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Executive Summary

The following assignment provides a critical evaluation and analysis of the FWA's proposed method for determining the federal minimum wage. It combines the two main theoretical schools of thought on pay determination. The study of the paper has been done in light of competing interests in minimum wage settings, as evidenced by recommendations from the Australian Chamber of Commerce & Industry (ACCI), the Australian Trade Union Council, and the Australian Industry Group (Ai Group).

The study examines and discusses how wages are determined using different perspectives. Additionally, concrete justifications and suggestions are offered to support the theoretical approach.

Introduction

This report's major goal is to analyse the methods used to determine minimum wages for the working class. At RWC, one such report was distributed. The hybrid aspects of theoretically applied systems are taken into account in this template, which has drawn criticism from researchers and practitioners. The nutrition component of the efficiency-wage model was viewed as its prototype. The fact that higher worker wages lead to greater food intake at work, which increases worker output, served as the inspiration for this idea. The submissions made to the FWC and the issues brought up regarding the theoretical approach to pay setting throughout the course of the project has been examined.

Analysis and Discussion

On July 1, 2020, the newly enacted minimum wage regulation went into effect. The 2019 Federal Minimum Wage Code is replaced by this change, which went into effect. The definitions created for pay fixing orders cover topics like recognising or awarding free employment and taking into account basic wages. Employers who have a disability will also be impacted by this issue. Institutions for the next generation and training are also covered by the paper's mandate. The recently established federal minimum wage is $753.80 per week, or $19.84 per hour (Whiting et al., 2019). It has been discovered that most residents of the contributing worker zone make more money than full-time minimum-wage workers.

The initial minimum wage only applied to a small number of worker groups, and it was created to safeguard individuals who were deemed to be especially vulnerable. The first nation to establish a minimum wage was New Zealand, which did so in 1894. Victoria, Australia, followed suit in 1896, and Great Britain did so in 1909. It was decided on a social companion. Early minimum wages occasionally singled out women and remote workers. In the early 20th century, there was much concern in the United States about the working conditions in "sweatshops," particularly for women and children. The National Consumers' League, a group founded by women, and the American Labor Law Association both supported the idea of a minimum salary. In 1909, the National Consumers' League's boards also supported the idea of a statutory minimum pay for women. The original minimum wage laws were passed at the state level, and they generally only affect women and children. State minimum salaries are frequently contested in court, and the United States Supreme Court ruled in 1923 that they were unconstitutional. President Roosevelt spearheaded the 1938 passage of the Fair Labor Standards Act by the US Congress, which established a federal minimum wage. Its legitimacy was swiftly contested in court, but in 1941, the Supreme Court upheld it.

It was discovered that 180,200 Australian workers were receiving the $19.49/hour national minimum wage. About 1.7% of all working Australians belong to this group. In 2018, it was reported that the award had an impact on the pay of 21% of his Australian employees. It was however less than the 22.7% previously noted. Most award-based workers received a weekly minimum salary of $740.80. The 44 of the 121 Modern Award winners who accepted such payments did so while maintaining pay rates for the remaining 77 Modern Award recipients above the federal minimum wage. Additionally, because it allowed for a fair approach and permitted earnings to be divided in accordance with the framework, the FWC's ruling has benefited businesses themselves (Chava et al., 2019). It is inadequate in that the viewpoint of the class is not taken into account.

The MIEFO's Mid-Year Economic and Fiscal Outlook for 2019-2020 was the primary driver of all pay changes. According to projections, the world's growth slowed in 2019. This includes Australia's principal Asian trading partners, which likewise seem to have reached a bottom. The decision to leave 2019 and enter 2020 was prompted by the year's higher economic growth. With economic growth reaching almost 2%, the labour market performed better than anticipated. According to neoclassical theory, businesses might react to the minimum wage in one of two ways (Azar et al., 2019). A company have the option of eliminating positions or upgrading your current personnel. However, it promotes social fairness, supports interventions, and supports institutional systems based on collectivism.

A classic analysis of the labour market is founded on the notion of equilibrium, which holds that at any given level of the economy, the levels of supply and demand for wages are equal. The neoclassical viewpoint was distinct in this regard. Neo-classists tried to explain why their ideals and reality did not match up. In situations where employees have unequal professional tasks, there has been considerable discussion about why uniform wages should be given within the market, even in highly competitive markets. No of the activities carried out, the underlying presumption was embedded into the notion of labour market uniformity (Himmelstein & Venkataramani, 2019). Considering whether employees are internally homogeneous is not relevant to the subject. As a result, it stands to reason that workers should be compensated differently if they carry out various tasks. As a result, workers receive unequal pay for performing different types of work.

