Unemployment Rate - Types - Issues - and Government Policy of Australia

Question: Discuss the unemployment rate, types, issues, and government policy of Australia and comment unemployment in various states of Australia. Answer: Introduction It is well known that, in current, unemployment is a major problem to all over the world. The situation of unemployment takes place at the time when the numbers of unemployed people increase in comparison to employed people. Along with this, the unemployment rate is considered as a measure that plays a significant role in order to assess the occurrence of unemployment in an effective and a more accurate manner. Moreover, the unemployment rate is calculated by dividing the number of unemployed people by number of employed people. This is an effective measure to calculate the unemployment rate in an exact way (Layard, Layard, Nickell, and Jackman, 2005). On the other hand, for this research paper, I would like to select unemployment as a research topic. This research topic would be helpful the major aims as well as objectives of the paper in an effective way. This research paper would also be beneficial to develop a clear understanding about the unemployment. Moreover, the paper would be valuable to give details about the conceptual framework of unemployment rate and would also be helpful to explain that unemployment have a major impact on the economic growth of a nation. In other words, it can be said that, this research paper is designed to develop a clear understanding about the concepts of unemployment of a nation. At the same time, this research paper would also be advantageous to elucidate the unemployment rate, issue, and so on in the milieu of Australia. In other words, it can be said that, this research paper would be helpful to describe the unemployment rate, types, issues, and government policy in the context of Australia. In addition, this paper would also be useful to remark unemployment in different states of Australia. In this way, it should be noted down that, this research paper would be helpful to investigate different concepts that are related to the unemployment rate in the context of Australia. Unemployment/ Unemployment Rate The term unemployment stands for the people who are unemployed or without a job and also making efforts to find out a job. Along with this, the unemployment rate corresponds to the proportion of the total labor force that is unemployed or jobless, but seems to be for work and also in search of job in an active manner. The unemployment rate is computed by means of dividing the numbers of unemployed people all the way through the current total number of workforce (Bagusat, Keenan, and Sedmak, 2010). In this way, it should be noted down that, unemployment comes to pass at what time people are out of work and also in search of work. In addition to this, the unemployment rate increase in the recession time period due to low market demand as well as cost cutting strategies of the business organizations. Moreover, unemployment rate is not constant but it is fluctuate. The unemployment rate changes as per the market demand as well as economic situations of a nation. In addition, the report o f International Labor Organization indicates that, in 2012, approximately 6% of the total workforce of the world was unemployed (Australian Government. 2015). On the basis of the above table, it should be noted down that, there is a continuous increase in the GDP rate of the nation. This increase indicates that, in current, the economic situation of Australia is favorable for the nation that is helpful to reduce the unemployment rate of the nation in an effective and a more comprehensive manner. On the other hand, it is also true that, in recent year, the unemployment rate of Australia decreased in comparison to previous years. For case, in current, the unemployment rate of Australia goes down to 5.8% that is measured as the lowest rate in last twenty months (Australian Associated Press. 2015). For case, the below given graph is helpful to understand that, in 2016, the unemployment rate of Australia is less than the year 2015. (Source: TRADING ECONOMICS. 2016). On the basis of the above chart, it should be noted down that, the unemployment rate of the nation has reduced to 5.8% that indicates the strongest jobs growth of the nation in last 20 months. Moreover, according to Australian Bureau of Statistics, it is a surprise increase in the employment rate of the nation (Australian Government. 2015). Apart from this, in the previous year, the unemployment rate of Australia was high and there was a regular increase in the unemployment rate of the nation. The below give table is helpful to understand the unemployment rate of Australia in the last years: On the basis of the above table, it should be noted down that the unemployment rate of the nation increased on the regular basis. It indicates that the economic situation of the nation is unfavorable for the youths and the government of the nation is unable to provide employment to the people. This is a major subject of the concern to the nation. Moreover, in 2016, there is a decrease in the unemployment rate of the nation. This is good thing for the nation. The below graph is helpful to notice that the latest unemployment rate is low in view of the fact 2014. (Source: ABC. 2016. But, it does not mean that the problem has been solved. This is still a major subject of anxiety to the nation. For that reason, it can be said that, the government of the nation should make a lot of efforts to increase the chance of employment and to reduce the unemployment in order to improve the economy of the nation in an effective and a more comprehensive manner. Types of Unemployment There are numerous different types of unemployment such as: cyclical unemployment, frictional unemployment, structural unemployment, seasonal unemployment, demand deficient unemployment, regional unemployment, and classical unemployment (Baumol, and Blinder, 2008). But, cyclical unemployment, frictional unemployment, seasonal unemployment, and structural unemployment are the major types of unemployment. These major types of unemployment are described as below: Structural Unemployment: Structural unemployment is a major type of unemployment in the economy. This