Jobless Rate in Australia - Essay Example

?Economic Analysis of “Australia's jobless rate envy of world, Treasurer Wayne Swan says” (Brinsden Introduction Australia continues to havea low jobless rate and is quite happy to crow about it in the Western world. One can look at this and try to examine how Australia is getting it right while the rest of the Western world is wallowing through a recession and what some may term a depression. At the Australian Chamber of Commerce and Industry (ACCI), “Mr. Evans said higher interest rates, a stronger Australian dollar, subdued levels of household spending and high international oil prices were all affecting business confidence in the non-mining sectors.” This demonstrates quite ably that macroeconomic tinkering must always strike a delicate balance to prevent the overheating of an economy as a result of lower employment figures. Ironically enough, lower employment figures make industries less agile to be able to respond to rapid changes in economic conditions, paradigmatic shifts in industry sectors and the ability to absorb newer worker populations into existing industries. Analysis “There is no such thing as a free lunch” and this recent news about employment figures speaks to this in volumes. On the surface, it would appear this can be nothing but good news for all concerned but it certainly comes with tradeoffs and opportunity costs. The very fact that students are attending university instead of immediately going onto the job market demonstrates that full employment is not necessarily the best thing for an economy. In the end, economics appears to be about the effective use of finite time and resources. The Australian economy is considered by many Western observers to be one of the strongest in the industrialized world outpacing even the gargantuan economies of the EU and the United States. The large trade And mining sectors in Australia and careful attention to the Eastern economies in India and China are giving Australia a boost other Western nations simply don’t have: “The comments also chime with recent commentary from the RBA, which has been at pains to emphasise the importance of the rapidly growing Asia region to the economic outlook, stressing China and India's emergence as crucial factors for Australia's outlook and putting it above concerns about the US economy. “(Curran 2010,2) Is there a downside to the positive news about high employment? There are certainly trends which have a negative impact on the future. Take opportunity costs for instance, if most potential employees in an economy were to forego higher education and immediately jump into the market, where would the university students be? Here you have an example of a number of potential hires in the economy intentionally foregoing present consumption for future gain by measuring the opportunity costs and taking the decision that a rather impoverished state now will yield substantially higher employment returns in remuneration in the future. Whether the engineer, doctor or attorney, large investments of time and resources are devoted to preparing for future employment for perceived greater gains in both salary and prestige. The forgone salary is significant but the potential future gains are clearly evident if the student continues to excel at university. In the case of doctors, one can spend almost a decade simply attending school and preparing for the various residencies required to establish professional credentials. From a scarcity perspective, fewer students will self-select to both see the grueling process through and have the means to remove themselves from the employment sector for that length of time. The opportunity costs for doctors tends to be so steep that it speaks to the higher salaries they commend once graduated due to the sheer lack of numbers of students willing to suffer through the process of self-imposed privation and years of study. The Australian AMA was even concerned about the placement of students in shortage intern positions: “Following an agreement between state and federal health ministers in February [2010], only domestic, commonwealth-supported students will be guaranteed intern positions at the end of their university training. Potentially, domestic fee-paying students at Australia's two private universities - Bond and Notre Dame - also could be at risk, along with all international students, who make up 17 per cent of Australia's 14,500 medical students. In March the government doubled the number of general practitioner training places from 600 to 1200 by 2014, but they are still in short supply.”