Business Economics | Assessment 1

ECONOMICS 1
Business Economics
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ECONOMICS 2
3.1
Mr. Bill Shorten would seek to increase the minimum wage rates through encouraging
unionism or a process known as ‘collective bargaining’. This can be done by forming trade
unions where all workers come together and choose representatives who will be responsible to
raise their complaints to the respective persons (Crowe, 2019). If Mr. Bill Shorten was made
President, his promise would be easily fulfilled in a way that these trade unionsrepresentatives
could reach him.
Also, legal enactment would be employed by Mr. Bill Shorten to raise the minimum
wage rates. The minimum wage rate of the Australia as a nation is regarded as ‘the minimum
base rate’ of pay for different hours that an employee who is not considered under ‘Modern
Award’ or even an ‘agreement’ works. He would rely on the Factories Act that was amended in
1896 in Victoria where wage creation was made by the wages board(Crowe, 2019). However,
under this Act the wages board never developed a minimum wage for all industries in the
country but rather only six industries that were said to pay low wages to their employees were
considered. In those early years, several states such as the new South Wales state and the state of
Western Australia also created wages boards. Since Australia was among the first countries to
form these wages that forced other countries to develop them too, then Mr. Bill Shorten would
not have experienced any difficult in increasing the minimum wage rates (Green, 2014).
Increasing minimum wages for employees whose salaries are very low in Australia is therefore a
legal issue that is supported by the Factories Act of 1896. In addition, the recently launched ‘Fair
Work Australia’ that replaced ‘Australian Fair Pay Commission in 2010 was supported by a
number of political leaders and this alone shows that in case Mr Bill wished to raise the
minimum wages, it would be simple and supported.

ECONOMICS 3
3.2 The scenario of increase in minimum wage rate in Australia.
It is evident that, when the economy experiences the increase in the minimum wage,
several things change in terms of price, goods and services and the labor market. For the case of
price and products in the economy, when the minimum wage is increased, many individuals are
in position of earning the reasonable amount of money to compete in both money and goods
market (MitrefinchInc, 2019). The bargaining power of individuals is raised which increases
the prices of commodities in the economy. Due to the increased demand for goods, prices are
likely to increase.
Also, when the minimum wage is increased, the demand for labor is low since most of
the employers prefer workers who earn low wages to those who earn highly. It is evident that and
increase in workers’ wages increases the costs of production is hiked. This scenario therefore
increases the prices of goods and services are high in return to cover the gap caused by increase
in wages.
Another incident caused by the minimum wage rates is wage-push inflation. It is evident
that when employers spend more on wages, inflation is likely to occur in the country. Also, this
situation may result into demand pull inflation due to the increased demand for goods and
services by people.