Unemployment Rate in Australia - Coursework Example

Comparing the Unemployment Rate for Young Workers Under 21 Years with the Unemployment Rate of Adult Workers over the Past 25 Years in Australia University: Abstract Unemployment refers to the incapacity for willing workers to find out gainful employment. Its degree in a nation is one of the indicators of the country’s economic health. Unemployment rate is prone to negative influences from a variety of factors including corporate downsizing, implementation of automation technologies, job outsourcing to other nations, variations in labor markets, turnover among others. Unemployment can culminate into great drawbacks across numerous life dimensions including a loss of skills, ill health, psychological harm and distress, criminal behavior, housing stress and social exclusion. Young people are a significant part of the working age populace of Australia. Income taxes that sustain government spending, including on aged and health care, education and the social safety net, all come as pays from working people. As the population ages, the participation of young people in the workforce will grow increasingly vital to the economy. This paper compared the unemployment rate for young workers less than 21 years of age with the unemployment rate of adult workers over the past 25 years in Australia. It further looks into the possible explanations of the differences. Introduction Although over the last ten years, Australia has experienced prosperity, economic and export growth, low inflation rates and high labor productivity, it is unfortunate that this generation of young people encounters great challenges in employment. Young people below 21 years who have been born and growing up during a time of prosperity, are now experiencing the effects of the global financial meltdown at whose onset the rate of youth unemployment rose from 8.7 % in September 2008 to 11.8% in March 2010 (ACCI Submission, 2010). Youth unemployment has lingered higher than average. This is the case particularly for youth in search of full-time work, since casual and part-time positions tends to dominate youth employment. For young people who have not completed school, males, and native and youth from a background that is non-English-speaking and those living in regional or rural areas, their full-time employment predictions are particularly low (Burgess and Strachan, 1999). In order to define unemployment rate, there is need to define labor force, non-labor force, participation rate and the unemployment level. Labor force is the number of employed people plus the number of unemployed but seeking work. The non-labor force comprises those who are institutionalized such as in psychiatric wards or prisons, those who are not looking for work, those serving in the military, stay-at home spouses, and children. The participation rate denotes the number of people within the labor force divided by the size of the non-institutionalized population – that is the adult civilian non-institutional population. The unemployment level is the difference between the number of currently employed people and the labor force. The unemployment rate is the unemployment level divided by the labor force – it is the number of the currently employed people divided by the population of working age (the adult population) (Trading Economics, 2010). In Australia, although some people used to retire well before their sixties, over the past two decades, the percentage of people in the labor force aged between 45 and 64 years has increased. In 2003 for instance, people within this age bracket constituted almost a third of the labor force – that is 32%, compared with 24% in the year 1983. This increase reflects masses entering this age group as well as alterations in labor force participation over time. Between the year 1983 and 2003, participation rates for this category increased to 68% from 56%, largely driven by the rise in women participation among other factors. In November 2003, one-third of all employed people comprised of those aged between 45 and 64 years (Australian Bureau of Statistics, 2010). Accounting for other adults in employment (those aged between 22 and 44 years), it is clear that Australian youth are almost left out of her labor force. In other words, it denotes high rate of unemployment of the population aged below 21 years. The rate of unemployment in Australia was last reported in September of 2010 at 5.10%. From the year 1978 until 2010, the rate of unemployment in Australia averaged 7.11%, getting to a historical high of 10.90% in December of 1992, and in February of 2008, a record low of 4.00% (Trading Economics, 2010). Below is a graph showing Australia unemployment rate from the year 1980 to 2010. Source: Mundi, 2010. Australia Unemployment rate Youth’s unemployment rates in Australia are high as compared to other nations – of the world’s unemployed populace, male and females between 15 and 24 years of age account for forty-one per cent, which is an estimated seventy-four million people. Statistics reveal that by the year 1993, among thirteen OECD nations, Australia was the fifth from the top in youth unemployment rate, and a decade later, Australia still fared poorly. As the OECD stated in the year 2003, early school leaving and teenage unemployment rates in