Thursday, July 12, 2012

Labour Market Institutions

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Trade unions

(1) What are trade unions?

Trade unions refer to employee organization, which represent groups of workers on a collective basis. Trade unions bargain collectively on behalf of their members thereby increasing the bargaining power of individual workers in wage negotiation

() How are trade unions organised?

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Trade unions are organised along general industrial and craft lines, but increasingly super unions are being formed along industry and even single enterprise lines with increasing coverage and bargaining power in wage negotiation.

() How do trade unions influence labour market outcomes?

Trade unions can influence market outcomes in two main ways

1. If unions can restrict the supply of labour to only unionized workers, this will cause a shift in the supply curve to the left as illustrated in Figure A forcing up the wage rate but reducing the quantity of labour employed to only union members

. a Trade Union or the union movement in general may attempt to raise wage levels above market equilibrium or market clearing levels as in Figure B [creates wage floor]

Employer Association

(4) What is the role of employer association?

(5) Give reasons for the support given to enterprise bargaining by employer associations.

Decentralisation of wage determination allows employers to link wage determination allows employers to link wage increases to improvements in the productivity of labour

Simplification of and less reliance on the award system allows employers more flexibility in containing wage costs

Enterprise bargaining gives employers more flexibility in deploying labour resources and introducing capital and technological improvements

Enterprise bargaining leads to less involvement by industrial tribunals and trade unions in wage negotiations which makes the labour market more competitive and flexible

Containment of wage costs and inflation through a less centralized and regulated industrial relations system helps to improve the profitability and competitiveness individual employers and industries

The Australian Industrial Relations Commission (AIRC)

(6) What is the AIRC and what are the five main roles that it has in Australia¡¯s industrial relations system?

The key industrial tribunal at the federal level is the Australian Industrial Relations commission (AIRC), which is a legally constituted and independent industrial tribunal. The AIRC¡¯s role in industrial relations under the Workplace Relations Act 16 is largely confined to

Administering and overseeing the simplification of the Award Safety Net System to 0 ¡®allowable matters;, which are basic conditions of employment

Conducting the annual Wage Safety Net Wage Case and making decisions over the adjustment of award wages after hearing submissions from the federal government, the ACTU and employer representative

Overseeing the certification process for Certified Agreements (between employers and trade unions) and applying the No Disadvantage Test to such agreements to ensure that workers are no worse off than under an equivalent or underpinning award.

Intervening in an industrial dispute arising from enterprise bargaining where all bargaining avenues have been exhausted or a nationally significant industry is affected by industrial disputation.

Applying a revised No Disadvantage Test to Australian Workplace Agreements (AWAs) based on 10 Community Standards if an agreement if referred to it by the Employment Advocate, which administers and register AWAs.

The functions of the AIRC are broadly summarised as follows

I) To facilitate agreement making between employers and employees or organisations of employees about wages and conditions of employment

II) To ensure that a safety net of fair minimum wages and conditions of employment is established and maintained

III) To prevent and settle industrial disputes, so far as possible by conciliation, and, where appropriate within the limits specified by the Workplace Relations Act 16 [WR Act], by arbitration

IV) To facilitate equal remuneration for work of equal value

V) To conciliate claims for relief in relation to termination of employment, and if necessary to arbitrate whether a termination is harsh, unjust or unreasonable

VI) To deal with matters concerning organisations, particularly registration, amalgamation, cancellation, representation rights, alteration of eligibility rules and change of name.

Written by Tim

Economic text book 001

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