Explain how wages are currently determined in Australia; roles of employer associations, trade unions and industrial tribunal in Australia's labour markets.

Decent Essays
Wages in Australia are currently determined by the interaction of demand and supply of labour in the labour markets. The wage rate is the equilibrium of demand and supply of labour. At the point, the amount of labour supplied is equal to the amount of labour demanded. If the real wage rate is above this point, then there is excess supply of labour, thus causing unemployment. The unemployed people would then be willing to work at a lower wage, hence put downward pressure on the wage rate which eventually move down to the equilibrium wage rate. If the real wage rate is below the equilibrium wage rate, then there is excess demand then supply. In order to continue production, firms will be willing to offer higher wages to attract labour. This…show more content…
These natures of employees and employers will constantly disturb the Australian labour markets causing it to be ever unresting. There are three major organisations in the labour market: trade unions, employer associations and industrial tribunal. A trade union is an association of workers that aims to advance the interests of its members by improving their wages and working conditions. There are many types of trade unions in Australia including occupational unions; industry based unions; enterprise based unions and general unions. Most unions are affiliated with the Australian Council of Trade Unions(ACTU), which is the national representative of various trade unions. The trade unions play a significant role in the labour market. First, it can restrict the supply of labour. By organising industrial actions such as strikes, trade unions are able to restrict labour from working, thus decrease the supply of labour. These actions are normally aimed for higher wages. Secondly, trade unions have stronger bargaining power in negotiations with employers. As the trade unions represent a large amount of workers, they have much stronger power when dealing with employers as employers will find it very hard to continue operating the firms once their workers are on strikes. Therefore, unions have more chances to succeed when bargaining for higher wages. In order to offset the enormous power the trade unions have on
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