Unemployment in Australia 2012-2017-Free-Samples for Students

Question: Discuss about the Unemployment in Australia 2012-2017. Answer: Introduction In the modern economy Gross Domestic product of nations are one of the important economic indicators to get a snapshot about the economic performance and ranking of them globally. GDP in turn reflects how much employment is contributing behind that What it fails to capture is the how many people still remaining idle and unproductive in the participation of national activities and such is identified as unemployment .In simple term unemployment, means the state of being without any job and be unable to earn livelihood through working (Argy Nevile, 2016). The unemployment faced by a nation reflect the underemployed human resources which if applied could bring forth more growth to the nation It is one of the macroeconomic factor that indicates and determine as well the overall economic operation (Shimer, 2012). More unemployment leads to less income of the nation and less consumption that influences the GDP of the nation. Excessive and increasing unemployment has detrimental impact on t he health of economy and that is why it is considered as one of the economic issues that almost every nation face though the rate intensity and degree differ remarkably. Economy of Australia though small but enriched with plenty of potential to grow and expand. The biggest mixed market, which the country is consist of at least indicates that strongly. Even though the nation ranks 14th as per nominal GDP, Ii is diagnosed too with the common ailment of unemployment that is recorded to be at the rate of 5.6% of total labor force recently in recent year(2017). The paper aims to report the unemployment issues faced by Australia over the last five year period that is 2012-2017. It sheds light on the facts and challenges posed by unemployment with further discussion of national policies and attempt to deal with the chronic problem. Current Economic Overview of Australia: Australia is 14th largest global economy as per the nominal GDP estimation and ranks 20th in terms of Purchasing Power Parity. As per the estimated data of International Monetary Fund, the nominal GDP of the nation is recorded to be $1.258 trillion in 2016. The national GDP grows at 1.8% annually. The country reflects pretty higher per capita income, which is recorded to be $51,850. The nation is top in world economies as per the wealth per adult and the annual growth rate of wealth is 4.4% due to constancy of exchange rate. The Human Development Index of the country is second highest in world. Looking at the sectors wise performance of GDP, the service sector seems to dominate the total production of the country accounting for almost 61% of the GDP. The major components of service sectors are education, tourism, consultancies and financial services They consist the maximum of the export basket mostly forwarding the good into China, Japan, South Korea, US and India. The country has been revolving around 5-6% recently after facing rise in post financial crisis reaching a peak of 6.25%. Construction is the next bigger component contributing to 8% of GDP. Mining is also crucial in the economy as it accounts for almost 7% of GDP. 6% of the total national production comes from the manufacturing sector. Only 2% of the total production is achieved through operations and productions in agricultural sector. . Natural resource along with agricultural production holds 2-5% of the total GDP. The country captures inflation rate recorded at 1.9%. Australia is one of the larger exporting countries to the world facing higher export demands from China, Japan, South Korea, European Union and United States of America. This makes the country produce more of exportable good and services as compared to manufacturing production. As a result, the country has been blessed with increasing terms of trade over time since 2000. The existing labor force of the nation is 12.6 million, of which 79.2% is employed in service sector, 8.8% in construction sector, 2.7% in agriculture sector, 7.4% contributing in the manufacturing sector and 1.9% employed in mining sector. Keeping parity with the employment the wages in the country has not raised rather has been falling over time. As per the estimation in 2017, the recent unemployment rate is recorded at 5.6%. The general price level in the national economy is moderate as it has been managing the inflation rate to prevail within 2-3% of the GDP. Unemployment as Economic Issue: Over the years there has been larger structural changes in Australia in terms of its quantum and process of production. The changes owe its credit to the technological advancements, compact integration with the huge world market and the competition stemming from manufacturing production and growing services produced by low wage developing countries. Changes in the tastes and preferences of consumers due to rise in real income is also one of the driving factor behind Australian changes in outlook (Pissarides, 2013). The adoption of technology and changes in way of production has come