Cylical Unemployment In Australia
INTRODUCTION
As per Australian economic trends, a person is classified as unemployed if he did not employed for atleast one paid hour in preceding week and have opportunities to work in next week and able to accept that work. The unemployment is the major crisis in recent years as it affects the whole economy of the country. The rate of employment growth is less than the rate of population growth in Australia. Hence, result in rise in unemployment in Australia. Unemployment is the major hurdle in the economic and social development of the country. It results in poverty, despair, poor standard of living, low GDP, less revenue of government, social crimes etc. As per the latest labour force date by Australian Bureau of Statistics, labour market …show more content…
is showing improvement but not to the rate it is needed. So, still results in weak labour market in the country (Borland, 2008).
UNEMPLOYMENT IN AUSTRALIA
Unemployed person means the person who are able to work and willing to work, looking for employment opportunities but unable to get job. It does not include the persons who are willingly unemployed.
Labour force in a country includes both unemployed and employed who are able to and willing to work.
The unemployment rate is the percentage of unemployed persons in the total labour force.
Labour force participation rate is the percentage of actual labour force to the total population which has potential to be part of labour force.
Unemployment rate is published by the Australian Bureau of Statistics in Australia in a particular time interval. In the current months, Seasonal Adjusted unemployment rate has touched the lowest of 5.9% after May, 2014 of 6.2%. There is an increase in the no of jobs of 58600 jobs, highest increase in jobs since May, 2012. Unemployment Rate in Australia is averaged at 6.96 % from 1978 until 2015, with the highest of 11.10 % in 1992 and lowest of 4% in 2008.
Increase in employment by 1% i.e. by 15900 jobs, but there is decrease in full time employment by 3800 jobs and increase in part time employment by 19700. But on the other hand, unemployment is also rising from 20300 to 741700. So, the unemployment rate is increase to 6%.
The labour force participation rate has increased to 64.7 but still less than the highest of 65.9 % in 2010. There is an increase in average monthly hours worked by 0.9 % i.e. 15.1 million hours.
As per the statistical highlights by the Department of Social Services, the total new start allowance recieptants increased by 3.8% i.e. 726740 to 754340 and the youth allowance recieptants increased by 5.8% i.e. 115310 to 108657. The no. of job seekers is also increased by 2.2% i.e. 428160 to 437718 (Heath, 2015).
Rates of unemployment in 2015: Unemployment trend in Australia: Source: (Mulligan, 2015, Jeffrey, 2008) MAJOR TYPES OF UNEMPLOYMENT
There are three major types of unemployment, discussed as follows:
Cyclical Unemployment
Cyclical unemployment generates as a result of less demand for labour in market.
Lack of demand is the result of lack of spending capacity and consumption in the economy. It occurs as the result of slow economic growth and economic contraction. It is the fluctuations in the rate of unemployment as per the results changes in economic cycle. This type of unemployment rises as the market go in recession and reduces with expansion of market.
For example, at the time of recession, a hardware engineer may be laid off as there is less buyers of laptops and computers in the market. When there are less buyers, fewer laptops and computers are needed. So, less hardware engineers are needed to meet the demands. Similarly in expansion, more buyers of laptops and computers and more hardware engineer is needed.
Frictional Unemployment
Frictional unemployment results due to the time period consumed in searching the job and transmission of one job to another. It is also called as search unemployment. It is due to the fact that unemployed persons usually do not accept the first job offered to them due to salary offered and necessary skills. This is also generates by the persons who quit their job in search of better pay and relocation.This type of unemployment is always present in the
economy.
For example, aemployee is doing job in a company as engineer and quits his job in order toprepare himself for post-graduation exams and interviews so that he could find a betterjob after post-graduation.
Structural Unemployment
Structural Unemployment is created due the mismatch between the skills demanded by the employers and the skills possessed by the worker. It occurs due to the absence of demand of particular type of workers. It is mainly created due to technological changes, which make the existing job skills of worker obsolete. This occurs because of the social needs of the economy and the changes happen in the economy during the period.