type of unemployment takes place at what time a labor market is incapable to make available jobs for every person who is in search of job. Moreover, this employment also happens due to the mismatch between the required skills by the employer and the skills that employee has (McEachern, 2012). Along with this, structural unemployment mainly focuses on the structural problems as well as inefficiencies in an economy and labor markets respectively. Cyclical Unemployment: Cyclical unemployment is a major type of unemployment that takes place at what time there is not an adequate amount of aggregate demand in the economy in order to offer employment to each and every person who wants to do work (Boyes, and Melvin, 2013). Along with this, in this type of unemployment, the number of unemployed people will always be greater that the number of available job. Frictional Unemployment: frictional unemployment is also the other major type of unemployment in the economy of a nation. It generally crops up at what time when there is a variance between the employees and jobs. Along with this, the disparity can be associated with payment, attitude, skills, work time, location, and other factors related to a job (Sexton, 2015). In other words, it also can be said that, this type of unemployment occurs when a worker makes efforts to search and switch from one job to another due to the dissatisfaction of the previous job. Seasonal Unemployment: Seasonal unemployment occurs because of the seasonal business of the business organization. For case, it is well-known that, in todays more competitive business era, each and every business organization focuses on the seasonal business to earn more and more profits. Consequently, a lot of industries produce as well as distribute their products at certain times of the year. As a result; they hire employees as per their needs and demands. Tourism, farming, and construction are the major industries wherever seasonal unemployment is frequent. These industries provide seasonal employment to the people who want to do job (Baumol, and Blinder, 2008). In this way, it should be noted down that, structural, cyclical, frictional, and seasonal are the major types of unemployment that take place within the economy system of a nation. Major Issues of Unemployment It has been clear that unemployment is a major issue to all over the world. Along with this, a long-term unemployment may create several social as well as economic problems to the nation. The main reason behind it is that unemployment points out low family income and consequently; it is a sign of low consumption of money by the people. In addition to this, the low consumption rate has a negative impact on the economy of the nation. It is because of low consumption rate points out that people have low desire to purchase products/ services due to the lack of sufficient money. This also reduces the demand of the products as well as services (Castaeda, Serrani, and Sperotti, 2012). In this way, it can be said that, high unemployment rate, low consumption rate, and low demand have an impact on the economic growth rate and success of the nation. On the other hand, the high unemployment rate also influences the government taxes of the nation. It is because of due to the low income and low consumption, the government of the nation is unable to collect and spend enough funds on social welfare as well as infrastructure of the nation. Apart from this, high employment rate also influence the standard of life of the people in a negative manner (Spoehr, 2005). In this way, these types of situations create social and economic problems in front of the nation. Moreover, the social and economic problems are dangerous to the overall development of the nation. At the same time, there are numerous kinds of issues that may create the problem of unemployment in front of nation. Moreover, these types of issues come to mind because of a variance between skills in the labor market. This discrepancy between skills may occur due to several reasons such as: geographical immobility, occupational immobility, technological changes, structural changes in the economy, and so on. In this way, it can be said that, long-term or high unemployment create a lot of issue to the nation that have a negative impact on the economy of the nation (Sloman, Norris, and Garrett, 2013). In other words, it also can be said that, unemployment is an issue that also create numerous serious issues to the nation and also influence the social, economic, and financial position of the nation in a negative manner. Government Policy Now days, unemployment has become a serious issue to all over the world. Along with this, the government of each and every nation making a lot of in order to reduce the unemployment rate in an effective way. Moreover, the government of the nation also making and implementing different methods, strategies, and policies to decrease the unemployment rate of nation. In other words, it can be said that, the government of a nation is playing a significant role to improve the employment rate and to reduce the unemployment rate for the economic and overall development of a nation (Helpman, Itskhoki, and Redding, 2010). On the other hand, it should be noted down that, Australia is a major country that is also facing the problem of unemployment in the past years and mainly at the time of recession. For case, Australia has been faced high unemployment problem for the duration of the great depression (19291932). It is because of, in mid 1930, the unemployment rate of Australia was 22% that has been reached at peak of 32% in middle of 1932. As a result, the government of nation made different effective policies to control the unemployment rate in an effective and a more comprehensive manner (Engbersen, Schuyt, Timmer, and Waarden, 2006). For case, monetary policy and deflationary policy are the major policies that were developed by the government to reduce employment rate and to improve the economy of the nation in an effective way. On the other hand, demand side policy and supply side policy are the major policies that were developed by the government to control as well as manage unemployment in a significant way. These two major policies are described as below: Demand Side Policy: Fiscal