Consider the efficiency-wage theory at this point, which is based on the idea that all employees possess some form of efficiency unit. Adam Smlow's response contends that pay for employees should be viewed as an inducement in a sector that is renowned for its share-based incentives. Therefore, the engaged behaviour of employees and their fervent belief that they were represented pay equity. In this instance, it was argued that greater salaries were directly correlated with higher labour productivity. The efficiency-wage model's nutrition component was seen as its archetype. This concept was inspired by the observation that higher worker earnings result in greater food consumption at work, which raises worker output. The incentive or avoidance model is the following model to emerge. According to this idea, heterogeneous market workers control the EU (European Union), and it was assumed that they may have an impact on the market's output of workers (Wang et al., 2019). Employers who are unable to exert direct control on her use salary as a substitute. The "primary agent problem" or the "moral hazard dilemma" is the term used to describe this kind of circumstance.

The minimum salaries created and filed within the legal framework can be seen as cumulative variables taken into account in connection to duality and the job settings in which they are placed in relation to submissions to the present RVV. They contend that increasing worker productivity in each market is a result of minimum wage legislation and pay justice. According to Dunlop (2016), these clauses are useful for establishing minimum salaries for workers in the current market, which is inconsistent and heterogeneous. The findings of Kwon (2014) demonstrate that knowing the potential of minimum wages can raise employee productivity. On the other hand, a radical ideology focuses on creating a wage system as a covert means of managing EU (European Union) of workers. Considering wages and salaries as the foundation for employee motivation is a typical practise in modern marketing; firms use this strategy to close the motivational gap between employees.

Recommendations

The following recommendations are made in relation to figuring out minimum wages:

A grey area beyond the RV's visibility. The FWC can bring more people into the minimum wage range by addressing the grey areas. To keep many families out of poverty, the minimum wage should be set higher than the poverty level. Other elements including government economics and employment incentives, as well as the minimum salary, should also be taken into account. The minimum wage should not be linked to a single income eligibility condition.
The FWC shall take into account elements that lead to wage conflicts in the market and the diversity of the workforce. To obtain dependable indicators of minimum living standards, they must expand their research. This aids in closing the wage gap between the median wage and the national minimum wage (NMW).

Conclusion

In conclusion, it can be claimed that the FWC's present proposal to establish a minimum pay for workers in a very diverse market is driven by worries about preserving employee productivity and minimising inequality. increase. An incentive model is reflected by a minimum wage with bonuses. The creation and setting of minimum wages in conflict markets have been influenced by all conventional models and neoclassical theories.

It is unrelated to the topic to think about how homogeneous an employee population is inside. Therefore, it makes sense that if employees perform different activities, they should receive varying levels of compensation. As a result, workers get paid differently for doing various sorts of work.

References

Azar, J., Huet-Vaughn, E., Marinescu, I., Taska, B., & Von Wachter, T. (2019).  Minimum wage employment effects and labor market concentration  (No. w26101). National Bureau of Economic Research. https://www.nber.org/papers/w26101

Chava, S., Oettl, A., & Singh, M. (2019).  Does a One-Size-Fits-All Minimum Wage Cause Financial Stress for Small Businesses?  (No. w26523). National Bureau of Economic Research. https://www.nber.org/papers/w26523

Dunlop, J., & Segrave, M., 2016, “ The theory of wage determination . Springer”, fwc.gov.au 2020 Australian Government Submission to the Fair Work Commission Annual Wage Review 2020, viewed on 18 October 2020 https:// www.fwc.gov.au/documents/wage-reviews/2019-20/submissions/ausgov-sub- awr1920.pdf

Himmelstein, K. E., & Venkataramani, A. S. (2019). Economic vulnerability among US female health care workers: potential impact of a $15-per-hour minimum wage.  American journal of public health,  109 (2), 198-205. https://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2018.304801

Kwon, H.S., 2014. Economic theories of low-wage work.  Journal of Human Behavior in the Social Environment,  24 (1), pp.61-70. https://www.tandfonline.com/doi/abs/10.1080/10911359.2014.844615

Wang, W., Phillips, P. C., & Su, L. (2019). The heterogeneous effects of the minimum wage on employment across states.  Economics Letters,  174, 179-185. https://www.sciencedirect.com/science/article/pii/S0165176518304580

Whiting, M. E., Hugh, G., & Bernstein, M. S. (2019, October). Fair work: Crowd work minimum wage with one line of code. In  Proceedings of the AAAI Conference on Human Computation and Crowdsourcing  (Vol. 7, pp. 197-206).

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