Unemployment in the Australian Economy - Case Study Example

Unemployment in the Australian Economy Name University affiliation Date Measurement of unemployment Unemployment is a situation where individuals in an economy have no jobs or are actively looking for a job. Unemployed persons are those individuals that are willing, able and qualified for a certain job, but there are no vacancies that can absorb them (Bell, 2000). The Australian Bureau of Statistics, ABS, measure unemployment in the Australian economy by collecting data got from a monthly survey of dwellings including hospitals, colleges, prisons, and communities in Australia. The ABS uses questionnaires to determine if a person is employed or not. Though the unemployment rate is the commonly known measure of labor underutilization, ABS has a range of steps that combats unemployment. These measures include; Extended labor force underutilization This measure uses the combination of three elements i.e. the underemployed, the unemployed and groups of individuals attached to the economic labor force in terms of the proportion of the labor force contributed by the group. Long-term unemployment rate These are persons that have remained unemployed for 12 months. This number is measured in percentage in relevance to the labor force. The volume measurement for labor underutilization This measure uses the hours of labor with the overall potential hours of labor force expressed in a percentage. The rate of underdevelopment-this measure expresses the number of persons that are underemployed as a proportion of the total labor force. The causes of unemployment in the Australian Economy Structural unemployment Structural unemployment occurs because of the inequality in skills present in the labor market. The structural unemployment is caused by factors such as; Geographical immobility- geographical mobility is the difficulty a person has in moving from one geographical area to another. This factors may include the availability if efficient infrastructure, public utilities like hospitals and schools, and family (Study.com, 2015) . There may be a job in a given area, but a person may find it difficult to move because of the family and other issues. Occupational immobility- occupational mobility is the difficulty experienced in understanding new skills that apply to a new industry. The primary factor that contributes to the professional immobility is the consistent technological changes. Change in technology-a fall in demand for labor would be experience in industries due to technological changes. Replacement of the personnel duties by machines hence renders the employees jobless. Economy's structural changes- lack of efficient competition in the coal mine industry has resulted in the reduced development of labor saving in the firms. Miners, therefore, become jobless and get it difficult in finding other jobs i.e. in the computer industry. Frictional unemployment Frictional unemployment is a type of unemployment caused by the time taken by individuals to move from one job to another. Frictional unemployment happens because people have imperfect information and the long time in finding a job. Other Causes of unemployment may include; Personal Particular causes of unemployment are the individual attributes that make it hard for an individual to gain and keep employment. These factors may include poor physical or mental health, low level of training and limited work expectation. Place and timing Wrong place, wrong time is a situation whereby an individual resides a certain geographical area while jobs are in other areas. Unemployed individuals possess a different mobility pattern and moves that are of long distance is difficult to individuals with limited resources. Training Training of individuals for jobs that are difficult to find or given a wrong training is another cause of unemployment. The training may also be out of date in the job market. Insecure work Insecure work is jobs that are seasonal, temporary or no longer available work. Work insecurity would result to employment uncertainties, and since people hate uncertainty, they opt not to go for the job. Numerical causes It is impossible for all citizens in an economy to get employment at the same time. There are no enough jobs to cater for all the trained individuals. Classification of underemployment Underemployment related to time This form of underemployment reflects on the inadequate work hours with the alternative of an employment situation that an individual is available and willing to engage in. Time-related underemployment occurs when an individual who is in the employment sector is below the limit. Persons under this classification have the following characteristics. They are willing to work extra hours. Those who look for overtime work should be eminent from the individuals that do not. They are available to work extra hours during a particular period. The individual can work less than the limit with working hours. Framework of the underemployed constructed by ABS uses a limit based on the border between part-time and full-time job Inadequate employment situations The inadequate employment type of situation comprises the workplace conditions that reduce the workers capabilities and wellbeing as compared to another employment that is an alternative. Under inadequate employment situations, there are these forms of underemployment; Skill related unemployment-individuals In this class of underemployment are those who, in the course of the working period, changes their work situation to use their present occupational ability more efficiently. Underemployment related to income -individuals in this form of underemployment are those who, in the course of the work period, change their job to a situation to increase their income. Productivity, insufficient equipment, and poor infrastructure limit an individual limits the individual to change work conditions. Why employment varies