at the cost of declining job opportunities for male in the labor force. The country provides education at much higher cost and this inflicts into lesser number of people in the workforce with formal education. Compared to male employment, the female employment has been rising (Keynes, 2016). It has been found that there has not be balanced reduction in unemployment as compared to the economic growth that the nation captures. Also the wage rates did not rise much. The unemployment of Australia has been a long term problem for over past 30 years and following discussion shows the trends captured in past 5years Year Unemployment (% of total labor force) 2012 5.22 2013 5.66 2014 6.07 2015 6.06 2016 5.72 Figure 1: Unemployment Rate The Australian economy received major shock in its economic performance in the post Great Financial Crisis that impacted the country severely. The reason behind this has been the strong linkage that Australia has with world countries through transaction of export and import (McNamara 2013). To combat the recessionary pressure, the government resorts to expansionary fiscal policies to enhance the GDP which further created employment too. In this analysis the trend of unemployment from 2102 to 2016 has been capture. It can be seen that the rate of unemployment tends to hover around 5.5 % in average but only in the years 2014 and 2015 the rate has spiked a bit (Pigou, 2013). One of reason behind this can be governments attempt to reduce fiscal deficit through reduction in government expenditure that hurt the cause of generating employment. Year Unemployment (% of male labor force) 2011 4.55 2012 4.93 2013 5.37 2014 5.83 2015 6.09 The data reveals that the trend in male unemployment for the selected years has been following smoothly increasing over time. Figure 2: Male Unemployment Rate Year Unemployment (% of female labor force) 2011 4.58 2012 4.79 2013 5.29 2014 5.38 2015 5.31 The trend of female unemployment also shows increasing pattern but situation started changing from 2014 to 2015 where the rate has fallen by 0.7%. Figure 3: Female Participation Rate Unemployment in 2012-13 As per the report released by Australian Bureau of Statistics, the national rate of unemployment seasonally adjusted was recorded steady at 5.2% in March of this financial year. The report records the increase in the number of people reaching 11,491,200 from 44,000 in March. The increase in employment captured the increase of full time employment which increased by 15,800 people reaching a level 8,080,400. Part time employment reached 3,410,900. After recording an increase of 28,200 people being employed. Both male and female increase in part time and full time employment has add up to the total increase in employment. As per the report of ABS, the reduction in unemployment has been by 3200 people in March and reached 629,100. Monthly aggregate of working hours records an increase of 9.5 million hours in March. The estimated hours of work is now reached at 1,624.2 million hours. The labor force participation rate has increased minimally by 0.2% and reached 65.4% in the report of 2012 . The estimates of the unemployment rate can be decomposed into two analyses. Seasonal and trend analysis. The seasonal factors influencing unemployment are estimated on monthly basis and reviewed on annual basis maintaining detail in order to take into account the original data of each additional year. The conduction of review is done in February publication of each year. The review does not always result into changes in the estimations made in published reports. Unemployment in 2013-14 As per the report published by ABS, the rate of unemployment recorded a downfall only by 0.1% and reached 5.6% in September 2013. This estimate is the seasonally adjusted estimated that takes into account the monthly data. The number of unemployed falls by 14,700 and reached 697,100 in seasonal term but in terms of trend, the estimation shows a rise of 300 persons reaching 706,400 (Mavromaras, Sloane Wei 2015). The recorded decrease in the monthly rate is consistent with the reduction the rate of participation as well. Rate of participation decreases by 0.1% and is attained at 64.9%. There has been an increase of 9100 persons in seasonally adjusted number of employed person reaching 11,645,800 persons. In terms of trend estimation, the employment fell only by 200 persons reaching a level of 11,646,800 persons in September 2013. The employment to population ratio is the number of total employed people as percentage estimate of total civilians recorded at 61.2% as per seasonal adjustm ents. The trend estimate of the same parameter shows 0.1% fall. Unemployment in 2014-15 As per the ABS report published in September 2014, the rate of unemployment showed a rise by 0.1% and reached a level of 6.1% after the estimation and adjustment is done seasonally. The unemployed person adds up to the list by 11000 persons and reached a level of 746,600. In terms of trend estimation, the rate differs a bit and records a steady rate at 6.0% in September 2014 (McCombie Thirlwall, 2016). The increase in employed