Assignment On Minimum Wage Rate | Australian Government

Added on -2020-02-19

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ECONOMICS: PRINCIPLES, MODELS AND POLICIES1Economics: Principles, Models and PoliciesStudent’s NameCourse IDUniversityDate
ECONOMICS: PRINCIPLES, MODELS AND POLICIES2Executive SummaryAustralia is a well developed country with high per capita GDP and low unemployment rate. In the recent years, the hike in the minimum wage rate introduced by the Australian Government has negatively impacted the employment status of the economy. For instance, a Multinational Organisation will not employ a poorly skilled worker at a higher wage rate of $16.87 per hour. Furthermore, the policy of equal compensation for both highly skilled and poorly skilled workers may create an imbalance in the economy. However, the abolition of the price flooring policy may lead to monopoly power of the large scale organisations that may negatively impact the economic balance of the country. Hence, it is important for the Australian Government to introduce a lower minimum wage rate that is equivalent to the equilibrium wage rate in place of abolishing the minimum wage rate policy.
ECONOMICS: PRINCIPLES, MODELS AND POLICIES3Table of ContentsIntroduction......................................................................................................................................4Analysis...........................................................................................................................................4Current unemployment scenario and minimum wage system.....................................................4Demand and Supply Factor in Labour Market.............................................................................6Recommendation.............................................................................................................................8Conclusion.......................................................................................................................................9References......................................................................................................................................10
ECONOMICS: PRINCIPLES, MODELS AND POLICIES4IntroductionThe identified study focuses on the current economic debate on whether Australian government should abolish the existing minimum wage as a part of economic reforms. Precisely,a number of economists and policymakers have advocated the burden of the system of discriminatory minimum wage pointing out the negative aspects of the system. The existing minimum wage arrangement in Australian economy states that an employer must hire an employee at a minimum of $16.87 per hour in 2016 (ABC News, 2016). Evidently, the restriction in employment under the minimum wage system arrangement has incurred the fiscal burden of the government. In the current economic scenario, many of the economists have voted for abolishing the minimum wage system. One of the leading points of the discussion is whether the minimum wage system is a jobkiller or job creator in the Australian economy. Since the inception of the minimum wage systemin 1907, the system has been criticised for a number of times as it is believed that the system creates restrictions in employment. At the same time, the study identifies how the high rate of minimum wage can increase the rate of unemployment in Australia. Based on the studies and economic model of supply and demand, at the end of the study, the verdict has been made whether the government should abolish the system of the minimum wage. AnalysisCurrent unemployment scenario and minimum wage systemWhile the debate on abolishing minimum wage system continues, it is important to identify how the system affects the rate of unemployment in an economy. Evidently, based on

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