a bit dodgy because the change goes not affect the whole market

ps. i tried to not give a boring answer...ur probably just a little bit out of ur depth

 

[Sparcod]

I.R is an interesting topic but sometimes difficult to understand.

Thanks for your answer BTW.