Analysis of Wage Behaviour and Labour Employment in Australia

This report reviews the article by Bishop (2018) on the effect of minimum wage increases on wages, hours worked, and job loss in Australia. The study examines the impact of the Fair Work Commission's decisions on wage rates, focusing on the effects of minimum wage adjustments on various sectors and worker groups. The analysis considers the consequences of minimum wage systems, including impacts on business turnovers, training costs, and hiring practices. The report explores the complexities of measuring the impact of minimum wage changes, considering factors like tax effects and the use of different data sets. It also discusses the role of the Fair Work Commission in protecting workers and the application of the difference-in-differences approach to analyze wage elasticity. The report highlights the challenges of applying traditional labor market models and the varying empirical evidence on the relationship between minimum wage increases and employment outcomes. This research provides valuable insights into the macroeconomic effects of wage policies and the dynamics of the Australian labor market.

MACROECONOMICS

Wage behaviour and labour employment in Australia.
A huge discussion was conducted on the effect of minimum wages for employment
on the international level. The data says that Fair Work commission has passed this
discussion on the next generation where it says there is an increase in Australia`s annual
wage rate by 2.4 percent till $672.7 in a week. This data reveals that it is extra of $15.80 in a
week for 1.8 million workers who were still paid very low. This discussion brings out many
views from many researchers and experts who says affected labourers will soon notice
increase in their minimum wage rate that just exceed the current hourly pay. It is on the basis
of basic pay as it does not include additional labourers who have received directly or
indirectly wage increase with the help of certain spillovers as the employers will adjust the
whole pay scales. The effect of minimum wage rate system leads to many consequences such
as it reduces the business turnovers, higher training cost, and unusual hiring. Low
unemployment and high wages can further lead to increases the tax revenues.
According to Bishop, (2018), no economic model has the ability to apply any of the
traditional competitive model of the labour market, which further suggests that increase in
minimum rate will influence the employment. Whereas, other theoretical models can
predicted that whole situation as opposite. For instance- increasing employment in the labour
market especially where the organisations operates in monopoly has the power to set their
own wages. Different views depends on the different views due to different database on
which the research h has to be conducted. For example- empirical evidences suggest from the
various countries that incremental increase for minimum wage will not affect the economy as
the adverse effects on loss of jobs as well as hours worked. Whereas, there is limited access
to empirical evidences in Australia due to data constraints. Further, this article contributes to

a level of approach where a dataset of job level have uniquely suits the effect of increase in
minimum wages in Australia.
NMW groups a legal base for the wages as labourers are often exploited due to low
education. In order to protect the workers, the (FWC) Fair Work Commission protects the
interest of the workers and avails them to earn and live their livelihood in high inflation. As
of 2018 in July, NMW is like to 1.93 per hour for the adult worker. The country has a
comprehensive system of the honour system, which is at the top of NMW. Further, awards
wages depends on the industry, age, qualification, and level of skills. The macro analysis of
the minimum wage rate has been conducted with strong arguments as there was challenge of
choosing the group as different level of workers has different percentage if adjustment in
their wages. For instance- when author decided to effect of tax effects on the change in the
income tax rates, it is observed that any changes in employment occurred as the changes in
the minimum wage affect the tax changes rather than considering the FWC decisions. The
author has considered taking a group of people that are influenced by alteration as well as
alternative group of people who are not affected. According to Bishop, (2018), he has
overcome this challenge after finding all the jobs who have minimum wage adjustment.
Some jobs who have greater adjustment as compared to others are considered for this
analysis. This concludes that now the comparison can be made on the basis of greater
adjustment to those of receiving smaller adjustment. Sometimes, FWC granted smaller flat
increase in dollar that lead to developed award remuneration ranges rather than flat upsurge.
In 2003, the FWC revealed an rise in rewards at it was 45 cents for an hour for all the award
based wage receivers that was up to 19.26 every hour and 39 percent for all the wage
receivers above a particular level. This lead to discontinuous profile of increase in proportion

wage surges at $19.26 every hour. Several discontinuities incline to intensify the difference in
the size of the award increase from lower to higher award wage employees. This article has
conducted its analysis to see the difference in the extent of the least wage rate alterations to
foresee the diverse jobs to separate and separate the impact of bottom wage from the
influence of many changes in labour market. The main awareness was to link the changes and
differences for each variable of interest across every FWC decision between the jobs, which
have practiced larger percentage change as compared to those who have experienced smaller
adjustments. It is strongly evident that awards adjustments has been added to the whole sum
of wages by measuring the elasticity of the wages in regards to award wages. This test has
applied DD approach that leads to sensitive violations due to assumption of parallel trends.

References
Bishop, J. (2018) ‘The Effect of Minimum Wage Increases on Wages, Hours Worked and Job
Loss’, Reserve Bank of Australia Bulletin. Retrieved from:
https://www.rba.gov.au/publications/bulletin/2018/sep/the-effect-of-minimum-wage-
increases-on-wages-hours-worked-and-job-loss.html