Research Discussion Paper – RDP 8103 The Labour Market in Australia: A Review


This paper reviews important trends in the Autralian labour market from the mid 1960s. It also offers some possible explanations for continued weakness in the demand for labour in Australia in the second half of the 1970s.

In the period reviewed, the main feature of the labour market in Australia is considerably lower growth in employment in the period from 1974/75. The drop in growth in employment was concentrated in private industries and growth in the number of females employed fell relative to growth in male employment. Although average growth in the labour force fell at the same time, the unemployment rate rose to its highest level during the post-war period.

The overall worsening in conditions in the labour market was preceded by a sharp drop in corporate profitability. This owed importantly to government policies - the introduction of the Prices Justification Tribunal, for example - and excessive real wage increases. Lower profitability was reflected in lower growth in economic activity and, therefore, in the demand for labour.

The relative drop in female employment followed large increases in female wages relative to those of males. The increased relative wages of females, which seemed largely to be due to decisions of industrial tribunals rather than market influences, was an important factor influencing changes in female employment in the late 1970s.

The coincidence of these changes suggests that moves in factor shares and in relative wages were important influences on the labour market in Australia in the second half of the 1970s.