Unemployment – Australia Essay Example
Unemployment – Australia Essay Example

Unemployment – Australia Essay Example

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  • Pages: 7 (1748 words)
  • Published: March 19, 2017
  • Type: Case Study
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The term 'Unemployment' refers to those individuals who are capable of and willing to work, regularly search for jobs but are unable to secure suitable employment. The Australian Bureau of Statistics (ABS) performs a monthly telephone survey of the workforce in order to determine unemployment rates across Australia. The data supplied by ABS represents the total count of people actively pursuing employment yet remain unemployed. To be categorized as 'actively seeking work', one must frequently check various job postings, respond appropriately, submit applications, attend interviews, and register with an Unemployment agency tied to a Job Network. During 2008-09 there was a labor force participation of approximately 11,425,300 individuals among which around 662,900 were classified as unemployed yielding an unemployment rate of 5.8%.

There are seven distinct categories of unemployment. Frictional unemployment occurs when people change jobs or deal with cha

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nging economic conditions; Seasonal unemployment affects industries or professions that have significant seasonal variations, which may cause job losses; Structural unemployment happens due to a discrepancy between the skills workers possess and the available job vacancies; Cyclical unemployment is caused by downturns in economic activity or overall demand; Long-term unemployment involves those who have been jobless for over a year; Regional unemployment arises when key industries (like TFC, PMV) within a specific geographical area cut back on their labor needs, leading to widespread employment loss; Hidden or disguised unemployment pertains to individuals not counted in official employment statistics because they've ceased looking for work or rely on income support from their spouse.

During the stagflation period of the 1970s, Australia experienced a considerable increase in unemployment levels over 6%, mainly due to inflation and slow economic growth. The

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situation worsened during the 1980s when unemployment rates reached 8% and even surged alarmingly to 11% during the recession of the 1990s. However, there has been a consistent reduction in these figures ever since, dropping to around 7.4% from 1998 to 1999. A significant decline was seen in average yearly unemployment rates from 1999 through to 2008 thanks to steady economic advancement along with substantial changes in labour markets, which resulted in a nearly around3% decrease. An interesting pattern is noticeable within Australian unemployment statistics - it's not rare for people to be unemployed for longer durations, implying an upward trend on joblessness duration.

Between 1993 and 1994, there was a notable increase in long-term unemployment which constituted 34.6% of the total workforce, with an average span of 57.3 weeks. This primarily resulted from a significant job loss totaling about 30%. Data on unemployment from 2000 to 2009 indicated that youths aged between15and19 found it difficult to secure jobs due to inadequate skills, training, and experience. The pattern of joblessness varied across states during -06-08 because the labor market had reached full saturation point. The international financial crisis in the years2008-09caused a rise in unemployment rates across all states. Australia faced negative employment growth at -0.4% towards the end of 2008. By July of the following year, its unemployment rate soared from its previous figure of4 .3%to5 .8%.

One of the primary reasons for unemployment is a lack in total demand (AD=C+I+G+(X-M)). Variations in either domestic or global economic performance could lead to shifts in labour demand. Since labour demand is indirectly derived from the final product demand, a decrease in total demand can trigger an

increase in cyclical unemployment. For instance, during the Global Financial Crisis in 2008, there was a decline in total expenditure and economic activity, resulting in increased unemployment (DIAGRAM?).

Increases in structural unemployment can be attributed to changes in consumption and production structures. For example, the implementation of technology that saves labor can result in increased unemployment rates. The expectation of wage elevations is another contributing factor to unemployment as it causes an escalation in labor costs relative to capital. An accelerated increase in real wage costs will discourage labor demand and motivate employers to switch to capital. Frictional unemployment can also be caused by inefficiency in aligning labor skills with job vacancies.

Labour market rigidities like government regulations such as workers’ compensation, unjust dismissal legislations, and the award system can discourage employers' hiring intentions. The absence of access to education and training facilities for workers could further lead to unemployment due to skill deficits.

Full employment is a concept representing a situation where labor demand matches labor supply. The unemployment level at full employment is called the natural unemployment rate, and changes in this rate result from variations in frictional and structural unemployment in the job market. Furthermore, the natural unemployment rate can also be referred to as the Non-Accelerating Inflation Rate of Unemployment (NAIRU) since it indicates a constant level of joblessness in an economy where inflation neither increases nor speeds up. From 1998 to 2009, NAIRU was determined to vary between 4% and 6%.

Primarily impacted by unemployment are teenagers, particularly females more than males, as they grapple with difficulties due to inadequate skills, expertise, training, and education. Furthermore, individuals with minimal education tend to be

more affected by joblessness compared to those with advanced educational credentials. Other demographic groups notably impacted by unemployment encompass Aboriginal and Torres Strait Islander communities, sole caregivers, newly arrived immigrants, and financially reliant scholars.