Australia surpassed the area-wide average. Furthermore, compared to their better-learned counterparts, the employment drawback of inadequately qualified school leavers is fairly higher than the OECD average (OECD & UNESCO-USI, 2003). Statistics by ABS trend reveal that in September of the year 2003, 21.6% of youths aged between 15 and 19 years in Australia were unemployed. Female teenagers had a higher unemployment rate (23.3%) compared to their male counterparts (20.6 %), which was in stark contrast to the then rate of unemployed adults (5.9%). Thus in September of 2003, compared to adults, teenagers were more than two and a half times more likely to be unemployed. What is more is that if the 11.5% of teenagers aged between 15 and 19 years who are not in the labor force were accounted for; the number of unemployed teenagers would have been even higher. As Strathdee and Hughes (2003) point out, it is alarming that 15.3% of all Australian teenagers neither are they attending an educational institution nor employed full-time. Although the adult unemployment rate by the year 2003 had almost halved since the year 1993, the percentage of teenagers not in study or full-time employment (marginal activities) had persisted. Some groups of the populace have even greater proportions of teenagers in marginal activities. While 15.3% of all teenagers were not in full-time education or in full-time employment, 45% of native teenagers were in the same condition. Moreover, teenagers living in particular states were also less probable to be studying or working full-time. For instance, this was the case for 32.2% of teenagers in the Northern Territory, 17.8% in South Australia, 18.1% in Queensland and 18.4% in Western Australia (Dusseldorp Skills Forum, 2003). One of the reasons behind high unemployment rate of individuals below 21 years in Australia is the shrinking job market. As Dusseldorp Skills Forum (2003) documents, research has revealed that youth unemployment in Australia is soaring owing to the shrinking labor market or demand for this category of Australians. Since the year 1995, there has been a 6.9% drop in the availability of teenagers’ full-time jobs, which has pushed many of teenagers into part-time or casual positions and, consequently, some have failed to gain sufficient experience and learn extra skills. This in return has further limited their probability of securing full-time employment in future. In addition, a decline in labor market opportunities in apprenticeship is manifest for Australian populace aged 21 years and below. For instance between the year 1993 and 2003, the rate of offered apprenticeships noticeably declined – during this period, compared to the period between 1974 and1992 (the two preceding decades), apprenticeship training dropped by 16% especially in electrical, electronics and metals. Toner (2008) holds the view that there would have been about nineteen thousand additional job opportunities if the rate of training had not reduced over the period between 1993 and 2003. Changes in the labor force are attributable to flow variables including natural population growth, new entrants, retirements from the labor force and net immigration. On the other hand, changes in unemployment are dependent on inflows from non-employed people beginning to search for jobs as well as of employed people losing their jobs and consequently looking for new ones; and outflows of populace who stop looking for employment and of people who find new employment (Trading Economics, 2010). Following deterioration in labor market conditions, youth unemployment rate rose to approximately six year high by the middle of the year 2009 and the general improvement in employment ever since notwithstanding, the joblessness rate amongst young people below 21 years of age has been sluggish to get better and remains not far lower than its recent peak. The rise in the rate of youth unemployment has aggravated than the increase in unemployment across the whole labor market (ACCI Submission, 2010). Turnover is another reason behind high unemployment rate of individuals below 21 years in Australia. There has been an argument that youth unemployment is deceivingly high owing to youth turnover in the labor market. The likelihood of teenagers changing their labor force status is thrice that of adult men, and twice that of adult women, which frequently makes the duration of youth unemployment shorter compared to adult unemployment. However, although there is likelihood of youth unemployment being for a shorter period as compared to adult unemployment, if over time unemployment hours are compounded; youth are unemployed for longer durations. This turnover can only be partially attributable to youth “exploring” the labour market in pursuit of more appealing work in addition to the seasonal nature of work for several students. In effect, few youth generally leave their jobs voluntarily – for example, from the year 1994 to 2003, only 15% of unemployed youth had left their job by choice, while 24% had lost their positions. This is according to data by the ABS, a trend that OECD analysis corroborated. Other reasons behind high unemployment rates of Australian youth below 21 years of age include underemployment, part-time work and education. There has been an exaggeration of “Marginalized