Labor Market Analysis In Australia: Trends In Demand And Supply

Understanding of Australian Traditional Market Theory

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A labor market analysis mainly identifies the areas within which the company competes for employment. The labor market analysis helps to conduct the market survey within the labor market in order to determine the rate of the wage that is paid to the different individuals. There are different labor market segments in the economy of the Australian labor Market. The labor market mainly refers to the interaction between the demand and supply of labor. The labor market analysis in the Australian labor market mainly helps to determine the number of jobs in the Australian labor market (Bowen & Finegan, 2015).
The size of the Australian labor force has increased from 5.6 million individual to about 9.8 million between the years 1971-2001. Over the past thirty years, the Australian labor market has undergone a reflective transformation. On the supply side, the individual workers are the part of the labor market where they supply labor inputs into production. In the Australian labor market, the rate of employment increased to 17,400 and the rate of unemployment-decreased by781, 100. The official rate of unemployment decreased from 0.1 points to 65 percent (Atalay & Barrett, 2015).

As per the reports, there are trends that have been going on in the digital technology as well as social media that are expanding with the help of the marketing methods. The traditional marketing theory can be explained in the following ways:
1. Market – the traditional market theory are mainly based on an acquaintance with the markets. The market in turn consists of the consumers, competitors as well as the authoritarian agencies. The effectual traditional market in turn offers a higher value of the consumers as compared to that of the competition that takes place in the market. The traditional market theory makes certain that the company acts in agreement with the appropriate laws as well as regulations. In order to execute a successful marketing strategy the company must be aware of what the consumers requires as well as what the competitors are executing (McLachlan, 2013).

As per as a marketing survey that has been conducted, the survey provides a feedback on the attitude of the consumers towards the product of the company as well as the competitors. Since different consumers have diverse needs, the companies must choose a market that can be easily accessible at a reasonable price (Hildenbrand, 2014).

2. Product – As per as selling is concerned, traditional marketing differs in the approach they use to sell the products. In terms of traditional marketing, selling is termed as the fact that requires convincing the consumers so that they purchase the products that is sold by the company. Traditional marketing finds out what is required by the consumers as well as what is the cost the consumers are willing to pay. After finding out the details, the company will offer the price to the consumer that the consumer is willing to pay. If the marketing research is done correctly, then the consumers will purchase the product (Sabia & Wooden, 2015).

3. Channel – One of the most important elements of traditional marketing is the selection of a distribution channel that is expedient for the consumer who is buying the product. The distribution channels mainly include the retail stores, direct sales as well as the mail order with online sale becoming vital. The online sale has also fitted into the theory of traditional marketing model as an optional channel. The marketing survey gives the details about the products that the consumers would prefer to purchase (May et al., 2013).

4. Value – One of the most important bases of the traditional marketing is facilitating the valuable goods for exchange. It is very important to promote the products to those customers who has the value for the particular good and is likely to purchase that good. A loyal customer is created when the customer gets the full satisfaction from the consumption of the product. The loyal will thus continue to make the purchase till he or she gets satisfaction from the good.

The figure provides a framework about the determination of the outcome of price and quantity in the Australian Labor Market. The determination of the quantity includes the determination of the employment, unemployment as well as the outcome of the price that in turn includes the labor cost of the employer (Wilkins & Warren, 2013). S denotes the labor supply that reflects the participation of the workforce. D that in turn reflects the willingness of the employers to hire denotes the demand of the labor. V denotes the level of vacancy, whereas the employment is measured with reference to the D-V curve. W indicates the wage curve that in turn captures the characteristics of the sticky price of the Australian Labor market (Tan & Lester, 2012).

The Labor Demand Trend in Australia

The change in the output and the cost of the inputs mainly changes the demand for the labor. The demand of the labor is modeled as a decision of the firm and also from the neoclassical point of view. The labor market in Australia mainly takes the salary and the cost of the input as given and with the help of this; the firms choose the employment in order to maximize the return. The labor demand curve of the firm in the short run is given by the curve of the marginal revenue product. However, in the long run there are large possibilities of substituting the labor for capital and also the material inputs (Australia, 2014).
The traditional demand of labor in Australia can be written in the following ways:
ln Lt = α0 + α1 ln (w/p) + α2 ln Qt + α3t + α4 ln Lt-1 + ut
Here L is defined as the employment that is measured as the number of employees employed and the hours they work. The gross domestic product deflator is denoted by p. The nominal rate of wage is indicated by w and Q is the output (Duncan et al., 2014). The time trend is denoted by t. In the Australian Labor Market, the wages changes drastically and it also flows across the financial system to all the industries. In the Australian Labor Market, the employment is generally measured in terms of the total employment and it is degenerated on the numerous variables that include real wages, output as well as the time (Australia, 2014).

The change in the technology leads to the trend in the labor demand of the Australian labor Market. The technological change increases the productivity of the high skilled as compared to that of the low-skilled workers. The second factor that has affected the trend in the labor demand in the Australian Market is the international trade that has abridged the relative demand for the low-skilled workers.

The labor force in Australia includes those individuals who are employed and are actively looking for jobs. One of the factors that contribute to changing trends in the Australian labor supply is migration. Immigration affects the labor supply trend in Australia by increasing the population of the working age. Immigration helps to improve the growth of the economy by bringing the skilled workers who are highly demanded. The change in the composition of the migration intake of Australia has affected the labor supply of the Australian labor market. The rise in participation has corresponded with a decrease in average hours labored, predominantly over the past decade. As a result, the entire number of hours worked has developed at a slower rate than the number of people working. (Muffels, 2014).
The factors those are included in migration also includes a range of temporary visa holders and the working holiday makers who also leads to the trend in the labor supply of the Australian Labor market. The taste, attitudes and the preferences of the workers also affects the supply trend in the Australian labor market (Watson, 2013).

