Impact of Skill Shortage on Wage Growth in Australian Labor Market

Running Head: ECONOMIC ASSIGNMENT
Economic Assignment
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1ECONOMIC ASSIGNMENT
Table of Contents
Introduction......................................................................................................................................2
Overview of the article....................................................................................................................2
Economic Analysis..........................................................................................................................4
Skill shortage and wage growth...................................................................................................4
Positive outlook of wage growth.................................................................................................5
Recommendation.............................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

2ECONOMIC ASSIGNMENT
Introduction
In modern technologically sound world, every industry is trying to shift their production
technique to a more mechanized work. Industries thus need trained workforce for proper
utilization of such advanced technology. The availability of human resource thus become a
crucial aspect for production operation in these in this industries. Shortage of human resources
creates the main obstacles to expansion of production (Conger and Lawler 2015). Some vital
industries in Australia today have come across the problem of having workers with sufficient
training. Construction, telecommunication, hospitality, automotive are the main pillars of
Australian industry. Shortage of human resources in these industries thus have a detrimental
effect on the entire economy.
Overview of the article
The Reserve Bank of Australia give an optimistic view regarding the trend wage growth
in the labor market. The wage price index of December revealed that there is a moderate growth
of wages especially in the public sector. Employment report of this year suggests that employers
in some industries faces difficulty to have workers with demanded skills. The strong demand on
the part of employers will contribute to a decline in prominent position of underutilized laborers
in the market.
RBA has a positive outlook for the wage growth. The higher wage growth is expected to
stimulate economic activity from the resulted inflationary pressure (businessinsider.com.au
2018). The wage has increased inflationary pressure to the extent that RBA needs to take tight
monetary policy in form of rising interest rate in since late 2000s.