The influence of an increase in the minimum wage will have a significant impact on the four features these are labor market, employees, enterprise group and the entire economic output of Australia. It has two positive and negative aspects of the impactions.
The impact of the labor market
Wage is the labor market supply and demand, which can conductor enterprises and individuals of the labor demand and supply behavior of the signal. When the labor demand is less than supply, wage growth will stimulate some synthetic operation, resulting in the increase of labor supply, ameliorate the contradiction between demand and supply; on the other side, declining wages will stimulate the part of workers, out of the …show more content…
For intermediate and advanced workers, the market supply and demand relations mainly determine their wages, so that the increase in the minimum wage will not have a great impact on them.
The minimum wage increase will have an impact on them for low-income workers in the short term when raising the minimum wage will bring plenty of Gospel base, for some low-income families no doubt. The principle of raise the minimum wage is to protect the interests of low-income citizens and increase the disposable income for these people, consequently to improve their living standards. Not only protection low-income people 's basic life but also promote consumption and promote economic development.
According to the income level, the consumer groups can be divided into three categories. Which are high, medium and low categories. Keynes believes that the higher the income, the propensity to consume, that is, the general trend of consumption of high-income groups of low-income groups. The beneficiaries of the minimum wage standards, their desire for consumption is particularly …show more content…
Enterprises to pay an increase in wages, production costs will increase, which forced the company to move to the region and more technical content.
In addition, raising the minimum wage standards, so that the purchasing power of consumers to improve. Then, they will spend more on consumer goods, so that manufacturers can sell more products, which will reduce the loss of increase payments.
Impact on the Australian economy
From the above analysis, Minimum wage increases stimulate the economy by increasing consumer spending, without adding to state and federal budget deficits. At the same time, due to the increasing demand for enterprise products, the market economic status will become very good, the business group will expand the scale of production. In gross domestic product (GDP) there will be a big upgrade.
Raising the minimum wage in Australia will likely lead to a rise in unemployment. Minimum wage increases for small businesses, which may slow the recovery of the economy, a serious blow. In addition, the company may raise prices with the minimum wage increase, which may lead to the increase in the cost of transfer of Australia 's increase. Inflation is likely to rise in the