Unemployment In Australia: Types, Trends, And State-wise Analysis

Types of unemployment

Discuss about the Unemployment in Australia.

In an economy, unemployment is defined as inability of some members of the labor force to find jobs to support their living standard. There are different factors responsible for unemployment in the economy. The structure and composition of an economy needs to be evaluated analysis of unemployment. The economic structure and employment scope have been changed rapidly in Australia in the last few years. Job opportunities have found to be declined in manufacturing and primary sector.  With a growing spectrum of service sectors, new jobs are created in different services. Services generating maximum number of employment opportunities are hospitality, health and education.  Decline in employment opportunities in agriculture shows the shift of traditional agriculture technique to the modern large scale farming using advanced technology. Loss of jobs in manufacturing is partly caused by adaption of labor saving technology. However, import competition for manufacturing hurts domestic demand and causes job loss in manufacturing.  

The essay concerns with unemployment status of Australia. Unemployment is an important indicator of economic development.  Lower the unemployment rate, more the economy is considered as a developed one. Therefore, the study of unemployment in Australia helps to understand the development aspect of the economy. Recently Australia has accounted an unemployment rate of 5.7%. Nearly all types of unemployment are found to exits in the economy. Cyclical unemployment, frictional unemployment and structural unemployment together results in long-term unemployment in Australia. The long-term unemployment is a major problem in Australia. State of employment is related to other development indicators as well. Unemployment has a direct effect on inequality and poverty of the economy. The direct consequences of unemployment on individual and social health and different government schemes to combat unemployment are briefly discussed to make a complete analysis.

Structural, Frictional, Cyclical and Seasonal unemployment are some common types of unemployment experienced by the economy. Lack of demand for a specific type of workers causes structural unemployment. This type of unemployment typically occurs because laborers in the industry lack certain skills. Advancement of production technology and low cost labor overseas contributes to structural unemployment. The structural unemployment is the result of structural mismatch between available jobs and skills of the unemployed laborers. Labor having short of high quality education or training mostly suffer from structural unemployment. In Australia, structural unemployment is growing rapidly increasing the threat for long-term unemployment.

Unemployment trend in Australia

Cyclical unemployment is the consequences of deceleration of economic activity. I times of business cycle recession there are low demand for goods and services, which reduces the demand for laborers in the job market. Decrease in fluctuation in business reduces the uncertainty in the labor demand. As the production activity increases, there is decline in cyclical unemployment. The dominance of cyclical unemployment increased in Australia during 2008-2009.  Following global recession in 2008, cyclical unemployment had increased contributing to an increase in overall unemployment (Gregory and Smith 2016).

Laborers themselves are often found responsible for frictional unemployment. Because of low job satisfaction people considers of switching their jobs. This takes times to find new jobs. In the transition, phase people remain unemployed. This type of unemployment is called frictional unemployment.

Seasonal unemployment is applicable for those engaged in profession that depends on seasons. In the off-season, they become unemployed.     

Figure 1: Unemployment rate in Australia

(Source: tradingeconomics.com)

Seasonally adjusted unemployment rate in Australia accounts as 5.6% in the month of June.  The unemployment rate in the previous month was settled at 5.6% following an upward revision. The unemployment rate turned out to be consistent with that of market estimation. In 2016, the lowest unemployment rate recorded in the month of October. The job opportunities in Australia are rising in recent years. Despite the fact that 14,000 new jobs created in 2016, there was still an increase in the number of unemployed people. Unemployed person in the economy has increased by the margin of 13100 (Tradingeconomics.com 2017).  However, the rate of labor force participation stood at 65.0 in June, a slightly higher from that in the previous period. With increase in participation rate, incidence of employment in the economy is increased from earlier 27,900 to 12,201,400. This is beyond the market estimates of a 20,000 increase. Job market data indicates that increasing participation is resulted from an increase in part time employment. Increase in part time employment partially offset the decrease in full time employment. This shifts the job seekers attention from full time job to a part time one. There is a massive alteration in the number of people searching for a full time job and that for part time job. The number full time workers decreased by 3,800 to 496,400 while the corresponding number for part time job seekers increased by 4,900 to 234,200.