persons takes place by 5600 persons reaching a level of 11,604, 900 person. Compared to that, the hike in the number of unemployed person has been recorded at 4,600 persons reaching 745,500 in terms of trend estimation. As per the trend estimation, participation rate achieved 64.6% in September 2014 and remained steady. The seasonal adjustment of the rate is 64.5% after showing a decrease of 0.2% (Milner, Page Lamontagne, 2014). The decrease of unemployment rate in September is due to increase in part time employment. The seasonal estimation of employment to population ratio recorded at 60.6% falling by 0.2% from the previous estimate (Hatfield-Dodds et al., 2015). The trend estimation of the same recorded at 60.7%. Unemployment in 2015-16 The seasonal estimation of the unemployment rate as published in the ABS report of 2015 recorded at 6.2% after a 0.1% decrease. The trend estimation reveals no change in the rate of unemployment, which stays still at 6.2% as announced by ABS (Gould, 2013). The seasonally adjusted rate of labor force participation is recorded at 65.0% showing a fall of 0.1% in August 2015. In terms o seasonal adjustment, the number of employed people increased by 17,400 reaching 11,775,800 in 2015 (Plumb, Kent Bishop, 2013). The increase owes its importance from both male and female full time employment as well remarkable growth in female part time employment. The male employment in full time work increased by 10,100 almost. Seasonally adjusted working hours decreased in August 2015 to 1,623.8 million hours falling by 0.6 million hours. 14000person has been deducted from the number of unemployed persons reaching to 781,100 after seasonal adjustment. Unemployment in 2016-17 As per the report released by ABS in August 2016, the monthly trend of the employment in full time category increased by 22,000 persons. The increase in part time employment has been by 6,000 persons leading to overall rose in employment by 27,000 persons. Since August 2015 and toward the end of 2016, the full time employment has increased by 253,000 persons. Asper the statement of Chief Economist for ABS, employment as per trend estimation increased by 2.6% that is way greater than the average year-on-year growth of 1.9%. The employment growth rate overweighed the growth rate of population that has been 1.7% the trend unemployment rate in Australia 2016 remained at 5.6% showing increase than last financial year. The trend estimated monthly working hours has increased by 3.9 million hours showing a rise of 0.23% reaching1708.6 million hours in August 2016. The labor force participation rate reached 65.2% in the year. Policies undertaken to combat unemployment: Quite evidently, to lower unemployment rate the government has to boost the economic performance of the nation. This is possible through adoption and successful execution of reform policies. The reforms have to be designed incorporating diversification and broader outlook of the entire economy. Regulation is in international trade, deregulated financial market, wider ranged reforms in tax, labor polices to ensure flexible labor markets are mandatory (Hasan, Mitra, Ranjan Ahsan, 2012).. To combat the unemployment problem from root it is the prime duty of the government to arrange for facilities that would be accessible to people for acquiring, developing and enhancing the skill sets for job. Welfare arrangements should be made. Most important policies that government takes help of is the robust fiscal and monetary policy. Expansionary fiscal policies in terms of new projects initiated by the government creates new source of employment. The autonomous government expenditure has to be high. Reduction of unemployment in recent times through implementation of various policies require addressing of the challenges faced by the national economy in medium term(Michau, 2013). OECD conducts an extensive study based on cross-country data of factors that drives economic growth, employment. Based on that it has designed a strategy to be followed by nations affected with unemployment. The job strategy of OECD is responsive of the problem of growing high rate of unemployment in almost every countries under it since 1970 (Milner, Page LaMontagne, 2013). The major focus of the plan has been to make working time and cost of labor more flexible, reforming security provision in employment, deliverance of effective program in labor market, improvisation of competencies and skills, reforming unemployment system linking them with potential benefit systems making them interactive with tax system and operations. This can be achieved by consolidating social and economic fundamentals, facilita tion of diffusing information , enhancing communication technology through innovation, investing in human capital formation forming new firms. Adoption of sustainable, non-inflationary and growth encouraging macroeconomic policies by the Australian government has been remarkable to combat the rising unemployment in recent times. Improving technological know-how after creating and diffusing it to broader level (Groenewegen McFarlane, 2014). Improving