youth” prevalence owing to an increase in youth working part-time and attending educational institutions. Statistics show a substantial increase in part-time youth participation rates (those below 21 years) over the last few decades, beginning 12% in 1980 to about 34% in 2000. The rise in the number of youth in part-time work is partially attributable to the uptake of education – for example, in the year 2003, 23% of teenagers were in part-time studies (Chapman and Gray, 2002). Nonetheless, innumerable youth engaged in part-time work are not in this condition by choice – a good proof is the 1994 survey that revealed that 45% of youth in part-time work in Australia preferred to be working for longer hours. Likewise, one in four part-time workers, as the 1997 ABS data suggests, preferred more working hours. Most probably, if there were realistic chances for a working hours increase, this number would be higher (Watson, 2002). Education is a major factor in influencing employability. Education-related contributing factors to youth unemployment including barriers to education, a lack of suitable education in addition to a disparity between job opportunities and skills gained through education. As the OECD holds, the high rates of youth unemployment are largely attributable to the fact that several young people leave school devoid of the skills required to get into employment. Worth to note is the fact that levels of literacy proficiency are strongly related to employment and unemployment and while Australia is internationally competitive concerning the number of students achieving a high literacy level, she falls behind as far as reducing the percentage of students with low levels of literacy is concerned. Actually, although she has 18% of 15 year olds reading at the highest level, 12% of all her 15 year olds remain at the lowest level. Normally, individuals under 21 years who are early school leavers; come from poor socioeconomic backgrounds; subsist in communities with high rates of unemployment and who have poor academic results are the most affected by unemployment in Australia. In fact, the aforementioned categories in addition to those individuals from non-English speaking settings; those having low literacy and numeracy levels; native youth; those that dislike school; live in regional or rural areas or particular communities and go to government schools; as well as those living with one or more other unemployed person(s) are at higher risk of unemployment. Oftentimes, young people in these conditions face manifold challenges, but usually, the major factor that they have in common is early school leaving. The ‘school to work’ transition, for early school leavers in particular, is a critical phase in determining whether they manage to join the workforce successfully or become unemployed (Strathdee and Hughes, 2002). As Fullarton et al. (2003) assert, both parental employment and education can determine whether an individual complete school – youth of university graduate mothers are at higher chances of finishing school as compared to those whose mothers fail to attain this level of education. Again, English-speaking students (those who speak English at home) have a higher tendency of dropping out of school early as compared to students from non-English speaking backgrounds. The council upholds that youth from low/poor socioeconomic families could feel pressured to abandon school in order to aid in the alleviation of their households’ financial stress (ACOSS, 2002). Unfortunately, the majority of them erroneously suppose that upon leaving school, they would find an apprenticeship or work. They therefore end up becoming unemployed. Worse still, they lack the buffer against unemployment that post-school education further provides, thus ushering them into long-term unemployment (McMillan and Marks, 2003). Low socioeconomic status in addition affects the accessibility of information and communication technology by individuals, which consecutively may influence their academic performance and hence labour market outcomes. Individuals from backgrounds with high income plus those who have higher education levels are more probable to have access to as well as greater usage of communication technology as compared to those with limited education and from low socioeconomic backgrounds. Zappala and McClaren (2003) calls this the “digital divide” and explains that it further exacerbates the pre-existing inequalities and that it extends into “ABCs of the digital divide”, that is beyond access to the physical ICT hardware. Chapman and Gray (2002) explain that Indigenous youth are over twice probable to undergo unemployment compared to non-Indigenous youth, and that Indigenous youth’s high school retention rates are just 35% compared to 70% for non-Indigenous young people. Upon the assessment of levels of education as well as employment prospects, education significance for Indigenous Australian youth grows sharper. Indigenous youth’s employment prospects can undergo a 40% increase if they complete Year 10 or Year 11, while completing Year 12 would add another 13% of likelihood for employment. Moreover, post-secondary education boosts employment projections by between 13 and 23% (Dusseldorp Skills Forum, 2003). Geographically, regional students are more probable to become school