Labour market is a factor market and crucial part of economy, which involves the

interaction between individuals seeking employment to earn income and employers

who want to find workers (with appropriate skill) for production process. Many labour
markets for each industry, firm, occupation in economy. No single; price for labour and
Conditions.

FACTORS EFFECTING DEMAND: Firms demand labour by offering wages; this is

different to product market cause Labour is derived demand. (Based of consumer
needs)
- The output of firms
- Productivity of Labour (economy wide UP 1.4%)(Market Sector UP 2.5%)
(Multifactor UP 0.4%) differ w industryAffects employment (depends on
aggregate demand)(Total Output/Input)
- Economic conditions (aggregate demand)(Reaching Recession)(RBA promote
growth decrease AUD about 74.4 US cents and RBA Lowered interest rate 1.75%)
(Promote economic activity)(Increase derived demand for Labour) e.g realestate
boom
- Cost of Capital RBA I.R (1.75%), encouraging investment in capital goods.
FACTORS EFFECTING SUPPLY:
- Wages
- Working conditions
- Skills and Education
- Mobility of Labour Occupational (end mining boom) Geographical (peak mining
boom) reskilling
- Labour force participation (64.7%) lower than (65.9%) -Portion of the population
that decides to supply its labour (can and willing) workforce/population aged 15
up to 65 * 100.
- state of economy can encourage increase
- Ageing population (GOVT. increase retirement to 70/offer incentives to firms for
keeping elderly workers.)
- Social Attitudes gender empowerment (more women in workforce)
- School retention rates (growing trend for young people to pursue tertiary
education)
- Gillard Govt. increase tax free threshold from 6,000 to 18,000 make people want
to pursue work
WORFORCE: above the age of 15 and actively working or seeking work. = unemployed
+ employed
- Population currently 23.13 million (natural increase + migrants (fill skilled jobs in
low supply)
- Age distribution (ageing population)
- Education patterns (increasingly more people chasing tertiary education)
TRENDS
Unemployment is currently settled at 5.7% and has slightly increased but otherwise
fairly stable decreasing since 6% peak late 2014/ early 2015
Underutilisation rate 14.5% is on increase 16.5% with hidden employment
Casualisation and contracted labour on the increaseCasual (23.9%) Contract (9%)
Insecure work and usually contributes to underutilization
Government investing in industry to increase hours worked and creates employment
opportunities with reskilling as well.
Part-time work is increasing steadily and Full time work fluctuating but downward trend
Firms tend to have an over-capacity of labour
- Labour Market institutionsAustralia becoming more decentralized wage system,

- encourages allocative efficiency:

o Awards are industry specific
o Encourages supply to better industries
- If you are unskilled or skilled in a poor industry then living conditions can
decrease and makes it less practical e.g shut down of manufacturing in Australia
vs boom of minerals