Wage rate reduction strategy. Law of demand and shortages

Kevan2 on 13/08/2014 - 23:56

Budget strategy of 40 job application per month, no income support for as long as it can be avoided. Child care support that may prove net negative real income.

All the above, combined with the worst unemployment figures for 12? years, tells me that there will be an argument that there is an over supply of labour (the goods). This will be evidenced by the increased job application received by businesses.

As shown in farming, with a glut of any product the price (wage paid) will fall.

What do the Ozbargain community say to this - with oversupply of labour as shown by (the engineered ) excessive called for and unrequested applications for 'a' job, the government will need to bring about the reduction of the min' wage (yes and the next few pay rate levels), American style internships (free labour), to tempt businesses in employing extra staff.

From past life experience I have little faith in the real outcome as 'BIG' business is short term profit driven rather than wealth driven (my def/as the sum of profit, growth, and community good with a view to longevity!)

Are we or someone we know going to be stuffed or am I wrong?

Financial

Comments

  • ryudo222 on 14/08/2014 - 00:05

    I had a weird headache reading all of this, I think you had too many brackets :((((

  • Serapis on 14/08/2014 - 01:30
    +4

    Eco / Law major here, from knowledge of the Australian Labour market and employment law:

    About wages:

    • Reduction of minimum wage not going to happen, only has been increases or a 0% increase every FY for the last decade
    • Maybe possibility of reduction of entitlements like penalty and overtime rates but that's sort of the limit as evidenced in the recent cuts in Sunday rates for restaurants:
      https://www.fwc.gov.au/about-us/news-and-events/summary-sign…
    • American style internships for 'free labour' is usually compared to exploitation, and is seen unfavourably in both Australia and UK. Has been deemed unfavourable by courts in the past as well. Government has done an extensive study on this: http://www.fairwork.gov.au/ArticleDocuments/763/UW-complete-…

    About unemployment rate:

    • Kevan2 on 14/08/2014 - 10:07

      Thanks , little reading here and will get back to it.
      Passing comment, Government policy changes, as do regulations.
      It seems there are voice or media bombs being dropped every day, the Gina's'arses, Clive's,Hocke'rs, even Howards of the past which lay acceptance of sad, bad law and conditions. Slippery slope?

      • Serapis on 16/08/2014 - 02:15
        +2

        I don't even listen to the media anymore, full of junk news and they love to blow unimportant things up out of proportion all the time.

        Recent examples include MH17 crash (while there was the actual Ukrainian / Russian crisis at hand, Israel / Palestinian crisis, ISIL over in Iraq and more.),and death of Robin Williams (SMH had like 6 articles… SIX just on Robin Williams the day he died, completely unnecessary. Meanwhile in Africa… Ebola killing over 1000 people, has potential to spread to other countries and only 6 doses of antidote (ZMapp) remaining until end of the year..)

  • rambutann on 14/08/2014 - 08:17
    +1

    The new generation of Australians tend to do what they want to do in the workforce and not what society needs them to do. For example, plenty of jobs as a long haul truck driver but nobody wants to do it..

    I do agree that the min wage should reduce but yeah nah I don't think that'll happen.

    • Kevan2 on 14/08/2014 - 10:00

      This opens a real can of worms. Long hall trucking, many good drivers there but a train can carry much more and would the time log pressure verses the delivery expectation be elimated.

      Australians do what they want in the workforce? Please explain -

      Does the terms and conditions that is offered by "society needs" are not approaching the real value given.

      Most blatant example are the earnings paid to Hospital Cleaners. I believe there was a report that estimated that the hospital cleaners contribute the most to society. Who would like to have their Mum operated in an ' unclean ' hospital and recover in a dirty bed. Sorry I have not the link to the study menchioned here.

      • rambutann on 14/08/2014 - 10:27

        Yes but the amount of movements freight needs to undergo to get from point A to point B via rail is high AND the rail infrastructure between melbourne and sydney is crap. Im pretty sure it takes about 14 hours and theres curfews surrounding when the trains can enter sydney. Its easier to truck goods.

        Like, if someone studies how to be a cat toenail plucker they will only do that job even if it means that they have to go on centrelink until they find that job. I feel like thats how gen Y is at least.. not so much the last generation.

        Basically I look at it as.. In Australia minimum wage could easily pay rent, food and still have half of your wage set aside for savings. If that is not the case then you are living beyond your means. I personally live well under minimum wage and I am still able to save quite a lot.