dropouts, with those in remote areas following closely. According to Abbott-Chapman (2001), while youth unemployment among regional students is high, regional and rural areas have high social, emotional and economic support levels to draw on in difficult times. Nonetheless, this support may lead to families dispiriting youth from moving to regions more probable to offer employment, consequently culminating into adverse employment upshots. Youth perceive staying close to home as vital owing to the fact that rural as well as regional communities and families can offer support to each other during times of difficulties. Moreover, siblings also significantly influence youth and families’ decisions concerning moving away for further education or employment. Besides, youth dwelling in certain ‘disadvantaged’ populations are more likely to have poor labour market outcomes as compared to other young people; a condition made worse by the fact that the 1970s’ most disadvantaged regions are still disadvantaged to date (Vinson, 1999). Conclusion Unemployment is a scourge in a nation and its populace at all economic development levels. It brings with it poverty and despair along with exclusion from the conventional way of life. It is becoming progressively more important to harness young people’s potential, considering the fact that Australia is experiencing an ageing population. This is by making sure that all young people get opportunities for learning and developing skills essential for their fully participation in the labour market. Worth to note is the fact that the foregoing analysis of the possible causes of high rate of youth unemployment in Australia is a proof of the indistinctness of a consensus on the causes and the worthlessness of looking for a single-factor explanation. Youth unemployment in its current dimensions in Australia is the upshot of the interplay of several factors with differing significance. The analysis shows that the labour market has extensively been adverse for Australian youth, a situation that economic recession in the company of movements in youth labour costs as well as an altered demographic profile have exacerbated. Perchance the major distinctive feature of the current youth unemployment in Australia is the enormity of the quantity of unemployed youth. Certainly youth unemployment as a problem within the Australian context, should have received the attention it deserved when youth unemployment incidence in addition to the quantity of unemployed youth started to climb steadily upward in the year 1974. References Abbott-Chapman, J. (2001). Rural Resilience, Youth Studies Australia, 20, 3, 26-31. ABS, (2003). Labour Force Australia, 6202.0, ABS, 1, 6, 9-10, 13. ACCI Submission, 2010. Fair Work Australia. Retrieved from http://www.acci.asn.au/text_files/submissions/2010/%282010-04%29%20ACCI%20FWA%20Reply%20Subn%20FINAL.pdf ACOSS, (2002). Poverty, policy and the cost of raising teenagers, ACOSS Info 344, 4. Australian Bureau of Statistics, (2010). Paid Work: Mature Age Workers. Retrieved from http://www.abs.gov.au/Ausstats/abs@.nsf/94713ad445ff1425ca25682000192af2/3c1b29bbc2c1d573ca256e9e00288ddf!OpenDocument Burgess, J. & Strachan, G. (1999). The expansion in Non-Standard Employment in Australia and the Extension of Employers. London: Macmillan Press. Chapman B. & Gray, M. (2002). Youth Unemployment: Aggregate Incidence and Consequences for Individuals, Centre for Dusseldorp Skills Forum, (2002). Applied Economics, Realising Australia’s Commitment to Young People: Scope, Benefits, Cost, Evaluation & Implementation, Dusseldorp Skills Forum. Dusseldorp Skills Forum, (2003). How Young People are Faring: Key Indicators 2003, Dusseldorp Skills Forum, Sydney. Economic Policy Research, Australian National University, Discussion Paper No. 459, 1-4 Fullarton, S., et al. (2003). Patterns of Participation in Year 12, Longitudinal Surveys of Australian Youth, Research Report 33, ACER. Khoo, S., et al. (2002). Second Generation Australians: Report for the Department of Immigration and Multicultural ad Indigenous Affairs, DIMIA. McMillan, J., & Marks, G. (2003). School Leavers in Australia: Profiles and Pathways, Longitudinal Surveys of Australian Youth, Research Report Number 31, ACER. Mundi, (2010). Australia Unemployment rate. Retrieved from http://www.indexmundi.com/australia/unemployment_rate.html OECD & UNESCO-USI, (2003). Literacy Skills for the World of Tomorrow: Further Results from PISA 2000, France: OECD. Strathdee, R. & Hughes, D. (2002). Changes in Young Peoples’ Social Networks and Welfare Reform in Australia. The Drawing Board: An Australian Review of Public Affairs, 3, 1, 33-50. Toner, P. (2002). The Occupational and Skill Structure of New Apprenticeships: A Commentary. Labour & Industry, 13, 1, 55-71. Trading Economics, 2010. Australia Unemployment Rate. Retrieved from http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=AUD Vinson, T. (1999). Unequal in Life: the distribution of social disadvantage in Victoria and New SouthWales. Jesuit Social Services. Watson, I. (2002). Wage Inequality and Underemployment: Australia in the 1990s’, The Journal of Industrial Relations, 44, 1, 88-107. Zappala, G. & McClaren, J. (2003). Patterns of computer and internet access and usage among low-income households. Camperdown: The Smith Family. Read More