For example, when technology for textile industry changes, i.e. from hand made to machine made, it results in removal of workers who does not have skills to work on machine. (Thirlwall, 2007) (Holzer, 2008) THE ECONOMIC AND SOCIAL COST OF UNEMPLOYMENT
Unemployment is considered as negative thing for the economy of the country. It involves in many cost to individual, to society, to country, and to economy.
The following are the cost of unemployment:
• Cost to the individual - Impact on standard of living, erosion of skills, harms mental and physical health of the unemployed, loss of earnings, difficulty to get job in future, etc.
• Cost to the society - Increase in crime, domestic violence, social exclusion, loss of freedom, loss of social values, increase in social problems, etc.
• Costs to the country - Higher payment by government for unemployment benefit, medical benefit and food assistance, increase in government borrowings, decrease in tax revenue, lower GDP of the country, deprive the economy from future skills, reduction in trade, loss of current output, etc (Helliwell, 2014).
POLICIES TO COMBAT UNEMPLOYMENT
Various reforms are made to combat unemployment such as, trade reforms, enhancing competition in the economy, deregulation of financial markets, tax reforms, development of required skills and capacities by proper trainings, increase in productivity, labour force participation, increase in flexibility of the labour market, welfare arrangement reforms, fiscal and monetary policies to enhance economic stability.
In recent years, due to global economic crisis, economy is slow down leading to reduction in the rate of job creation.Australian government is trying to meet the employment challenges in the country. They are trying to improve labour force participation rate, focussing on development of long term employment, encouraging youth employment, boosting indigenous employment and job creation. It is mainly focusing on stronger job creation by establishingrequired committee, changing reforms of workplace, public investment in infrastructure, flexible labour market regulations, job search assistance, tailored support to job seekers etc.
The thing which affect the most and directly to the employment is the economic growth of the country. So, the country is focusing on growing the economy (Lye, 2006).
CONCLUSION
As per the above data, the unemployment rate, jobs created during the year, labour force participation rate are not satisfactory. The government is consistently trying to reduce the unemployment in the country by different reforms, but not came up with satisfactory results. The government must form efficient reforms for this and also look for effective implication of the reforms made. So, the cost of unemployment can be reduced and the adverse effect of unemployment on the individual, society, economy and the country as a whole can be minimized.
As per Australian economic trends, a person is classified as unemployed if he did not employed for atleast one paid hour in preceding week and have opportunities to work in next week and able to accept that work. The unemployment is the major crisis in recent years as it affects the whole economy of the country. The rate of employment growth is less than the rate of population growth in Australia. Hence, result in rise in unemployment in Australia. Unemployment is the major hurdle in the economic and social development of the country. It results in poverty, despair, poor standard of living, low GDP, less revenue of government, social crimes etc. As per the latest labour force date by Australian Bureau of Statistics, labour market …show more content…
is showing improvement but not to the rate it is needed. So, still results in weak labour market in the country (Borland, 2008).
UNEMPLOYMENT IN AUSTRALIA
Unemployed person means the person who are able to work and willing to work, looking for employment opportunities but unable to get job. It does not include the persons who are willingly unemployed.
Labour force in a country includes both unemployed and employed who are able to and willing to work.
The unemployment rate is the percentage of unemployed persons in the total labour force.
Labour force participation rate is the percentage of actual labour force to the total population which has potential to be part of labour force.
Unemployment rate is published by the Australian Bureau of Statistics in Australia in a particular time interval. In the current months, Seasonal Adjusted unemployment rate has touched the lowest of 5.9% after May, 2014 of 6.2%. There is an increase in the no of jobs of 58600 jobs, highest increase in jobs since May, 2012. Unemployment Rate in Australia is averaged at 6.96 % from 1978 until 2015, with the highest of 11.10 % in 1992 and lowest of 4% in 2008.
Increase in employment by 1% i.e. by 15900 jobs, but there is decrease in full time employment by 3800 jobs and increase in part time employment by 19700. But on the other hand, unemployment is also rising from 20300 to 741700. So, the unemployment rate is increase to 6%.
The labour force participation rate has increased to 64.7 but still less than the highest of 65.9 % in 2010. There is an increase in average monthly hours worked by 0.9 % i.e. 15.1 million hours.
