The IR system is defended from being the cause of declining productivity
There are fears that the IR system affects productivity because there are laws giving unions too much power, which translates into unnecessary strikes and wage claims. Legislators have argued that productivity is a result of the whole industrial relations legislative structure and not just the current IR system. They also support the Fair Work Act, which can create productivity gains such as those achieved by the first Keating reforms.
The declining national productivity has been traced from the Workplace Relations Act, and so the Fair Work Act is defended from being the cause of falling performance. This implies that the fall in productivity occurred irrespective of the legislative framework that was in force in Australia. However, the policy is identified as an influential factor in the determination of future equilibrium growth rate for instance through the removal of irrelevant regulatory burdens or industries that affect business inputs (Whitbourn 2012).
The Australian economy faces a decline due to a slump in the Chinese economy
The Australian dollar went down compared to the US dollar due to the 5.2% decline experienced by industrial companies in their net income. The demand for construction materials in China is uncertain due to the increasing failure of auctions and falling land prices of sales between developers since interest in buying land have receded. Australia faces economic decline as a result of the slump in China’s economic growth since it is the main supplier of iron ore, which has its demand lowered.
The tight controls instituted by the government on real estate buying to stabilize the market have helped handling of demand since the 10-20% price reduction has controlled the piling of inventories. Furthermore, the initiative by the Chinese government to construct millions of social housing for the poor caused a huge uncertainty for construction materials for commercial housing projects (Sainsbury 2012).
The need for consumer protection laws was realized after the Australian Airline collapses
Consumer protection laws are important in every country. The need for these laws has been felt in Australia after the collapse of Air Australia, which was an international budget airline. The airline left stranded over 4000 passengers who had booked flights with it. At the same time, 300 workers now have no jobs, and unsecured creditors will not be refunded their money which they invested or lent the airline.
As KordaMentha investigates the plight of the airline, questions continue to be asked as to whether the airline was operating while being insolvent. Since a net worth of between 10 and 20 million US dollars is owed for ticket sales, the implications of the collapse will affect stakeholders tremendously. The sales from nearly 100,000 tickets will create losses that are likely to be incurred by passengers who never paid using credit cards is too huge a price for innocent customers (O’Sullivan 2012).
Relaxation of inflexible labor laws can lower the rate of unemployment
Employment can be enhanced through other means other than the creation of new jobs. An IMF report has revealed that the relaxation of inflexible labor laws can lead to a decline in the rate of unemployment. Flexibility is required in the Fair Work review of the industrial relations system, such as recruitment costs and hiring and firing regulations. A change of policy is also ideal because employers are unable to hire more workers due to economic uncertainties in the global market.
Employment is also hampered by the fact that about 800,000 employees desire additional working hours, and employers can increase production before thinking about getting new workers. The jobless rate of 5.1% reported in January could be reduced if inflexible laws are relaxed since this can reduce unemployment by 1.3%. Relaxation of labor laws would be the most effective method of adjusting the current level of unemployment in Australia (Rollins 2012).
Uncertainties in the Chinese, European, and US economies will affect Australia’s economic growth rate
The interdependence of global economies can be costly to domestic countries since a slump in one region causes ripple effects in other nations. Australia is one such unfortunate country that will suffer if the Chinese economy declines in 2012. The Australian economy relies on resources which in the past assisted it to overcome the global recession. The global economy is, however, facing uncertainties because of the European financial crisis and the stagnant US economy, which is not picking up recovery at the desired pace.
Australia found itself in a precarious position since the 1.1% decline in economic growth forced China to cut rates to stabilize property prices. This will impact Australia, which relies on mining for 50% of exports. Australians are set to suffer the increased loss of jobs if mining, which contributes 7% of GDP is affected by the Chinese economic decline and government restrictive policies (McMahon 2012).
References
Whitbourn, M 2012, ‘IR laws not to blame’, The Australian Financial Review.
Sainsbury, M 2012, ‘Demand risk as developers do it tough in land of the dragon’, The Australian, p. 20.
O’Sullivan, M 2012, ‘Creditor hopes a flight of fancy’, The Saturday Age, p. 3.
Rollins, A 2012, ‘IMF argues for less restrictive laws’, The weekend Australian Financial Review, p. 7.
McMahon, S 2012, ‘Hard China landing bodes poorly for jobs’, Herald Sun.