Unemployment In Australia: Trends And Challenges - An Essay.

Write a Reseach Paper on Unemployment in Australia last 5 years. 

Forms of Unemployment

Unemployment is a matter of concern for all countries every stages of economic development. Persistent unemployment results in poverty and misery. People who remain unemployed for a considerably long period are gradually excluded from the mainstream life. The effect of unemployment transmitted across generations. It hampers child development with generating conflict in home. All types of economies experience some form of unemployment resulted from population growth, shut down of firms and changes in the employment structure. Unemployment causes great damage to individual and social life.

The economy of Australia has undergone severe changes in its production structure. The changes have been resulted from technological change in production, integration into the global market, increasing competition with low wage countries in manufacturing goods and services and changes in consumption pattern with rise in real income. There has been a sustained job loss in production industries leading to decline in job opportunities for those having only modest level of basic and formal education. This causes a rise in unemployment incidence in Australia. However, some part of the economy is expanding opening opportunities especially for woman. Unemployment in Australia often becomes intense problem for the economy.

The paper analyzes unemployment trend in Australia for the last five years. Australia has faced different types of unemployment resulted from structural and cyclical factors. Youth unemployment and long-term unemployment are two prevalent problems in Australia. Unemployment also differs across different states of Australia. Immigrants coming in Australia from different parts of the world aggravates the unemployment problem. 

The three common forms of unemployment in an economy are frictional, structural and cyclical. The first two types make natural unemployment. The third is related with business cycle. In times of recession, the decline in economy’s demand causes unemployment. Every economy even those are in a healthy state has some amount of unemployment. This is known as natural rate of unemployment. Any structural shift in the economy causes some people to become unemployed. This type of unemployment is called structural unemployment. Frictional unemployment is the unemployment in between transition of two jobs. An economy experiences cyclical unemployment because of business cycle contraction (Fujita and Moscarini 2017). These forms of unemployment when cause people to remain unemployed for a long period results long-term unemployment in the economy.

Australia has different forms of unemployment. Since the middle of 2011, unemployment in Australia has increased by ¾ percentage to reach at 5 ¾. The factors causing unemployment in Australia include a weak demand for cyclical contraction, structural influence and mismatch between workers’ skill and job vacancy. In the past few years, declining prospects several mining projects and deterioration of mining investment has weighed out labor demand in mining and related sectors. The decline in employment during this phase is more concentrated among males occupying a larger employment share in mining and related cyclical industries. There are workers in Australia who are leaving their existing jobs to find new jobs and hence are unemployed for the time being. This leads to frictional unemployment in Australia (rba.gov.au, 2013). The mismatch between ability of workers and vacant jobs causes structural unemployment. It is though difficult to capture how much the structural factors are causing unemployment however; the long-term unemployment in Australia has increased in recent years. Most of the people remain unemployed between 4 and 52 weeks and are unemployed because of cyclical factors.

Factors Contributing to Unemployment in Australia

Figure 1: Trend in Unemployment in Australia

(Source: tradingeconomics.com, 2018)

The unemployment rate in Australia during 2013 had recorded a slight decrease with unemployment decreased by only 0.1 percent and became 5.6 percent in September 2013. The number of persons remained unemployed decreased to 697,100 accounting a decrease of 14, 700 from the previous level. The seasonally adjusted rate for labor force participation decreased by 1 percentage point to become 64.9%. The number of persons employed had accounted an increase by 9,100. During this time there were 11,645,800 people employed (seasonally adjusted). The seasonally adjusted measures for full time employment shows an increase in full time employment by 5,000. As against this, the part time unemployment rose by 4,100. Despite small increase in the total employment, there were a recorded decrease in aggregate working hours by 6.4 million.

The performance of labor market has deteriorated in 2014 with unemployment rate accounting an increase and reached to 6.1% in September 2014. The unemployment rate increased following an increase in number of unemployed persons by 11,000. The seasonally adjusted participation rate declined by 0.2 percent and became 64.5%. During this phase, the number of employed persons reduced by 26, 700. The decline in employment has contributed from an increase in part time employment as against full time employment (Carvalho 2015). The ratio of employment to population decreased by 0.2 percentage point. 

The condition of labor market strengthen in between June 2015 and 2016. The employment level has increased by 1.9 percent to become 11, 939,600 in 2016. The growth in employment is more than that Australia ever experienced in the last 10 years. The labor market started strengthening from the second half of 2015. The employment rose by 1.5 percent. The employment growth during this time is mainly due to growth of part time jobs. Vacancies in part time employment has increased by 134,400. With this, the total part time employment in the economy stand at 3,740,700 in June 2016. As against the growth of part time employment, full time employment recorded only a modest growth (Luigjes and Vandenbroucke 2015).  The aggregate unemployment in Australia declined by 3.1 percent. The improvement in unemployment rate is associated with an increase in participation rate by 0.1 percentage point.

