Dergulation+of+the+Labour+Market

=** ﻿ Deregulation of the ****Labour Market - Gareth **= 1. To deregulate is to remove restrictions or regulations from a particular area. The restrictions and regulations that the Australian government places in the labour sector are mainly to protect the rights and interests of Australian workers, and to issue standard procedures which businesses must adhere to when dealing with labour resources. When the government deregulates the labour market, it usually reduces the restrictions on the latter. The government, during harsh economic times chooses to deregulate the labour market in order to help businesses stay viable and reduce costs. By removing these regulations the government is less involved in the market and therefore businesses can employ more cost-effective strategies to conduct their operations

2. As mentioned earlier the lower government involvement and standards in the labour market will provide the businesses with more freedom of choice, there are now options that the business can consider that in a more highly regulated market, would be unattainable. These options include, in some industries the introduction of commission based payment where the level of productivity of an employee directly affects their income. This is beneficial for the business as with an increased productivity level at the same or marginally higher cost, the business is able to reduce the cost per unit. As a result the business becomes more profitable and is more likely to survive the potentially harsh circumstances of the economy.

3. The deregulation of the labour market allows businesses to seek cheaper, more cost-efficient ways of operating. For example, a business may organise for a part of the production process to occur overseas where labour is cheaper, as opposed to having the entire process performed in Australia at a higher cost. These new techniques and procedures will lower the businesses cost of production, therefore cost inflation which is directly dependant on the cost of production will be lower.

4. Deregulation can have negative effects however, if the government does not take caution when deregulating the labour market. The rights of the workers can be breached leading to an unfair workplace. In 2005, Prime Minister John Howard deregulated the labour sector by introducing the “Work Choices” act. This act was heavily criticised and frowned upon by the population as it gave businesses unprecedented power, workers could now be dismissed without compensation and be denied payments for overtime and penalty rates. It can therefore be established that deregulation becomes a hindrance to society once it reaches the point where the balance of power between employers and employees is skewed and the workers becomes exploited.