Australian Wage Determination
...ns Act (1996) by the elimination of compulsory amalgamation to trade unions by employees. This resulted in the introduction of the Australian Workplace Agreements (AWAs) in addition to the already existing Certified Agreements (CAs), which was used by workers represented by a trade union at the enterprise or industry level. The Australian Workplace Agreements were incorporated into the Workplace Relations Act (1996) for workers negotiating wage determinations and working conditions on an individual basis without trade union involvement and administered by the Employment Advocate (EA). For those workers unable to negotiate an enterprise agreement, the Howard government also implemented the industrial award system or Award Safety Net, which specified the fair and enforceable minimum wages and conditions of employment. The new Federal Workplace Relations Act (1996) integrated the link between productivity and wage outcomes. Under the system of productivity, there are two methods of rewarding it, through wage and non-wage outcomes. In addition to ordinary and overtime payments known as wage outcomes, employees have the opportunity to receive supplementary benefits such as sick leave, holiday leave, superannuation and other fringe benefits, known as non-wage outcomes. These non-wage outcomes were introduced based on the principle that the productivity system would thrive and operate more efficiently as resources were being utilised to their maximum potential. Theoretically, the interaction between demand and supply determines the price and quantity outcome for labour. However, this is mainly not the case when applying it to the labour market. There are factors such as government policy decisions restricting the supply of labour, for example by imposing certain credentials or licenses to particular occupations, that affect the labour market. In the diagram below, it demonstrates how equilibrium may be achieved, the equilibrium wage rate occurs where the quantity of labour supplied is equal to the quantity of labour demanded. Wage rate $ D S W1 We W2 S D Qe Quantity of labour Equilibrium in the labour market As supply curve slopes upwards, the wage rate increases and people are more willing to supply their labour. Though as the wage rates become higher supply will decline, this process is known as backward bending. The supply of labour is considered to be relatively wage inelastic, as it doesn’t respond sharply to changes in wage rates. The demand curve sloes downward the reason being that as wage rates decline, demand for labour increases. With other factors of production constant, i.e. land, capital and enterprise, remaining constant, labour is affected by the law of diminishing returns. At a certain position each additional worker will be producing less than the previous worker, therefore productivity will decelerate and at an additional cost to the business. In the diagram (page 2) illustrates, equilibrium is at QeWe. When wages surpass We to W1 the quantity of labour supplied descends as it exceeds the amount of labour demanded....