Unemployment in Australia last five years - MyAssignmenthelp.com

Question: Discuss about the Unemployment in Australia last five years. Answer: Introduction: Unemployment in an economy is a persistent factor in all economy and over the time, it fluctuates depending upon the various factors. It stunts the economic development and growth of the country and influence the sustainability of the economy (Balewski 2015). Unemployment reduces the disposable income of the households leading them to fail to meet the autonomous expenditure (Guardiola and Guillen-Royo 2015). When it comes to Australian economy, the effect of unemployment has been persistent in the economy (Ball, Jalles and Loungani 2015). This essay is meant to analyze the unemployment in Australia during the last 5 years and it will discuss the various factors that have caused the economy to have it. Besides this, the essay will put some recommendations in order to overcome the burden of unemployment. Unemployment rate in Australia: With the rapid expansion of global economy and reduction in death rate around the world, unemployment has risen over the time in Australia (Saunders, Wong and Bradbury 2016). When it comes to Australia, then the economy is one of the most stable and sustainable western economy that has diverged economic structure. Though most of the job creation in Australia comes from the mining industry, but recent government spending has paved the path for new sectors, which is expected to provide more jobs (Fleming and Measham 2015). According to the figure 1 the unemployment rate of Australia is 5.4%, which is the lowest since 2013. Reduction in the level of unemployment is the direct implication of the fiscal and monetary reform of the country. During 2015, the unemployment rate was the highest, which was originated mainly because of the reduction in the demand in the world market. Besides this, cyclical unemployment was another leading factor that has caused the rise in unemployment (Cullar-Ma rtn, Martn-Romn and Moral 2017). With effective steps from the government, unemployment has felled and if the scenario remains constant, then the government is expecting to generate more than 2 million jobs within the next decade (Hajkowicz et al. 2016). Figure 1: Unemployment rate in Australia Source: (Tradingeconomics.com, 2018) Figure 2 depicts that the rate of unemployment for the age group of 15 to 64 years is comparatively moderate. Downward sloping curve of the figure 2, suggest that the more people are coming into the job market and higher level of participation rate of the Australian people has helped the government to curtail the unemployment rate for the country (Hawthorne 2016). Figure 2: Unemployment rate in Australia for 15-64 age groups Source: (Fred.stlouisfed.org, 2018) Family utilization level of Australia is predictable at 64.9% that highlights the country has contained the unemployment level to a steady state (Mavromaras, Sloane and Wei 2015). This level of unemployment acts as the stimulus to the economy according to the Keynesian theory of capitalism, however, it is higher than the 4% (Keynes 2016). Thus the country need to put more amount of focus to bring it down to the optimum rate of unemployment leading the country towards the better sustainability. Types and Issues of Unemployment in Australia: Level of unemployment in the Australian market is present since the time of great depression and it varies depending upon the aggregate demand of the mining industry (Cunningham 2015). Though Australia has diverse economy, but most of its employment generation comes from the mining industry. Thus whenever, there is any shock in the mining industry, the employment level tends to alter. This phenomenon can be seen by analyzing the economic performance of the Australian market during the 2006 to 2010. With reduction in demand in the mining industry, employment rose during that session. However, it is important to mention that Australian economy performed well compared to the other nations those have been facing recession during the 2008 with high demand of the mining products in the world market (Bamiatzi et al. 2016). Economists argue that employment is one of the drawbacks of the globalization and reduction in trade barriers has caused the Australian economy to face higher amount of u nemployment. In order to analyze the unemployment status of Australia and to discuss the various form of unemployment present in Australian economy during the last five year considering the participation rate and female employment status is important. With the help of participation rate, the number of active member in the total workforce of an economy can be analyzed. It aids to discuss the scope of job creation in the economy and analyzes how well it has performed during the stipulated time (Nguyen 2016). Higher level of participation rate depicts greater number of population of an economy is actively working or looking for work. Figure 3 depicts the labour force participation rate in Australia and according to the diagram it can be seen that presently the participation rate of Australian economy at moderate level. Though there has been a drop in participation rate back in 2014 owing to the political turmoil and reduction in demand of the mining industry, the economy was potent enough to bring back the participation rate to its mean once again by the end of 2016. Figure 3: Labour