The seasonally adjusted unemployment rate in Australia has accounted a sudden increase in December 2017. The recorded unemployment rate is 5.5 percent as compared to a rate of 5.4 percent in November in the same year. The last recorded unemployment rate above the market consensus rate of 5.4%. The number of unemployed person in the economy has increased by 20.5 percent. Presently, there are 730.6 thousand unemployed people in Australia. People searching for full-time jobs increased to 501.8 thousand. The statistics shows unemployed persons looking for a full time jobs has increased by 9.9 percent. In addition to this, people searching for part-time jobs has also increased but not as much as that of full time jobs. The number of persons looking for part time jobs has increased to 228.8 thousand as compared to 501.8 thousand for full time jobs. The employment in the last five years has recorded significant growth. Employment rose up to 12.44 million constituting an increase by 34.7 thousand. Taking into consideration last month, this is the 15 consecutive months recording a growth in employment. This is first time in Australia after 1993 that employment is rising at a long continuous stretch. The full time employment has risen by 15.1 percent and that of part time employment by 19.5 percent. The seasonally adjusted measures of employment rate has shown an increase by 0.1 percent point to become 62 percent reaching to an all-time highest level since 2012. Along with this, the labor force participation has risen by 0.2 percentage point. The participation rate has increased to 65.7 percent as against the expected rate of 65.4 percent. The labor force participation is now is in its highest level since 2011. 

Effects of Unemployment on the Economy and Society

Labor force participation across genders

Gender discrimination in the labor market is a problem in almost every nation. In this regard, Australia is no exception. The payment discrimination between male and female workers is presently stands at around 23 percent. However, the statistics alone cannot represent full extent of the problem. The parity of wage becomes secondary when discrimination already exists in terms of finding a job, opportunity for enough working hours and a healthy working environment. The recent data indicates nearly 9.4 percent of female workforce faces insufficient working hours. For male workforce, the corresponding percentage is 5.7 percent. Nearly, 400,000 working aged females are unemployed in Australia. Those who are employed are mostly engaged in part time jobs. 71.6 percent of female workforce are currently involved in part time jobs (Argy and Nevile 2016). Females in working age population despite having higher qualification than males are not getting enough job opportunities. As a result, the potentiality of the labor force have not explored fully. Researches on Australian labor market shows complete utilization on female workforce will bring a high economic growth for the nation.  Australia has experienced a massive increase in insecure work in the past few years. Insecure work implies working environment having uncertainties in payment, inferiority in entitlements and rights, very limited and even no access to the paid leave, irregular working hours and unpredictability over the job length. Insecure works in Australia disproportionality affects female workers mostly constituting part-time and casual workers.

Female participation in the labor force aged 20 to 74 years in 2014-15 was 65.1% as against male participation of 78.3%. Among the participated labor force, 43.8% of females were employed in part time jobs. For males, the percentage of part time employment is 14.6%. The percentage for females then increased to 62.2% for the employed females having a child under 5 years.

Youth unemployment in Australia

Figure 2: Youth Unemployment in Australia

(Source: tradingeconomics.com, 2018)

Unemployment among youth is one of the most widely discussed matter of concern. Youth unemployment in December 2017 has declined slightly to 12.30 percent from 12.40 percent in November 2017. The youth unemployment averaged at 13.46 percent between 1978 and 2017 while the overall unemployment rate averaged at 6.88 percent (aph.gov.au, 2018).

The status of employment among youth aged 15 to 24 years had worsened substantially in 2008 following hit of Global Financial Crisis. The youth unemployment was 14.5 percent in 2014. This is the time when unemployment among young members of the workforce aged 15 to 24 years was stuck close to 15 percent. The youth unemployment has seen even worse condition than this. Today, the proportion of young people searching for jobs are relatively smaller. The participation of young people in labor market has declined consistently implying a fewer youth present in job market. The State where youth unemployment is most severe is Tasmania. In North West and West Tasmania, approximately 21 percent of youth are out of jobs. The figure for South East Tasmania is nearly 20 percent. In Queensland, the youth unemployment hit at 15 percent. The worst result of youth unemployment is in Cairns with unemployment rate being 20.5 percent. Apart from Cairns, the other areas having considerable number of unemployed young include Logan, Ipswich, the Moreton Bay Region and the Wide Bay. For South Australia, the regions concerning most youth unemployment are northern Adelaide area, Gawler and Elizabeth having 19.7 percent of unemployment (Mavromaras, Sloane and Wei 2015). However, recently youth unemployment have shown some recovery. The youth unemployment after reaching a level of 14.5 percent in 2014 has declined to 12.0 percent in 2016.The unemployment rate remained around 12.30 to 12.40 percent during the months of November and December in 2017. 

Youth Unemployment in Australia

Unemployment among immigrants

Immigrants’ unemployment is another factor contributing to overall unemployment in Australia. Migrants from Middle Eastern are piling up employment. The jobless rate among immigrants is 33 percent during first five years of arrival. Recent data indicates that unemployment among immigrants from Middle East has nearly doubled in a decade. Migrants from North Africa and Middle East are three times more prone to unemployment as compared to those from European and Asian countries (news.com.au, 2017). The jobless rate among immigrants are six times higher than country’s average rate.  

