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The essay focuses on the current economic problem of Unemployment in Australia. The growing unemployment rate is not only the problem of Australia but it is a global problem. As per (2013), the global financial crisis has resulted in the unemployment of many youth and existing employees. The rate of youth employment has increased which creates a danger to the future of the country. To find a solution to such big problem, this should be amongst the major concerns of the government. The government should focus majorly on the solutions which can meet the challenges of high rate of unemployment in the country. The rate of employment has improved a bit if compared to the conditions after the global financial crisis but still it needs to improve a lot for better future of the country.
The main purpose of the essay is to discuss the various types of unemployment and how they occur. It will also discuss the problems of unemployment which are to be suffered by the society, individuals and the economic system. To mitigate the challenges the government of Australia has taken some steps which will also be discussed in the essay. The paper aims at discussing about the social and economic evil which is destroying the lives of people and families as a whole. It also affects the growth and development of future generations which will be discussed in detail in the essay. The various steps taken by the government to mitigate these issues will also be discussed. Many policies and programmes are initiated by the government to provide employment to the maximum no. of people so that at least regional unemployment can be reduced. The essay aims at throwing a light on the unemployment conditions of different states of Australia.
Figure 1 : Unemployment
Introduction to Unemployment
According to Gatzia (2012), Unemployment is the crucial issue which the economies are facing nowadays. Unemployment can be referred to the state where the people do not get jobs and do not earn for his basic living. In the words of Sharp (2013), unemployment is a social curse. It wastes youth and generations of the country as the unemployed people do not provide any productivity to the country. This curse can lead to the destruction of societies.
As per Sharp (2013), it is seen that the more people are becoming jobless and could not find work for earning. This is actually more relatable to the young population of the country who are educated but do not have jobs to earn a living. The rate of unemployment is rising year by year and this situation is even worse in some other countries.
Unemployment in Australia
Sharp (2013), says that unemployment is the current major topic in Australian economy. The history of unemployment in Australia can be explained in phases starting from 1890’s when different colonies suffered due to the unavailability of work. It brought poverty. When Australia was being considered as a country the employment rate rise to 9.5% and then from 1910 till the Great depression, the unemployment rate reduced to 4.9%. The next few decades were considered as the golden age for employment in Australia as the unemployment rate was only 2%. It again rose to 8% in 1990’s and then after the global financial crisis of 2008 it is rising year after year. The graph given below shows the rise in unemployment rate in past few years.
As per OECD (2009), Unemployment rate can be defined as the percentage of people who are unemployed to the total workers in the country. According to the Australian Government (2016), the rate of unemployment in Australia was 5.8% in February 2016 which was 6.2% in the previous year. There are various trends in unemployment which varies from industry to industry and from state to state in the country. Like the strongest growth of employment is seen in New South Wales in 2016 which is 4.1% and then n Queensland, 2.4%. Tasmania has seen a very poor growth of 1.1% in 2016. In 2016, unemployment increased in Western Australia (5.6% to 5.9%), Northern territory (4.2% to 4.4%). South Australia it increased to 7.2%. Tasmania has 6.8% of unemployment rate and the rate decreased in New South Wales and Queensland to (6.1% to 5.8%) and (6.2% to 6%) respectively. So, it can be summarised that the trend of unemployment was highest in South Australia, 7.2% and lowest in Northern territory, 4.4%. The figure below shows the trend of unemployment rates as per the states or territories in February 2016.
The employment rate also varies from occupation to occupation and as per the data collected by theAustralian Government (2016), the highest employment growth was seen in the personal service workers, 4.4% in the sales workers and negative growth is seen in machinery operators and drivers. There is 1.1% of growth in managers and 3.1% in professionals. The table given below explains the same.
Types of unemployment
In the words of Amadeo (2016), there are three main types of unemployment which are structural unemployment, frictional unemployment and cyclical unemployment. The structural unemployment and frictional unemployment maintains the natural unemployment rate of the country but the cyclical unemployment rate rises when there is a fall in demand which normally occurs when there is recession.
Cyclical unemployment:The cyclical unemployment rate causes because of the fluctuations in the business cycle. It raises when the overall demand for goods and services falls and the businesses layoff its employees for cutting costs. It then further increases the ill effects because the employees who are laid off do not have purchasing power to buy things which lead to more fall in the demand. In this case, Government have to intervene to take some steps and make policies to reduce the effects of the situation (Amadeo, 2016).