force participation rate in Australia Source: (Tradingeconomics.com, 2018) Women employment is another important factor that depicts the performance of an economy (Fuchs 2017). With higher level of women employment, it is expected that economy is growing towards sustainability. Figure 4 depicts the women employment of Australia and it describes that during the 2014, women employment was highest during the last five years. Comparing it with the Australian economic performance one can find that the economy has grown at a higher rate during the same period. However, during the third quarter of 2017, there has been a reduction in women employment and its impact can be seen in the total employment scenario from the figure 1. Figure 4: Female unemployment in Australia Source: (Fred.stlouisfed.org, 2018) One of the main reasons of the unemployment in Australia is structural unemployment. Besides this, there is frictional unemployment and cyclical unemployment that leads to rise in overall unemployment status of the country (Qi et al. 2015). Researchers have showcased that Frictional unemployment is the main reason of the reduction in employment status for the women, where as lack of long term employment along with the cyclical and structural unemployment is the main reason that has caused reduction in employment in the whole country (Jackson 2014). Government policies to address unemployment: Australian economy has a strong macroeconomic framework and the Australian government is aimed to reduce the unemployment level of all type. High labour participation rate and growth in productivity has aided the Australian economy to constrain the unemployment rate in the economy to a sustainable rate and it is expected that with rise in aggregate demand of the Australian mining industry, rate of unemployment will slid further (Carson and Kerr 2017). Political factors and the fund allocation are one of the main parameters that alter the rate of unemployment. Besides this, government expenditure and rise in level of infrastructural development is the driver that leads to high rate of employment. Australian government is aimed to produce 2 million jobs within next decade and in order to achieve this; government has restructured its fiscal as well as the monetary policies. Australian government is takes the fiscal risks into account and consider the national saving adequacy and the effect of policy on the future generation in order to curtail the level of unemployment (Argy and Nevile 2016). Besides this, government has taken various initiatives since 2010 to reduce the unemployment level. Some of the reform by the Australian government to reduce the unemployment in the economy is mentioned below (Gregory and Smith 2016): Council of Australian Governments has introduced National Reform Agenda (NRA) in order to bring in growth in productivity and enhance the labour participation rate. Government has introduced essential training institutes throughout the country, which are aided to provide necessary skills to the workforce to sustain in the job market. Government in their recent fiscal policies has provided emphasis to rise the labour force participation and as a result there is a rise in participation rate since 2016, depicted in figure 3. As a stimulus to the employment, government has brought in the mature ages worker tax offset. New resource allocation structure of the Australian government is aimed to provide equal distribution to all the sectors, which will certainly reduce the magnitude of disparity in the Australian service sectors, curtaining the level of unemployment. Though there were recession back in 2008 and the Australian mining industry has been going through stagnation since 2006, fiscal policies taken by the government has been fruitful for the last five years from now. Recently the Australian mining industry is facing boom with the rise in aggregate demand, which is acknowledged as the outcome of the fiscal policies of the Australian government. One of the major problems of the Australian economy was that they lack to produce long-term employment. However, recent reformation in the working sector and policies taken by the government has aided the Australian economy to provide long-term employment (Argy and Nevile 2016). When it comes to fiscal policies of the Australian economy, then the Reserve Bank of Australia (RBA) has taken strict steps to maintain the smooth flow of the economy. Monetary policies of the RBA have guided the Australian economy to reduce the scope of unemployment. RBA has taken strict actions against the Non Performing Assets of the banks, that has bought in the required liquidity in the market leading to rise in the job creation and decrease in the level of unemployment (Kriesler and Lavoie 2015). Thus, it can be said that government of Australia has a strong hold on its economy and with their fruitful monetary and fiscal policies; the government has able to curtail the level of unemployment for the country. Unemployment in Different States of Australia: Unemployment rate follows the economic cycle and depending upon the financial condition of the economy it changes over time. For instance, if the economy faces boom, then the unemployment rate tends to fall, and if the economy is falling or facing recession, then the magnitude of employment will rise (Christiano Eichenbaum and Trabandt 2016). Figure 5 shows that the unemployment