Presentation: Critical Analysis of Minimum Wage Increase in Australia

This presentation critically analyzes the advantages of a lower minimum wage increase in Australia, examining its impact from various economic perspectives. It explores the influence on the labor market, employees, businesses, and the overall economy. The presentation utilizes economic theories to support its arguments, discussing wage as a metric of supply and demand, and the impact on different worker skill levels. It considers the Keynesian theory of consumption, the short-term effects on employment costs, and the long-term implications on industrial structure and purchasing power. The presentation references academic sources and concludes that the negative impacts of higher minimum wage increases outweigh the positives, particularly for small businesses and individual employees. This presentation was created as part of an assignment for a university course on critical thinking and managerial decision making.

Critical thinking and managerial decision making
Argument in favor of lower minimum
increase of wages

Introduction
• The primary objective of this presentation is to
analyse the advantages of lower minimum wage
increase in Australia.
• Various economic theories will be implemented in
order to make the assessment in decision.
• The discussion regarding the impact of lower
minimum wage will be conducted from four aspects
incorporating the influence on labour market, on the
employees, on the business groups as well as the
overall economy of the country.

Discussion
• Wage can be considered to be a metric of the supply and demand in the labour market.
• Wage guides demand of labour as well as supply behaviour of the organisations as well as
individual labours.
• When demand for labour is less than the supply, increase will influence the highest number
of labours to take up jobs, accounting in instrument of labour supply as well as easing out
the contradictory situation between supply and demand.
• On the contrary, deduction in wages can stimulate assessment of the worker who will leave
the labour market which will in turn reduce supply.
• The system of minimum wages refers to the intervention of the state government regarding
wage and increment of wage rates by means of the administrative policies.
• However Bishop and Cassidy (2017), states that it is necessary that the government
interfere in the labour market economy.
• In a situation where the labour market is fully competitive, and minimum wage increase
rate is over the equilibrium range, labour supply will generally tend to be higher than the
demand for labour, and willing employees in Companies will be lower than and the
employees willing to employment.

Discussion Continued…
• This part of the presentation will analyse the impact
on the employees. in context to the knowledge
level of background as well as Technology,
employees in Australia can be segregated into
primary, intermediate as well as advanced workers.
For the intermediate as well as advanced workers
former the wages will be determined by supply and
demand in the market so that the increase in the
minimum wages will not have major influence on
them.

Discussion Continued…
• On the basis of the income level former the group of consumers can be
segregated into high, medium as well as low categories (McKenzie, 2018).
• According to the Keynesian theory, it can be stated that higher the income,
lower would be the consumption propensity.
• According to the theorist, the natural propensity of consumption pertaining
to the high income individuals is lower than that of the low income
individuals.
• Beneficiaries of minimum wage exhibit strong desire for consumption which
can in turn imply that there sustainability over minimum wage will be lower if
consumption propensity is higher.
• Along with maintaining the basic requirements in life, lower increase in
minimum wage can specify the consumers a certain consumer valuation
which will save them from the buffer between high end consumption and low
and consumption prices.

Discussion Continued…
• On a short term basis, the minimum wage increment can
contribute to enhancement of employment cost as well as
enhance the operational burden of the Enterprises
particularly business organisations pertaining the light
industry, household appliance industry as well as business
is pertaining to the other domains.
• It was the same lower minimum wage policy that forced
organisations like Ford, Toyota and other automotive
companies to shift their production from Australia to other
countries like China, Vietnam and so on (Coleman, 2016).

Discussion Continued…
•Considering from the long term perspective, the initiative of minimum wage increment will have significance on
adjustment of the industrial structure.
•The payment of wages by the companies will increase which will in turn enhance production cost. In order to adjust this
cost fluctuation, the companies will gradually attend towards automation and screening of low skilled labours.
•As evident above, the low skilled labours in Australia have their scope of skill development from vocational training.
•Hence, such employment is the only scope for them in order to emerge in the economy as experienced workers.
•On top of that, increase of minimum wage at a higher rate will make the purchasing power as well as purchasing parity
of the customers higher.
•Naturally, their expenditure on consumer goods will increase which will require the manufacturer to inject more product
in the market.
•This can reduce the loss from market operations and enable the companies to increase their payment.
•This is only true in the long run from a local market prospective. Nevertheless, big farms like Ford not able to implement
this strategy and that is why their market operations in Australia become Limited and extinct (Carvalho, 2015).
•Hence, it is arguable that the balance in the economy will be maintained, not by maintenance of the trend of gradual
higher increase of minimum wage rate.
•However, considering the current minimum wage policy in Australia, it can be implemented that the overall trend of
market growth shows that the higher increase in which rate is going to get promise from the future political frameworks.

Conclusion
• Now, speaking of minimum wage increment in Australia, it is most likely that
unemployment will increase.
• This is why from all aspects, the higher increase of minimum wage will be a blow
on the business and considering the fact that small businesses are the
fundamental to overall economic growth, the recovery of the economy from the
economic inflation and crisis of 2008-09 will be delayed (Berg & Farbenblum,
2017).
• The enhancement of minimum wage significantly impact of employees, labour
market, organisations.
• Considering the multitude of aspects, it can be summarised that the negative
impact of the higher increase of minimum wage rate are much more compared
to the positive outcomes.
• The most outrageous impact will fall on the individual employees, advancement
and sustained in the economy as well as the small and emerging Enterprises.

References
•Berg, L., & Farbenblum, B. (2017). Wage theft in Australia: Findings of the national
temporary migrant work survey. Available at SSRN 3140071.
•Bishop, J. (2018). The Effect of Minimum Wage Increases on Wages, Hours Worked and
Job Loss (No. rdp2018-06). Reserve Bank of Australia.
•Bishop, J., & Cassidy, N. (2017). Insights into low wage growth in Australia. RBA Bulletin,
March, 13-20.
•Carvalho, P. (2015). Youth unemployment in Australia. Policy: A Journal of Public Policy
and Ideas, 31(4), 36.
•Clibborn, S. (2018). Multiple frames of reference: Why international student workers in
Australia tolerate underpayment. Economic and Industrial Democracy,
0143831X18765247.
•Coleman, W. (Ed.). (2016). Only in Australia: The history, politics, and economics of
Australian exceptionalism. Oxford University Press.
•Couch, K. A., & Wittenburg, D. C. (2001). The response of hours of work to increases in
the minimum wage. Southern Economic Journal, 171-177.
•Kelly, E., & McGuinness, S. (2017). A study of sub-minimum wage rates for young
people. Economic and Social Research Institute (ESRI) Research Series.
•McKenzie, M. (2018). The erosion of minimum wage policy in Australia and labour's
shrinking share of total income. Journal of Australian Political Economy, The, (81), 52.
•Preston, A. (2018). The structure and determinants of wage relativities: evidence from
Australia. Routledge.