Recent figures produced by the Australian Bureau of Statistic show and increase in unemployment as illustrated in Graph 1. In some industries, the Unions and workers agreed to cut wage to preserve jobs. Explain the economic rationale of a wage cut of 10%. With a graphical representation of the equilibrium of the labor market, show how a reduction in the wage can preserve jobs. (please find the graph in attachment file)

Graph 1: Evolution of Unemployment in Australia % 7.6 H ---- - Seasonally Adjusted 7.4 7.2 7.0 6.8 6.6 6.4 6.2 6.0 5.8 5.6 5.4 5.2 5.0 4.8 Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020