(Healy 2010, 1) This simply illustrates that the opportunity costs and scarcity associated with the more rarified employment opportunities present and future can be a rather complex affair. On the larger front, the total employment in an economy is always a constant conflict for the incentives necessary for various positions. Higher paying positions don’t necessarily entail the many years of university education just described. A simple perusal of jobs in the mining sector in Australia can describe opportunities paying 70,000 Australian dollars for entry jobs in that particular industry. The incentives are simply different. As the class has described, incentives play a large role in why people take the jobs that they do. Some may not want to invest the time in formal education while others may not be suited or inclined to take physically demanding and even dangerous jobs in the mining sector. One can say that incentives are one of the most important considerations for most short and long term prospects of employment in the economy. The combination of salary remuneration, tax climates and long term retention all play a vital role in healthy employment in a given country. This is also having an effect on the strength of the currency which in turns provides incentives for less or more imports and exports depending on how expensive either is getting. According to the Reserve Bank of Australia (RBA): “A stronger currency is weighing on Australia’s manufacturing industry, which contracted in March for the sixth time in seven months, the Australian Industry Group and PricewaterhouseCoopers said in a survey released in Canberra April 1.” (Heath 2011, 2) Again, we see that trade-offs occur even when a positive outcome like high employment happens. Trade-offs are simply the necessary decisions and outcomes that accompany any complex reallocation of resources and services in a large functioning economy. This essay had mentioned overheating earlier and this is the phenomenon where successful outcomes such as high employment start to impact other parts of an economy. What would occur as a result of a strengthened currency regime emerging from the high employment figures? If the Australian dollar starts to increase in value versus other currencies, it will make exports from Australia more expensive therefore starting to depress demand at the margin for these same exports. One could imagine that if all these competing factors were not necessary to balance, the world economic system would not be subject to constant ups and downs it seems to experience over time. On the superfluous assessment, high employment figures are a positive outcome for the individual workers and prospective workers in Australia but a more careful appraisal demonstrates that it is a very complex web indeed that is subject to plenty of subtle but potentially damaging threads to the overall health of the economy now and in the future. Even the Australian Prime Minster is seeing the effect that the work and employment are have ion the ability of the government to reform itself: “Look my view is people who can work should work, and that’s why we have been reforming welfare, including through income management. That’s why we’ve been reforming the rules about benefits when people are unemployed, making sure that people do turn up, do participate, do seize the opportunities to get a job. That’s why I’ve been talking to the Australian community for many months now about doing more.” (Gillard 2011, 1) Conclusion Again, employment figures are simply one component of the recipe for success in the larger macroeconomic diagnosis of recovering or sustaining an ailing economy. Australia provides a number of innovative ways to ensure that higher employment is reached and maintained. Lower jobless rates can be a positive indicator but the substrata could also reveal fundamental omens and dysfunctions ranging from underemployment to exaggerated employment figures and the larger gains in the government sector which usually fail to yield the productivity the private sector is able to accomplish. There is no single recipe for success and the complexity of all the issues involved demands a constant vigilance to strike the delicate balance that leads to a healthy and vibrant large economy like that of Australia. All the components of economic analysis and tools of the trade are vital to being able to discern what policy will yield the highest effective return for the greatest good. SOURCES CITED Brinsden, C. "Australia's jobless rate envy of world, Treasurer Wayne Swan says." April 7 2011.http://www.heraldsun.com.au/news/breaking-news/australias-jobless-rate-envy-of-world-treasurer-wayne-swan-says/story-e6frf7ko-1226035560885 (accessed APR 09 2011). Curran, E. “Economy to expand further in 2011 as China grows, says Reserve Bank's Broadbent.” September 29, 2010 http://www.theaustralian.com.au/business/markets/economy-to-expand-further-in-2011-as-china-grows-says-reserve-banks-broadbent/story-e6frg926-1225931801915 (accessed April 9, 2011). Healy, G. “Medical internship shortage forces AMA crisis summit.” September 29, 2010. http://www.theaustralian.com.au/higher-education/medical-internship-shortage-forces-ama-crisis-summit/story-e6frgcjx-1225931074696 (accessed APR 11, 2011). Heath, M... "Australian Job Growth in March Sends Currency to Record High." April 6, 2011.http://www.businessweek.com/news/2011-04-06/australian-job-growth-in-march-sends-currency-to-record-high.html (accessed April 9, 2011). Gillard, J... "Transcript of press conference, Perth." March 31, 2011.http://www.pm.gov.au/press-office/transcript-press-conference-perth (accessed April 9, 2011). Read More