from region to region in Australia The rate of employment and unemployment plays a significant role in determining a community's well-being. First, regions do not have same labor market conditions and socio-demographic characteristics. For instance, certain areas majorly rely on a small number of industries to keep its population size, infrastructure, and level of income. In these areas, job reduction is a major experience in the industries. On the other hand, the area may experience high unemployment level since people that lose jobs are not able to find other jobs (Cairncross, 2000). Second, there is a tendency of residential clustering of individuals in small areas. An area like SLA consists people with similar socioeconomic, demographic and characteristics of a labor market. This factor makes it difficult for the absorption of all the individuals in the industries present in such areas rendering others unemployed. Effect of government regulation on inefficiencies in the Australian labor market. The government has unions that limit competition among workers. The effect of this regulatory measure is the creation of labor surpluses. Besides, actions of making labor uniformity are underway such that individuals that lack jobs in an area are capable of securing jobs in labor demanding areas. The table below shows the type of government regulation on the labor market with its correspondent benefit. Table 1: governmental regulation Type of regulation Specific benefits Protection of the vulnerable groups Provision of the minimum age for work. Ensures equality in employment opportunities Protection and establishment of the common workers right Establishes right to associate, right for collective bargain, and right to contests for disciplinary and dismissals. Working condition Outlining the maximum working hours Provision for minimum holiday number Initiation and termination of employment Outlines the fixed term contracts, dismissal reasons and advance notices Compensation determination Lowest minimum wage outlined payments for workers who work overtime, and the preparation of non-wage benefits that are a must. Lowest minimum wage described payments for workers who work overtime, and the preparation of non-wage benefits that are a must. Government regulations on labor may result in the decrease or increase of employment. For instance, if the government places a license for a nurse to earn, the control would reduce the number of nurses that can work at all wage levels (Shimer, 2010). From the graph, governmental regulation increases labor until a certain point where the cost of regulation becomes overwhelming and result in increased taxes. The increased taxes would increase the cost of production which will lower the profitability of firms. Retrenching of employees because of the low profits would lead to unemployment. The greatest problem in the Australian labor market is the lack of economic growth. The Government offers a significant effect on the economy through the labor regulation. A well-designed regulation may have significant benefits for the economy but do not lack great economic cost. For instance, a government regulation that increases the production cost of a particular industry would lower productivity and eventually create unemployment. The government estimates the benefits and costs of changes in regulation under full the assumption of full employment. The law has resulted in the unemployment of individuals in the economy. The figure below gives the share of unemployment with the proportion of labor force in the current Australian economy. The Australian government policies to decrease unemployment accompanied The Australian government has taken various measures to combat employment in the country. These unemployment policies include; Employment subsidies- the government subsidies are available in the UK to youth contracts with payments of about $2,275 to employees who employ young individuals. This policy has reduced the long-term unemployment in the country (Sharma & Mamgain, 2009) . Apprenticeship scheme- this policy aims at providing the unemployed individuals with new skills needed to acquire employment and improve their motivations to work. For instance, in the UK, 500,000 persons started apprenticeships in 2013. The reduction in the geographical mobility of labor.- Though many people have skills of finding new jobs, factors like social ties, and family, makes it hard for individuals to move to a new location in search of a new job. The government has encouraged low house building level to increase labor mobility. Tax reforms and benefits- this policy reduces the actual value of advantages on welfare as a measure for the unemployed to secure a job. The government has linked welfare benefits with the participation of people in programs that working experience. Employment services- the governmental programs such as, job matching, and training in the job search. The government placed contracts that would deliver the services. In addition to this approach implementation of the pilot program called work for the dole encouraged many individuals to have part time jobs six months in a year. The unpaid work benefited the community at a great extent. Job seekers were moved rapidly into work. The Australian Labor government implemented the Job Service Australia that provided greater incentives for professional job training including long-term employment REFERENCES Bell, S. (2000). The unemployment crisis in Australia. New York: Cambridge University Press. Cairncross, A. (2000) Introduction to economics. London: Butterworths. Sharma, A., & Mamgain, R. (2009). Labour markets and employment in Asia. Delhi: Daanish Books. Shimer, R. (2010). Labor markets and business cycles. Princeton, N.J.: Princeton University Press. Study.com,. (2015). What is Unemployment? - Definition, Causes & Effects - Video & Lesson Transcript | Study.com. 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