Unemployment imposes substantial economic and social strains on an economy. The main economic impact of unemployment is the missed opportunity of potential productivity and income (lowered real GDP, national revenue, living standards). Unemployed individuals face financial hardship and social challenges due to the lack of market income and societal judgement. Therefore, their spending levels will diminish, making them less satisfied in life than those who have jobs as they have limited choices and opportunities for expenses and recreational activities.

Unemployment can result in a decrease in human capital because the skills and proficiency of those out of work are not being utilized. Consequently, further training may be necessary to prepare them for potential job opportunities ahead.

Another detrimental aspect of unemployment includes the potential for enduring joblessness. As the duration of unemployment extends, it becomes increasingly challenging for an individual to find new employment, as they become less favored over recent workers. Unemployment can also lead to a loss in self-respect and honor, diminishing their drive to seek new jobs or engage in skill retraining. This lack of ambition may result in a reliance on state welfare benefits.

Rising taxes represent an additional economic consequence of joblessness. The federal government may face a decline in its tax reservoir as a result of unemployment, coupled with an increase in cyclical spending on social welfare benefits. This could subsequently result in a budget shortfall or a decrease in budget surplus.

Unemployment's societal implications consist of unfavorable patterns

like escalating crime levels, amplified dependency on drugs and alcohol, health challenges for the jobless, elevated suicide rates, the disintegration of family ties, and diminished self-confidence.

The federal government has four primary strategies that can be employed to mitigate unemployment. These comprise of fiscal and monetary policies, which could be deployed to counteract economic downturns ensuing in escalated unemployment during periods of subdued economic expansion. The possible stimulatory effects of fiscal stimuli (or expansionary fiscal policies) and lenient monetary policies might enhance aggregate demand and consequently, amplify the production of goods and services in the economy. Since labor demand is intrinsically linked to the demand for goods and services, advanced output levels can potentially elevate employment. Amid the 2008-09 global financial catastrophe, our national authorities resorted to a blend of expansionary monetary strategies (including reductions in official interest rates), along with fiscal stimulus packages (through escalating budget deficits) to buttress aggregate demand employment. In Australia, the RBA trimmed the cash rate by 4.25% between September 2008 and April 2009, whilst the government escalated the budget deficit to -$53 billion.

Policies for reforming the labour market aim to boost labour market elasticity, promote competition in working habits, and elevate labour productivity. This could lead to a reduction in unemployment rates and induce employers to recruit more personnel. Aspects like labour market liberalization, progression towards decentralized wage decision-making (where companies and individuals bargain for wage rises in accordance with enhanced productivity), and the ongoing process of modernizing awards are all part of the government's labour market reform program.

The Workplace Relations Act 1996, a piece of labour market legislation, included provisions to limit union authorities and reduce rigid unfair dismissal

laws. Furthermore, the WorkChoices legislation implemented in March 2006 shifted the focus more towards individual workplace negotiation. These reforms liberalised the industrial relations mechanism, with governmental confidence that the newly-introduced changes would generate greater productivity and lower unemployment rates, owing to a flexible wage and employment setup. More recently, in order to bolster the workplace relations framework's safety net, the Fair Work Act 2009 was enacted.

Unemployment is also caused by a deficiency in the fields of education, training and skills sought by employers. The government, in an attempt to mitigate this, has launched various financial aids and agreements. The Rudd administration, in its 2008-09 Budget, initiated an Education Investment Fund with a beginning budget of $11 billion for use in higher education and vocational education and training facilities. The 2009-10 Budget heralded the advent of Job and Training Compact, funded $1.5 billion over half a decade, in response to the surge in unemployment triggered by the global financial crisis. Noteworthy features of the Compact include a provisional $83 million Training Supplement Scheme, $277 million Compact with Young Australians promising an educational or training spot for individuals under 25 wishing to enhance their skills, among others.

The federal government has made a significant policy shift by revamping the welfare and tax structures to enhance the motivations and responsibilities of those on welfare to pursue casual, part-time, or full employment. The government revealed its More Help for Families package in the 2004-05 budget, which included tax reductions and incentives for retirement savings. Moreover, in the 2008-09 budget, they announced reductions in individual income tax from July 1st 2009 to July 1st 2010, aimed at encouraging workforce participation and

consequently mitigating unemployment.

Australia's struggle with skills shortage is indicative of a scarcity in labour supply within some specific industries and occupations. This dilemma originates from an unbalanced state of affairs between the required expertise and the available jobs, leading to Australia falling short in producing the adequate amount of skilled workforce to meet the demands of said jobs. To tackle this issue, the government has adopted two strategies: retaining older employees possessing unique skills to enhance labour force engagement and promoting higher education and training among young professionals; simultaneously, boosting the availability of proficient labour by welcoming selected migrants from specific regions to cater to different industries.

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