Unemployment across different states

Figure 3: Unemployment in different states of Australia

(Source: lmip.gov.au, 2017)

Among the major states of Australia, highest rate of unemployment is recorded in Western Australia with an unemployment rate of 6.8 percent. The rising unemployment in Western Australia has resulted from a fall in full time jobs. The full time employment has dropped by 5700 while part time employment has lifted up by 5600.  The unemployment rate in South Australia stands at a rate of 6.1 percent. There are a number of reasons behind spiking unemployment rate in South Australia. There is a gradual slowdown of employment in sectors like Automotive especially in supply chain. The number of new people joining the labor market outweighs the number of new jobs created. The condition of unemployment is gradually improving in states like Queensland, Tasmania and Victoria. Unemployment rate is lowest in Australian Capital Territory. Thirteen hundred new jobs are created in ACT in December 2017. Of which 1100 are full time while 200 are part time. The youth unemployment in ACT though increased by 0.7 percent and has become 10.8 percent; it remains lower than national average of 12.3%.

Government policies towards unemployment

Attaining full employment is one of the major policy goals of Australian government. Government has already taken several policies to reduce unemployment in Australia. The existing policies to promote employment include National Employment Strategy, Council of Education and Development program and Indigenous Employment Policy. In Australia, unemployment is resulting from a number of long run structural factors. The existing training and education system implies that most of the people unemployed presently lacks requisite skills for the vacant jobs. The employers rather than hiring from domestic labor force are more interested to hire imported skilled workers (Beer 2015). To address the problem of unemployment, government focuses on improving the performance of employment service system in Australia. The government has undertaken employment service based on free market policy to deliver a better result to those looking for jobs. Changes undertaken in the employment service is expected to deliver a better quality assistance with refocusing payment on outcomes of the employment. The programs clearly specify the expectations of the job seeker with enhancing support from employers (oecdobserver.org, 2018). In order to improve skills of the workforce steps are taken to encourage development of skill. The skill development program include deregulation of university system and extending support towards vocational training program.

Conclusion

A brief analysis on Australian unemployment status has conducted in the essay. Unemployment in Australia is caused due to structural, frictional and cyclical factors. The female participation in the labor market lagged behind that of male participation. Other groups facing severe unemployment are youth and immigrants. Despite new job creation, unemployment has not yet reached to the desired level. This is mainly due to fact that newly created jobs are mostly part time in nature. States such as Western Australia and South Australia have more severe unemployment employment. On the other hand, regions such as ACT, Northern Territory and New South Wales have experienced gain in employment status. In response to aggravated unemployment problem, Australian government has initiated steps to promote employment with improvement in skills and productivity of workers. The economic growth along with government program will help Australia to attain a state of full employment in future. 

References

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Argy, V.E. and Nevile, J. eds., 2016. Inflation and Unemployment: Theory, Experience and Policy Making. Routledge.

Beer, A., 2015. Structural adjustment programmes and regional development in Australia. Local Economy, 30(1), pp.21-40.

Carvalho, P., 2015. Youth unemployment in Australia. Policy: A Journal of Public Policy and Ideas, 31(4), p.36.

Fujita, S. and Moscarini, G., 2017. Recall and unemployment. American Economic Review, 107(12), pp.3875-3916.

Lmip.gov.au. (2017). Welcome to the Labour Market Information Portal.. [online] Available at: https://lmip.gov.au/default.aspx?LMIP/LFR_SAFOUR/LFR_UnemploymentRate [Accessed 28 Jan. 2018].

Luigjes, C. and Vandenbroucke, F., 2015. Institutional Moral Hazard in the Multi-Tiered Regulation of Unemployment in Australia-Background Paper.

Mavromaras, K., Sloane, P. and Wei, Z., 2015. The scarring effects of unemployment, low pay and skills under-utilization in Australia compared. Applied economics, 47(23), pp.2413-2429.

NewsComAu. (2017). Unemployment rate among new Australians doubles. [online] Available at: https://www.news.com.au/finance/work/careers/migrants-unemployment-rate-among-new-australians-doubles/news-story/8211ef023e576933198a9256248712ed [Accessed 28 Jan. 2018].

Oecdobserver.org. (2018). Jobs, unemployment and government action - OECD Observer. [online] Available at: https://oecdobserver.org/news/fullstory.php/aid/4505/Jobs,_unemployment_and_government_action.html [Accessed 28 Jan. 2018].

Reserve Bank of Australia. (2018). Box B: The Increase in the Unemployment Rate | Statement on Monetary Policy – November 2013 | RBA. [online] Available at: https://www.rba.gov.au/publications/smp/2013/nov/box-b.html [Accessed 28 Jan. 2018].

Tradingeconomics.com. (2018). Australia Unemployment Rate | 1978-2018 | Data | Chart | Calendar. [online] Available at: https://tradingeconomics.com/australia/unemployment-rate [Accessed 28 Jan. 2018].