the climate of domestic economy to the foreign investments by clearing impediments and restrictive regulations are also adopted. Labor cost and wages are relaxed in order to let the wag reflect the conditions of local economy and skill sets. The policies planned by OECD can be broadly categorized in three groups of policies: Economic, Labor and welfare (Collins, 2013). The frameworks have been useful to assess the Australian polices undertaken and detect their deviation from the core strategies as suggested by it. Conclusion The report briefs up one of the important ailment of Australian economy prevailing in the economy over the years. The report sheds light on the state of unemployment in the nation for past five years. The Global financial Crisis in 2007 hit the Australian economy much bitterly that compelled the national government take expansionary fiscal and monetary policies to deal with the recessionary impact. Though the situation improved but the long run impact of the measures was rising fiscal deficit that further pushed the government to cut back the expenditure. This contractionary measure hugely affect the employment generation. As a result, the unemployment in the last few years has been increasing even though very significantly. The very recent statistics reveal improvement in the scenario where unemployment seems to decline stemming from the operation of OECD strategies as adopted and implemented by the national government. Since the country is dominant service provider in the national economy the majority of employment and its scope or opportunity is lying in this sector and further employment can be boosted through favorable fiscal policies and attractive atmosphere to the external as well as internal investors. Moreover, the share of export of Australia to the world export is much higher hence expansion of exportable production can create more employment both on full time and half time basis. The labor force participation rate should be increasing over the population growth rate and the estimation of 2016 rightly poses the success of the nation in achieving stability in the rate of unemployment. References Argy, V. E., Nevile, J. (Eds.). (2016).Inflation and Unemployment: Theory, Experience and Policy Making. Routledge. Board, A. S. I. (2012).Social inclusion in Australia: how Australia is faring. Department of the Prime Minister and Cabinet. Brckner, M., Pappa, E. (2012). Fiscal expansions, unemployment, and labor force participation: Theory and evidence.International Economic Review,53(4), 1205-1228. Circelli, M., Stanwick, J. (2014). Economic vulnerability in Australia, 200212: an employment perspective. Collins, J. (2013). Rethinking Australian immigration and immigrant settlement policy.Journal of Intercultural Studies,34(2), 160-177. Ehrenberg, R. G., Smith, R. S. (2016).Modern labor economics: Theory and public policy. Routledge. Feather, N. T. (2012).The psychological impact of unemployment. Springer Science Business Media. Gould, J. D. (2013).Economic growth in history: survey and analysis. Routledge. Groenewegen, P., McFarlane, B. (2014).A History of Australian Economic Thought (Routledge Revivals). Routledge. Hasan, R., Mitra, D., Ranjan, P., Ahsan, R. N. (2012). Trade liberalization and unemployment: Theory and evidence from India.Journal of Development Economics,97(2), 269-280. Hatfield-Dodds, S., Schandl, H., Adams, P. D., Baynes, T. M., Brinsmead, T. S., Bryan, B. A., ... McCallum, R. (2015). Australia is' free to choose'economic growth and falling environmental pressures.Nature,527(7576), 49. Keynes, J. M. (2016).General theory of employment, interest and money. Atlantic Publishers Dist. Mavromaras, K., Sloane, P., Wei, Z. (2015). The scarring effects of unemployment, low pay and skills under-utilization in Australia compared.Applied economics,47(23), 2413-2429. McCombie, J., Thirlwall, A. P. (2016).Economic growth and the balance-of-payments constraint. Springer. McNamara, P. M. (2013). Adolescent suicide in Australia: rates, risk and resilience.Clinical child psychology and psychiatry,18(3), 351-369. Michau, J. B. (2013). Unemployment insurance and cultural transmission: theory and application to European unemployment.Journal of the European Economic Association,11(6), 1320-1347. Milner, A., Page, A., LaMontagne, A. D. (2013). Duration of unemployment and suicide in Australia over the period 19852006: an ecological investigation by sex and age during rising versus declining national unemployment rates.J Epidemiol Community Health,67(3), 237-244. Milner, A., Page, A., Lamontagne, A. D. (2014). Cause and effect in studies on unemployment, mental health and suicide: a meta-analytic and conceptual review.Psychological medicine,44(5), 909-917. Pigou, A. C. (2013).Theory of unemployment. Routledge. Pissarides, C. A. (2013). Unemployment in the great recession.Economica,80(319), 385-403. Plumb, M., Kent, C., Bishop, J. (2013).Implications for the Australian economy of strong growth in Asia. Reserve Bank of Australia. Shimer, R. (2012). Reassessing the ins and outs of unemployment.Review of Economic Dynamics,15(2), 127-148.