As per the statistical highlights by the Department of Social Services, the total new start allowance recieptants increased by 3.8% i.e. 726740 to 754340 and the youth allowance recieptants increased by 5.8% i.e. 115310 to 108657. The no. of job seekers is also increased by 2.2% i.e. 428160 to 437718 (Heath, 2015).
Rates of unemployment in 2015: Unemployment trend in Australia: Source: (Mulligan, 2015, Jeffrey, 2008) MAJOR TYPES OF UNEMPLOYMENT
There are three major types of unemployment, discussed as follows:
Cyclical Unemployment
Cyclical unemployment generates as a result of less demand for labour in market.
Lack of demand is the result of lack of spending capacity and consumption in the economy. It occurs as the result of slow economic growth and economic contraction. It is the fluctuations in the rate of unemployment as per the results changes in economic cycle. This type of unemployment rises as the market go in recession and reduces with expansion of market.
For example, at the time of recession, a hardware engineer may be laid off as there is less buyers of laptops and computers in the market. When there are less buyers, fewer laptops and computers are needed. So, less hardware engineers are needed to meet the demands. Similarly in expansion, more buyers of laptops and computers and more hardware engineer is needed.
Frictional Unemployment
Frictional unemployment results due to the time period consumed in searching the job and transmission of one job to another. It is also called as search unemployment. It is due to the fact that unemployed persons usually do not accept the first job offered to them due to salary offered and necessary skills. This is also generates by the persons who quit their job in search of better pay and relocation.This type of unemployment is always present in the
economy.
For example, aemployee is doing job in a company as engineer and quits his job in order toprepare himself for post-graduation exams and interviews so that he could find a betterjob after post-graduation.
Structural Unemployment
Structural Unemployment is created due the mismatch between the skills demanded by the employers and the skills possessed by the worker. It occurs due to the absence of demand of particular type of workers. It is mainly created due to technological changes, which make the existing job skills of worker obsolete. This occurs because of the social needs of the economy and the changes happen in the economy during the period.
For example, when technology for textile industry changes, i.e. from hand made to machine made, it results in removal of workers who does not have skills to work on machine. (Thirlwall, 2007) (Holzer, 2008) THE ECONOMIC AND SOCIAL COST OF UNEMPLOYMENT
Unemployment is considered as negative thing for the economy of the country. It involves in many cost to individual, to society, to country, and to economy.
The following are the cost of unemployment:
• Cost to the individual - Impact on standard of living, erosion of skills, harms mental and physical health of the unemployed, loss of earnings, difficulty to get job in future, etc.
• Cost to the society - Increase in crime, domestic violence, social exclusion, loss of freedom, loss of social values, increase in social problems, etc.
• Costs to the country - Higher payment by government for unemployment benefit, medical benefit and food assistance, increase in government borrowings, decrease in tax revenue, lower GDP of the country, deprive the economy from future skills, reduction in trade, loss of current output, etc (Helliwell, 2014).
POLICIES TO COMBAT UNEMPLOYMENT
Various reforms are made to combat unemployment such as, trade reforms, enhancing competition in the economy, deregulation of financial markets, tax reforms, development of required skills and capacities by proper trainings, increase in productivity, labour force participation, increase in flexibility of the labour market, welfare arrangement reforms, fiscal and monetary policies to enhance economic stability.
In recent years, due to global economic crisis, economy is slow down leading to reduction in the rate of job creation.Australian government is trying to meet the employment challenges in the country. They are trying to improve labour force participation rate, focussing on development of long term employment, encouraging youth employment, boosting indigenous employment and job creation. It is mainly focusing on stronger job creation by establishingrequired committee, changing reforms of workplace, public investment in infrastructure, flexible labour market regulations, job search assistance, tailored support to job seekers etc.
The thing which affect the most and directly to the employment is the economic growth of the country. So, the country is focusing on growing the economy (Lye, 2006).
CONCLUSION
As per the above data, the unemployment rate, jobs created during the year, labour force participation rate are not satisfactory. The government is consistently trying to reduce the unemployment in the country by different reforms, but not came up with satisfactory results. The government must form efficient reforms for this and also look for effective implication of the reforms made. So, the cost of unemployment can be reduced and the adverse effect of unemployment on the individual, society, economy and the country as a whole can be minimized.