        In other countries people work full time 6/7 days a week just to put a roof over their head and to buy food.

        • Serapis on 16/08/2014 - 02:04
          +1
          • On Employment Market:

          This is more so in other industries like construction and hospitality which are flooded with people on 457s. No one wants to work 60 hours a week as a chef in a kitchen on minimum wages (approx 40 - 50k pa), which employers are still complaining are too high.

          This has only been made worse with TAFE cuts over the past couple years, not only is the appeal of these trades diminishing, the framework around gaining these qualifications are also being dismantled.

          • On households' capability to save:

          With Income vs Savings however, RBA data has shown that lower income households / individuals struggle to make ends meet, let alone save:

          http://www.rba.gov.au/publications/bulletin/2014/mar/images/…

          The graph shows that households with under 40k (approx) of disposable income generally have negative savings. The people who save the most are high income earners of 180k +, with approx half of disposable income going into savings. This disparity is alarming as the gap is only going to get wider as the poor get poorer by being in constant debt while the rich will only get richer.

          Australian minimum wage also barely covers living expenses if you live in the main cities like Sydney / Melbourne (not sure about other state but heard SA was relatively okay)

        • rambutann on 16/08/2014 - 14:54

          @Serapis:

          I honestly completely disagree, if you are struggling to live off minimum wage in Australia then you are living beyond your means. Some people are in an unfortunate position and have obtained lots of kids then split with their partner and are struggling to make ends meet but in a lot of scenarios this isn't the case and they are still living beyond their means. I can easily live off $220 including rent, bills, fuel, everything. Because I'm a student.. i don't live beyond my means..
          For example, there was a woman in the age yesterday who was angry because she spends $100 on petrol a week as is and she's worried that she won't be able to feed her kids with an increase in tax or something..

          First of all, she drives a commodore.. Now I was as open minded as possible and thought maybe someone gave it to her or something. Nope, she bought it last year. Why would you buy a large fuel guzzling car if you can't afford to pay for it?…

        • Serapis on 17/08/2014 - 05:14

          @rambutann:

          Good job keeping track of your finances

          But keep in mind the stats are averaged out across the entire population of Australia. A lot of people do live well beyond their means, even when single. They use their money for what they want and use credit to pay bills. Then there are those people who pretty much rely on their weekly pay to support their extravagant lifestyle (drives uninsured BMW, etc). Even students, I knew someone who earns approx $1.5k per FN working PT but spent $3k every now and again on handbags, shoes, etc

          Hence thriving credit provision and debt collection industry…

  • [Deactivated] on 16/08/2014 - 11:13

    The minimum wage and unemployment rate aren't the only controversial issues in our society which are hidden from plain sight by the media.

    Check out the ABS "Labour force status by Social marital status, Age and Sex"

    You will find that there are roughly two unemployed males for each female. Do you guys know why this is the case? Is it mostly due to the rise of feminism. It is a deep problem which is rooted in our society and yet the women keep stating that they need a pay rise. A pay rise for themselves.

    The only reason why the super fund balances for females are generally lower is because of the skewed inheritance issues. This means on average a man will earn more just because they receive inheritance and thus any rents or interest on that inheritance. In the main working age population, a woman's salary is more than a man's in most situations. Now the fact that women cannot work for a part of their life doesn't mean they should get a higher per hour wage. Remember equal work, for equal pay. It should actually be a catch phrase for men looking for equal pay.

    The bullshit in the media is astounding at times.

    So, why do women have higher wages? It is mostly due to the work they do and how it is paid. Mostly, the high concentration of women in the high paying health sector is what skews the women's working population salaries higher than the men. However, for every large man who receives inheritance and doesn't have to work (thus skewing men's "income" [not salary] higher <Note: these aren't in the statistics as they are not looking for work>), it seems like there are at least another two unemployed.

    So tough luck men.

  • grasstown on 17/08/2014 - 09:08

    In this situation, prices will go up not down. Prices are cheapest when economy is good. Worst after downsizing. Prices will go down when stores try to clear existing stock, but price of production will force up new stock prices.

  • Kevan2 on 09/09/2014 - 17:05

    Try this for wage disparity. It not just females but the divide between the ceo types and the ones who make the money.

    https://www.youtube.com/watch?v=ONCQwf3ClRc and http://www.businessinsider.com.au/presenting-what-the-ceos-o…
    and there is a throwaway line - things like shadow shares and blah blah
    http://www.theaustralian.com.au/business/financial-services/…

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