policy and monetary policy are the two major demand side policies that are used by the government of the nation in order o control the unemployment rate in an effective and a proper way. For case, fiscal policy is a major policy developed by the government in order to control the unemployment rate and to enhance the employment opportunities within the nation. It is because of fiscal policy plays a significant role in order to increase the aggregate demand, economic growth, and to reduce the unemployment rate (Abbas, Bouhga-Hagbe, Fats, Mauro, and Velloso, 2011). Along with this, with the help of fiscal policy, the government of the nation also becomes able to reduce the tax rates and to increase the government spending for the social welfare and economic growth success of the nation. In addition to this, fiscal policy also plays a vital role to increase the demand of the labor and as a result; it is beneficial to reduce the unemployment rate and also increase employment opportunities in the economy of a nation. In the same manner, monetary policy also plays a major role to manage as well as control the unemployment rate of the nation. The main reason behind it is that monetary policy of a nation is based on the low unemployment rate of the nation (Sakamoto, 2008). Along with this, the major objective of the monetary policy is to promote economic financial growth and stability in the nation that reduces the unemployment rate of the nation in an automatic manner. In this way, it can be said that, both fiscal and monetary policies play a critical role to reduce the unemployment rate within the economy of the nation. Supply Side Policy: The supply side policies developed by the government of a nation play a significant role in order to reduce the micro-economic issues and also control the unemployment rate of the nation in an effective and a more comprehensive manner. For case, employment subsidies, improved labor market flexibility, improved geographical mobility, decreased power of trades unions, education training, and so on are the supply side polices that are beneficial to reduce, control, and manage unemployment rate of the nation in a significant way. For example, the education and training policy is beneficial to improve the skills of the people that are essential to a job. It is well-known that, structural unemployment occurs due to the discrepancies between the required skills and the skills that employees have (Stroup, 2007). In this way, with the help of this policy, the government of the nation provides opportunities to the people; so they can develop their skills and become able to obtain suitable job. Consequently, it can be said that, the government of the nation is developing numerous policies to control the unemployment rate and to increase the employment opportunities in the nation. Unemployment in States and Territory of Australia According to the report of Australian Bureau of Statistics, in September 2015, the unemployment rate has been decreased in most of the states of Australia. For case, the unemployment rate cut down in Queensland (-0.1% - 6.3%), New South Wales (-0.1% - 5.9%), Tasmania (-0.4% - 6.0%), and South Australia (-0.2% - 7.7%) (OECD. 2014). Along with this, the unemployment rate was stable in Western Australia (WA) at 6.1%. Apart from this, the below given chart is helpful to represent the current unemployment rate of the major states as well as territories of Australia. (Source: Australian Government. 2016. On the basis of the above graph, it should be noted down that, the current unemployment rate of Australian Capital (AC) Territory is 4.1, Northern Territory 4.5, NSW 5.3, WA 5.6, Victoria 5.6, Tasmania 5.6, Qld 6.5, and SA 6.8 (Seal, and Penrith, 2008). On the basis of the unemployment rate of these states and territories, it should be noted down that, some of these states as well as territories for example ACT, NSW, WA and Northern Territory use low minimum wages policies to enhance employment and to control unemployment rate in an effective and a more comprehensive manner. Conclusion On the basis of above discussion, it can be said that, in recent years, high unemployment rate has become a serious issue to all over the world. The high unemployment rate is dangerous for the economic growth as well as success of the nation. It influences the economic growth of the nation in a negative way. On the other hand, it should also be observed that Australia is a nation that is also facing the issue of high unemployment. In addition to this, it is also scrutinized that, structural, cyclical, frictional, and seasonal unemployment are the major types of unemployment. Moreover, it can be concluded that, there are numerous issues that has been created the serious problem of high unemployment in the Australia. Also, it is observed that, the major states and territories of Australia such as: NSW, ACT, WA and Northern Territory have also been adopted attractive policies to reduce the unemployment rate in an effective and a more comprehensive manner. Along with this, it should also be noted down that, the government of the nation has been developed a lot of effective policies to reduce, maintain, and control the unemployment rate in the economy of the nation. References Abbas, S. A., Bouhga-Hagbe, J., Fats, A., Mauro, P., and Velloso, R. C. 2011. Fiscal policy and the current account. IMF Economic Review, 59(4), 603-629. Australian Government. 2015. The Great Depression. Australian Government. 2015. Unemployment benefits and the minimum wage. Australian Government. 2016. Bagusat, C., Keenan, W.J.F., and Sedmak, C., 2010. Decent Work and Unemployment. LIT Verlag Mnster. Baumol, W., and Blinder, A. 2008. Economics: Principles and Policy 11th ed. Cengage Learning. Boyes, W., and Melvin, M., 2013. Fundamentals of Economics 6th ed. Cengage Learning. Castaeda, A.S., Serrani, L., and Sperotti, F., 2012. Youth Unemployment and Joblessness: Causes, Consequences, Responses. Cambridge Scholars Publishing. Engbersen, G., Schuyt, K., Timmer, J. Waarden, F., 2006. Cultures of Unemployment: A Comparative Look at Long-Term Unemployment and Urban Poverty. Amsterdam University Press. Helpman, E., Itskhoki, O., and Redding, S., 2010. Inequality and unemployment in a global economy. Econometrica, 78(4), pp. 1239-1283.