The size of the working population is also responsible for the change in the supply of the labor in Australia. As per the report, the yearly growth of population in Australia picked up in the year 2000. The proportion of the labor force that had arrived in Australia in the preceding five years increased from under 3 per cent in 1996 to almost 6 per cent in 2011. The immigration resulted in the improved rate of the supply of labor and as a result, the number of unemployed immigrants decreased. The immigrants as a result, had a higher rate of participation as compared to that of the general population. This was mainly because the immigrants were younger as compared to the general population.

The major contribution of immigration to the labor supply has come from changes in the composition of migration intake in Australia. In particular, the augment in enduring visas since the mid 1990s has mostly been for skilled migrants. As per the reports, there are a total of 457 visas that contributed to the total number of immigrants that in turn contributed to the total supply of labor. The immigrants mostly settled in the Western part of Australia as well as Northern Territory where the jobs related to mining was mostly popular.

The visas of the students also contributed to the larger supply of labor in Australia. The students in Australia worked for at least 20 hours a week while their lessons are in session. Over the past decade, the number of students who holds visa has tripled. This was by far the largest increase in the visa category. The number of working holiday visa holders in Australia has approximately two folded since the mid 2000s. However, this number was relatively as compared to the students and other immigrants.
The demand and Supply Equilibrium in the labor market

The wage w* is also known as the market clearing wage and the reason is that any other wage level would either create an upward or a downward force on the wage. As a result, there will be number of jobs that will be chasing only a few accessible employees. A competitive market maximizes profit by adding P and Q that is P + Q. The number of individuals who desires to work equals the number of employees who are hired by the firm at the market clearing wage rate w*. In the diagram it is depicted that at the market clearing wage rate w*, E* employees are hired (Tan & Lester, 2012).
The elasticity of the real wage in Australia is estimated by using the general equilibrium models.

The Labor Supply Trend in Australia

Demand and supply for the labor market depends on various factors. Demand and supply of labor force in Australia had changed over the past ten years. Various factors have affected this change in the demand and supply of the labor forces in Australia. In order to perform the regression analysis of demand and supply of labor force in Australia, demand and supply of the labor force of Australia is considered as the dependent variables (Cameron & Trivedi, 2013). These two variables are independent of each other. The demand of labor force depends on the Technological change (percentage of manufactured export) and international trade (in $m). The supply of labor force in Australia depends on net overseas Immigration (in ‘000) and size of the working population (percentage of total). Regression analysis was performed for the two variables, demand of labor force and supply of labor force independently (Draper & Smith, 2014).

The regression equation for the demand of labor force was found to be demand = 7.52028 + 0.13175 x1 + 0.091498×2; where x1 = Technological change (percentage of manufactured export) and x2 = international trade (in $m). It could be interpreted that demand on labor force would be 7.52028 in absence of all the factors (Kleinbaum et al., 2013). The “Technological change (percentage of manufactured export)” influence the demand of labor force positively while the factor “international trade (in $m)” influence the demand of the labor force positively by a factor of 0.091498 (Montgomery et al., 2015).

The regression equation for the supply of labor force was found to be supply = 50.1715 – 0.002136 x3 -2.642694 x4; where x3 = net overseas Immigration (in ‘000) and x4 = size of the working population (% of total). The supply of the labor force would be 50.1715 in absence of the two factors that influence the labor force. The factor “net overseas Immigration (in ‘000)” influence the supply of labor force negatively by 0.002136 while the factor “size of the working population (% of total)” influence the supply of labor force negatively by 2.642694 (Seber & Lee, 2012).
The hypothesis test for demand shows that the F-value of the test is 0.57, which is greater than 0.05 for demand. This leads to the acceptance of null hypothesis and the demand depends on the two factors. The R squared value of demand is 0.1404. This suggests a weak degree of correlation between the demand and the two variables, “Technological change” and “international trade”.
The hypothesis test for supply shows that the F-value of the test is 3.787, which is greater than 0.05 for supply. This leads to the acceptance of null hypothesis and the supply depends on the two factors. The R squared value of supply is 0.519. This suggests a moderate degree of correlation between the supply and the two variables, “net overseas Immigration” and “size of the working population”.
The breakeven point of the demand and supply curve is 10.00. This is the point that at which the demand and supply curve meet each other. The value of the demand curve and the value of the supply curve is increasing and decreasing with time respectively. Thus, the breakeven point is 10.00.

Conclusion

The effectual traditional market offers a higher value of the consumers as compared to that of the competition that takes place in the market. The traditional market theory makes certain that the company acts in agreement with the appropriate laws as well as regulations. In order to execute a successful marketing strategy the company must be aware of what the consumers requires as well as what the competitors are executing. It is concluded that immigration affects the labor supply trend in Australia by increasing the population of the working age.
Immigration helps to improve the growth of the economy by bringing the skilled workers who are highly demanded. The labor market in Australia mainly takes the salary and the cost of the input as given and with the help of this; the firms choose the employment in order to maximize the return. The visas of the students also contributed to the larger supply of labor in Australia. The labor demand curve of the firm in the short run is given by the curve of the marginal revenue product.

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