structure of economy follows the economic cycle and over the period of 5 years, ranging from 2012 to 2016, the level of unemployment remained constant for the different regions of Australia. However, Western Australia faced the maximum reduction in unemployment during the 2013, owing to the rise in aggregate demand (Tonts, Plummer and Argent 2014). In the wake of global financial crisis back in 2008, Australian economy performed well due to rise in demand of Australian mining industry, which can be termed as the probable cause of reduction in unemployment during the same period. However, from the figure 5 it can be seen that Australian economy has faced a growth in unemployment since 2013, and the reason behind this is reduction in demand of Australian mining goods and rise in demand of Chinese products in the global market. Figure 5 shows a detailed comparison of unemployment rate of the various state in Australia and it describes that the rate of unemployment of New South Wales, Victoria, Queensland and Western Australia, which are acknowledged as the economic hub of the country. There is a common belief that employment rate is lower in the Western Australia if it is compared with the recent seasonal data (Kotey and Rolfe 2014). Mining industry of the Australia is located in the part of Western Australia that makes it prone to employment shock due to change in demand and financial condition of the country. Rise in unemployment during 2013 supports the proposition and the Australian economy has faced a reduction in employment due to rise in Chinese products in the world market (Argy an d Nevile 2016). Figure 5: State wise unemployment rate Source: (Dividend.net.au, 2018) South Australia was the deprived section of the country, thus the government has taken strong initiatives to bring it into the line with the Western Australia. Recent infrastructural development along with the monetary support from the central government has aided the southern Australia to become more productive and reduce its unemployment. Moreover, there have been various private-public partnerships in the southern region of the country, which has aided these states to reduce its unemployment level. Recent fiscal and monetary policies from the government along with the structural changes in the labour market, has helped the Australia to reduce its overall unemployment rate that can be seen by the figure 5. Since 2016, there is a reduction in unemployment, which is direct outcome of the government policies taken back in 2010 to 2012. Thus, it can be said that, though there is disparity in the employment status of the various regions in the country, overall percentage of the unemploy ment is under a manageable situation. Recommendation: Unemployment in Australia is reducing at a steady state and the government is aimed to reduce it to further with a job creation of 2 million within next decade. In order to achieve this target the Australian government should take policies that can successfully reduce the unemployment level. Some of the recommendations for the Australian government to achieve their target are mentioned below: One of the main issues of Australian unemployment is lack of skill in the workforce. Thus, government should focus on long run strategy to develop the skill of the workers. High tax rate in Australia is another reason that causes voluntary unemployment. Thus, government should reduce the tax level that can be achieved through a reduction of tax in national insurance scheme. Government should take necessary steps to provide necessary stimulus to the aggregate demand that will enhance the scope of employment in a cyclical way and crowd out the curse of the unemployment from the economy. Increasing the work incentive is another good way to enhance the scope of employment and reduce the magnitude of unemployment. Conclusion: Unemployment is one of the prominent phenomenons that have been persistent in the western economic and Australia is no exception. The country has faced a high unemployment since the post cold war scenario back in 1970, however recent reform and structural changes of the economy has reduced the burden. The above analysis has displayed that the country has a strong macroeconomic structure along with effective government policies that has aided the country to reduce the magnitude of unemployment to a great extend. With high level of employment for the Australian citizen who lies within the 16 to 64 age groups depicts that the Australian economy has good amount of job creation, which will help the economy to curb the unemployment rate in coming years further. Moreover, rise in demand of the Australian mining industry will assist the country to crowd out the present unemployment rate from the country that will lead the country towards a sustainable rate of growth. To conclude it can be sa id that the unemployment rate of Australia is comparatively low compared to other developed nation and along with the high rate of growth; Australian economy will certainly be successful to achieve its target. References: Argy, V.E. and Nevile, J. eds., 2016.Inflation and Unemployment: Theory, Experience and Policy Making. Routledge. Balewski, B., 2015. The Knowledge of Local Labor Market as a Determinant of Anti-Unemployment Counteraction.Journal of US-China Public Administration,12(5), pp.402-407. 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