Economists have long thought that an increase in minimum wage rates would lead to higher unemployment of unskilled workers. The higher minimum rates would cause employers to substitute other classes of labour or capital for unskilled labour and to contract output. Situations in which an increase in minimum wage rates will not increase unemployment do not seem to be practically relevant. The results of Card and Krueger have reopened this question. In their major study a survey of fast food outlets suggested that an increase in the minimum wage rate actually increased employment. Unfortunately, closer inspection of their results has not justified the attention paid to their study. The quality of their data is suspect and other data support the traditional view. In addition, the interpretation of their results is very questionable. The new material actually gives economists no reason to revise their traditional view on this subject.

Increasing income inequalities in Australia increase the need to protect the incomes of low income families. It is difficult for the taxation and social security system alone to do this. Minimum wage rates have a role to play. Thus, the question of their effects on employment can not be sidestepped Traditional analysis of this question is flawed by the assumption of perfect competition and the use of particular equilibrium analysis. Labour markets have many features which distinguish them from perfectly competitive markets and feedbacks from other markets can not be ignored. Theory alone can not settle this question. A large number of empirical studies are surveyed. A widespread consensus exists that effects of minimum wage rises on adult employment are virtually non-existent A number of studies find effects on teenage employment. A number of others do not. However, even those who find statistically significant effects agree that they are small.

An important aspect of the process of microeconomic reform is the improved operational efficiency of public trading enterprises. This paper argues the importance of appropriately distributing the efficiency dividend amongst the key players including the owners (ie., Governments which expect greater dividends), producers of the output (ie., workers and management who expect greater wages and salaries) and consumers (who expect better quality output at lower prices). The paper first evaluates the currently available measures of the efficiency dividend in public enterprises, including factor productivity and performance indicators. It then demonstrates that inappropriate use of these measures by management and/or workers during the wage bargaining process can lead to misunderstanding of the extent of the dividend and how it should be distributed. This in turn can undermine the reform process. Amongst the conclusions reached are that single factor productivity measures should not be used during the wage bargaining process.

This paper examines the concept and application of comparative wage justice in the transition to a more decentralised wage bargaining system in Australia. Although it is widely assumed that comparative wage justice now has little or no role in the system, the paper demonstrates that it continues to be major factor in the adjustment of wage rates within and between awards, particularly as a result of the national wage case decisions of 1988–89. The question still to be determined is whether it will also have an application to the growing disparities between the award wage structure on the one hand and the outcomes of enterprise bargaining on the other, which are addressed in the ACTU’s 1996 ‘New Living Wage Case’. The conclusion of the paper is that failure to apply the concept to these disparities will transform awards and tribunals into a ‘low pay ghetto’ with diminishing relevance to the overall dynamic of wage fixation.

The establishment of a minimum wage, a wage below which no employer can pay able bodied full-time employees, is a common feature in most industrialised societies. In many of these societies the minimum wage is determined by government fiat. In Australia, the prevailing method of minimum wage determination has been by way of industrial tribunals. In their minimum wage role both governments and industrial tribunals need to determine minimum wage criteria as well as mechanisms for operationalising the criteria This paper proposes ‘reasonable living’ needs criteria for minimum wage determination. By analysing the Household Expenditure Survey it also suggests the amount which would constitute a ‘reasonable living’ minimum wage for labourers in Australia.

Since the late eighties, a new model of public sector employment has swept a number of the States in Australia, initially at the senior executive level and now increasingly at non-executive level. This model of ‘contract’ employment is one in which employees may be terminated at short notice, for no reason, and with very limited termination compensation. This paper analyses the consequences of this new model and, specifically, of dramatically increased exposure to the risk of arbitrary termination or termination flowing from the impact of an ‘exogenous’ financial or policy shock upon Government. It also reflects on the prospects for the construction of a new ‘implicit contract’ which might mitigate the adverse consequences of the new model by facilitating the re-establishment of trust in the public sector employment relationship.

The 1988 sector-based industry plan for restructuring of the Australian Textiles Clothing and Footwear industries accelerated the decline of employment in the TCF sector. Many of those thrown out of work by TCF plant closures were women, older workers, and workers from non-English speaking backgrounds who would find it difficult to re-establish themselves in the labour market. The Hawke government provided a package of labour adjustment assistance designed to help the retrenched TCF workers find jobs in other industries. This paper examines the rates of participation by retrenched TCF workers in the TCF Labour Adjustment Package. Drawing on both statistical and case study evidence it explores the different take-up rates by different subgroups of retrenched TCF workers. The paper concludes by exploring the implications for labour market interventions more generally.