Structural unemployment:This type of unemployment appears when there is a change of trends and requirements in the economy. It is when the economy needs the skills which the existing workers do not possess so they need to be replaced by machineries or robots. When there is recession for a longer period of term, the structural unemployment may arise because the existing unemployed people may become out-dated with the time (Amadeo, 2016)
Frictional unemployment:Frictional unemployment is when more no. of workers leaves their jobs but did not join the new jobs. It can be voluntarily or when the worker is terminated. The students searching the jobs can be an example of frictional unemployment. It is the nature part of the process. To some extent, this type of unemployment is good for the economy because it provides an opportunity to the workers to join the jobs which are more productive for them (Amadeo, 2016).
The causes of Unemployment
According to Sharp (2013), there are many causes of unemployment which can be related to natural phenomena, technology, health problems or changes in the trends. As per Dr Carvalho (2015), every year a huge no. of youth population adds up the numbers in unemployed people. The youth population of Australia has been doubled since 2008 after the global financial crisis. The youth unemployed population accounts for one third of the total unemployment in Australia. The causes of unemployment, especially youth unemployment are many. One of the main factors is lack of economic growth in the country after the recession period. The industries closed in recession period which lead to the higher no. of people becoming jobless which increased unemployment in the country. The second cause could be immigration. People coming from different countries in Australia in search of jobs increased the no. of native Australians which are unemployed. Lack of development and infrastructure also reduced the no. of jobs. Also, advancement in technology replaced humans with machines and robots which increased unemployed people in the country.
Issues of Unemployment
As per Sánchez-Castañeda, et. al. (2012), unemployment and joblessness is itself a major issue for the national governments and for the international organisations. The unemployment rate increased after the global crisis of 2008 and lots of youth talent is unemployed at present. In accordance with Murphy (2016), Australia has a lot of people who do not have any jobs or work to earn a living. The unemployment rate fell in 2016 compared to previous years and many of the jobs are part time. People want to work for the fixed hours and do not want to serve full time jobs which are also a reason for declining wage growth rate for the employees.
In the words of Wade (2014), long term unemployment disrupts the wellbeing and growth of the country. It outdates the skills of labour. As per the wellbeing index of 2014 March quarter, the decline of $1.2 billion of wellbeing is seen which is the third consecutive fall since global financial crisis.
According to Mavromaras, et al. (2013), The issues and effects of unemployment are terrible on society and on the economy. Once, the person become unemployed, the chances of becoming out-dated and long term unemployed rises for the individual. Unemployment not only impacts the economy but an individual and society as well. The people unemployed for a longer period of time face hardship poverty, burden of debt, homelessness and even mental stress. The family tensions and stress increases which brings shame and isolation to the individual in the society. It erodes confidence and self-esteem of the person and also poses ill health effects. Because of this condition of individuals, the families also suffer. It depletes the standard of living of individuals and societies. This also assists in the emergence of criminal activities in the country. As per Gatzia (2012), studies suggest that unemployment of the individuals affect the development of their children who are raised in poverty. Their development is far lower than the development of children raised in richer families. Excessive stress harms the hormonal development in the bodies of individuals.
Gatzia (2012) also suggests that it is impossible for any economy to have full zero unemployment. This shows that millions of people in the economies are unemployed at a given time. Unemployment is a serious problem or issue of an economy because it lowers down the overall satisfaction of people in life. It significantly affects the health of the individuals. In 1973, it was analysed that the increase in mortality rate is because of the rise in unemployment. So, it reduces the overall wellbeing of population and the economy.
Youth unemployment is a big issue in Australia as after global financial crises, high no. of students and youth are struggling to find the jobs they require. This is a global issue. The below given chart shows the unemployment rate in youth has increased considerably (Dr Carvalho, 2015).
As per Fowkes (2011), the government of Australia has taken active measures for combating unemployment in the country. It assisted people in searching the jobs, providing training to them, job counselling and also created many jobs to employ people. The current policies and programmes of the labour government of Australia has started a program named as Job Services Australia (JSA) and appointed Local Employment Coordinators to assist people in getting the employment.
