Demand and Supply Theory in Contemporary Labour Market of Australia

The report analyses the shifts and dynamics in the contemporary labour market of Australia and interprets the situations in the light of the demand and supply framework of economics. It highlights the excess supply in the basic and low skilled labour force and an excess demand for high skilled labours, which can be attributed to the shift in the pattern of job creation and nature of jobs in the contemporary period.

Running head: ECONOMICS FOR BUSINESS
Economics for Business
Name of the Student
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Table of Contents
Introduction................................................................................................................................2
Essence of the Story...................................................................................................................2
Economic Analysis.....................................................................................................................4
Demand and Supply Theory...................................................................................................4
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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Introduction
The global economic framework has developed and changed considerably with time,
with the global economic environment becoming more integrated and inclusive. The different
aspects and dynamics in the domain of economy of different countries as well as the world as
whole can be explained in the light of the economic theories and conceptual frameworks
present in the contemporary periods. One such conceptual framework is that of the concepts
of demand and supply.
In sense of economics, the demand and supply forces for any good or service interact
in the market platform and come to mutual agreement regarding the pricing and producing
decisions of the commodities or services. While the mutual agreement between these forces
lead to market equilibrium, there often occurs mismatches between these forces which leads
to dis-equilibrium situations in the economy, thereby affecting a section of the economy or
the economy as a whole (Holland, 2018).
Keeping this into consideration, the concerned report tries to analyse the situations
present in the contemporary labour market in one of the dominant economies of the world,
Australia, keeping into consideration the fact that the labour market patterns in the country, in
the contemporary periods have been experiencing considerable shifts. To analyse the same,
the report refers to the news article named, “Where the jobs of the future will be”, published
in The Australian (Salt, 2018). The concerned report also tries to interpret the situations in the
light of the demand and supply framework of economics.
Essence of the Story
The concerned article emphasizes particularly on the shifts and dynamics in the job
sector of the contemporary period in Australia, thereby focussing on observing the sectors in
which the jobs are created and the regions where greater jobs are created vis-à-vis those

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sectors and places where jobs are getting lost or diminished. One of the primary aspect which
the article highlights regarding the shift in the pattern of jobs in the country is that, there has
been sufficient job creations in the country, however, the greater share of these newly created
jobs has been of part time type and not full-time types as can be seen from the following
figure which has been provided by the concerned article:
Figure 1: Shift in the types of jobs in Australia
(Source: Salt, 2018)
As is evident from the above figure, the share of part time jobs is fast growing in the
country. Apart from the above assertion, the article also highlights towards the fact that the
jobs in the high-end service sector has been increasing while those in the manufacturing and
subsistence sectors of the country has been decreasing (Smith, 2018).
The article also highlights the anomalies in the labour market arising in the
contemporary period of the country, which in turn is showing the problems which have been

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faced by the low skilled workers (mainly economic immigrants from different countries) in
terms of lack of jobs and a simultaneous increase in the demand as well as wages of the high
skilled labours in the country (Hawthorne, 2016). This in turn also points towards the region
wise labour demand and supply discrepancies and the differences in the standard of living of
the people in different regions of the country, which has become one of the primary concerns
of the government of the country.
Economic Analysis
The above situations described in the concerned article can be explained with the help
of the concepts of demand and supply in the market for labour resources. As can be seen from
the assertions of the concerned article, there is occurring a paradigm shift in the patterns of
job creation in the economy, with more jobs being created in the service sectors and highly
technological manufacturing sector and comparatively less employments being produced in
the subsistence and basic manufacturing sectors.
On the other hand, the country has been facing huge inflow of immigrants over the
years, much of whom have basic skills which are not enough for them to get absorbed in the
high-end service sectors (Watson, 2013). These people have been experiencing a decrease in
their job scopes as well as wages, thereby affecting their overall economic welfare. On the
other hand, the wages as well as demand for the high skilled jobs have been increasing in the
economy.
Demand and Supply Theory
As is evident from the above discussion, there has been occurring a situation of excess
demand and excess supply in the different sectors of the labour market of the country, the
effects of which can be shown with the help of the following figure:

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Figure 2: Excess supply and excess demand in the labour market
(Source: As created by the author)
As is evident from the above figure, the demand curve for normal commodities being
negatively sloped and the supply curve for the same being positively sloped, the equilibrium
in the market occurs at the point where demand is equal to supply, that is, where the supply
and the demand curve intersect one another (Baumol & Blinder, 2015). Any situation except
the same gives rise to a disequilibrium situation. When the supply is greater than demand,
then it leads to an excess supply of the commodity in the market, which in turn decreases the
price of the same. This has been the case with the low skilled subsistence labour of the
country, who have been facing a lack of jobs, thereby decreasing their wages (Hall &
Lieberman, 2012).
On the other hand, when the demand is higher than the supply, it leads to excess
demand, thereby increasing the price of the same. This explains the situation in the service
and high technological sectors of the country, where there lies a threat of creation of 1.4

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million non-fillable job vacancies by 2025. This in turn has increased the demand for high
skilled workers more than their supply, thereby increasing their wages and economic welfare
(Goodwin et al., 2015).
Conclusion
From the above discussion, it can be stated that the labour market of Australia has
been facing an anomaly in the supply and demand scenario, with an excess supply in the
basic and low skilled labour force and an excess demand for high skilled labours, which can
be attributed to the shift in the pattern of job creation and nature of jobs in the contemporary
period. Keeping this into consideration, the government of the country needs to emphasis on
the development of skills and training facilities for the labour force in the country, to fill up
the gap which have been created in the labour market scenarios in the country.

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References
Baumol, W. J., & Blinder, A. S. (2015). Microeconomics: Principles and policy. Cengage
Learning.
Goodwin, N., Harris, J. M., Nelson, J. A., Roach, B., & Torras, M. (2015). Microeconomics
in context. Routledge.
Hall, R. E., & Lieberman, M. (2012). Microeconomics: Principles and applications. Cengage
Learning.
Hawthorne, L. (2016). Labour market outcomes for migrant professionals: Canada and
Australia compared.
Holland, J. H. (2018). The global economy as an adaptive process. In The economy as an
evolving complex system (pp. 117-124). CRC Press.
Salt, B. (2018). Where jobs of the future will be. Theaustralian.com.au. Retrieved 20 April
2018, from https://www.theaustralian.com.au/business/bettercities/job-growth-in-
australia-points-to-future-prosperity/news-story/
4e6b4a314798e41a602254513f03aaf2
Smith, K. (2018). The new people problem. HR Online. Retrieved 20 April 2018, from
https://www.hcamag.com/features/the-new-people-problem-248815.aspx
Watson, I. (2013). Bridges or traps? Casualisation and labour market transitions in
Australia. Journal of Industrial Relations, 55(1), 6-37.