The Australian government has taken certain measures to reduce the rate of unemployment in the country. The government has some fiscal and monetary policies to achieve this objective. The fiscal policies of the government have major impact on the economic development. The government could take some decisions and allocate the funds which encourage the participation of labour and reduces unemployment at a certain level. Like the government might allocate funds for the programs of developing national infrastructure like roads, bridges or more in which many people will get employment and this will reduce the unemployment to some extent. These types of programs or steps are taken by Australian government to reduce unemployment rates in Australia (Mavromaras, et. al., 2013)
The steps taken by the government in reference to the fiscal risks, tax systems, policies, decisions, sustainable economic growth also decreases the unemployment rates in the country. The policies are made by the government which encourages the labour force participation. It can also start the labour welfare programmes or training can be provided which enhances skills of the employees. The government could cut the interest rates to boost up t average demand in the economy. It can cut the rate of taxes. It provides subsidies to the small businessmen to encourage them for business and to employ more people in their business. The government run programs in which it provides minimum wage to reduce the real wage unemployment (Mavromaras, et. al., 2013)
Unemployment in various states of Australia
As per the report of Australian Government (2016), in the year 2016, some of the growth has been seen in the no. of jobs in the economy but still there are some challenges which still remain. There are 11.9 million people employed in Australia. The labour market conditions have been improved recently in some of the areas. Employment has increased by 2.6% as on Jan 2016. The employment conditions are different indifferent states of Australia. The unemployment conditions are discussed for different states of Australia in here as under:
New South Wales (NSW)
In New South Wales, the employment rate is projected to grow by 9.8% in the next five years. The one in every three Australian worker is employed in New South Wales. New jobs are recorded for females, 10.9 per cent which is more than the jobs recorded for males i.e. 5.3% in the five years till November 2015. Young people have more employment in New South Wales. The three major employment providing industries are Health Care and Social Assistance (13%), Professional, Scientific and Technical Services (10%) and Retail Trade (11%). These three sectors accounts for one third of the total employment of New South Wales (Australian Government, 2016).
In Queensland, around 2.4 million of Australians are employed. The employment profiles in this state are diverse. The employment has grown 2.4% since 2014 and 5 % since 2010 and it is projected to grow by 7.9% in the next five years. The employment rates for females (6.9%) grew higher than men (3.3%). The three major employment providing industries are Health Care and Social Assistance (13%), Retail Trade (11%) and Construction (9%). The Mining industry in Queensland has lost much of the jobs in the past few years. In these ears, the industries which have seen growth in the jobs are Health Care and Social Assistance and Education and Training which have seen growth of 24% and 22.7% respectively (Australian Government, 2016).
As per the report of Australian Government (2016), South Australia employees a small no. of people and the growth of employment in this state is small. It has grown 0.6% in employment since 2014 and .3% since 2010. The state is projected to grow at 5.1% in the next 5 years. The state has faced some adverse labour market conditions in the recent years. The growth in employment in South Australia is even below the national average of 2.5%. The three most growing sectors which provide maximum employment in the state are Health Care and Social Assistance (15%), Retail Trade (11%) and Manufacturing (9%). The construction industry has seen major loss of jobs. The construction and manufacturing industries together provides 175 of the employment in the state. He workers in south Australia are likely to work part time rather than full time.
It is the state in Australia which provides employment to large no of people. It stands on 4th position among the states of Australia in providing employment. The employment has seen 0.3% growth since 2014 but 11% growth since 2010. The employment growth in 2014 is the weakest which created only 4700 jobs. The expected growth of employment in the next five years is 6.9%. Most of the workers are full time that is 71%. %. The three most growing sectors which provides maximum employment in the state are Health Care and Social Assistance (39.5%), Construction (22.3%) and Accommodation and Food Services (20.5%) (Australian Government, 2016).
This state which provides lowest employment to people but it has most regionally diverse employment. The employment growth is expected 5.1% in the next 5 years. The growth is 0.5% since 2014 and 1.1 since 2010. The state has one important industry, Agriculture, Forestry and Fishing which provides 6% of the employment in the state but the industry has seen loss of jobs in past few years. The state has more part time workers and it has the oldest workforce comparing to any other state (Australian Government, 2016).
It can be concluded that unemployment has been an evil for the western countries including Australia. It not only hampers the growth of the economy but also disrupts the growth of an individual and the society as whole. It has many ill effects which are seen in the form of mental illness, depression, stress, etc. The different types of inflation are en discussed in the essay which explains that unemployment to a certain level is important for the economy but after the global economic crisis, the percentage of growth of unemployment is disrupting the growth of economies on a global level. It is found that the major causes of unemployment are lac of economic growth, technology or lack of training and employment opportunities. The employment conditions of different states of Australia are been discussed in the essay. It is found that Australia has good expected job openings in future as new jobs will be created and the government will also take certain steps to improve the situations and present conditions of unemployment in the economy.
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