Labor market condition improved between June 2015 and 2016. The improvement largely influenced by the fact there was a continuous structural change and the stress is on the adaption of labor-intensive technology in services sectors. In the service industry, strong growth was realized. Among 19 big industries, rapid employment growth is observed in 12 industries. The largest jump is observed in services such as social assistance, health care, retail trade and construction (employment.gov.au 2016).

State wise analysis of unemployment

There is considerable decline in employment in sectors like wholesale trade, technical and scientific services and manufacturing. Employment opportunities in mining sector have increased overtime. Increase in overall strength of labor market is reflected from the improved condition of youth labor force. Youth unemployment is a serious problem in Australia. Unemployment rate among the youth accounts 13.2%. The percentage is more than double than the overall unemployment rate in the nation. Steady increase of part time employment is responsible for the persistent increase in youth employment. Participation of youth in the full time employment has declined substantially.  

Figure 2: Unemployment in some major states of Australia

(Source: lmip.gov.au 2017)

Lowest unemployment is recorded in Northern Capital Territory. The participation rate is also highest here. In the working population female workers accounts a considerable share. However, most of the participated labor force dependent on part time or temporary jobs. The part time job proportion is higher for female population than male members are.  The significant economic growth in this region supplements the lower unemployment rate. The stable economic condition contributes in improving the quality of the labor force in terms of encouraging the young people to complete their education and then join the labor force. Another territory region showing progress in combating unemployment is Australian Capital Territory. In this region, there are rapid increases in the scope for new job.  The new jobs are mostly temporary in nature.     

Employers are more interested in hiring part time workers because of low retaining cost for workers. Part time jobs also provide opportunities to secondary household earners to participate I the labor force. Another region with low unemployment rate is Northern South Wales. The recent unemployment rate is 5.1% (abs.gov.au 2017). Here, proportion of underemployed labor force is quite higher. Participants in the labor force face high gender discrimination in the job market. Female participants of the labor force are more exposed to unemployment or underemployment. Youth unemployment in this region resulted from the cyclical factors.

Unemployment accounts a slightly high rate in Western Australia. Stated unemployment rate is higher than the national average. Different sectors of this region provide employment opportunities to 1.3 million people. Still, there are considerable numbers of people in the labor force who are forced to do part time job because they are unable to find full time jobs. Increasing number of people in the labor force is the main reason for high unemployment statistics. Greater Victoria is a region having unemployment rate lower than the overall unemployment in the nation. New job openings have been created in a number of sectors such as construction, hospitality, in the field of technology and others. This region takes several steps to keep the unemployment rate to a low level. Job fairs have been organized to encourage the employers to hire more laborers. In response to steps taken by the policymakers, employment incidence has increased among the youth and middle-aged members. Two states where unemployment rate is worsening are Queensland and South Australia. In Queensland number of persons, searching for jobs exceeds the number of persons having a stable job, resulted in increasing unemployment for the region. Government in Queensland has taken steps to reduce the unemployment rate. Job promotion programs are arranged to increase job opportunities in different sectors. The policymakers hold the expectation that stable economic environment and active government steps will improve the employment situation in the state (Manning 2016)

South Australia has maximum numbers of unemployed person. The unemployment rate is high at 7.3%. In fact, South Australia is considered as the only region experiencing a fall in record employment. The skills of labor force are highly underutilized because of the lower job exposure. Persistent unemployment resulted in steady long run unemployment in the region. Different measures of government are taken to tackle the rising unemployment problem. Despite these measures, no improvement is yet experienced in the status of labor market.

There are profound impacts of persistent unemployment on the budgetary, financial and different economic aspect of the nation. Hence, there is widespread application of the study of unemployment. People who lose their jobs or unable to find jobs lack proper resources to carry out their daily life. They are unable to secure a comfortable retired life in future. Mission Australia has found that many of their clients after facing a long-term unemployment were unable to arrange proper clothes for appearing in the interviews, telephone connection and can hardly afford transportation cost to reach interview venue. House owners or purchaser face difficulties in paying council rate because of weak financial condition. Adult job seekers accounted huge council debt or left with the only option of selling homes at a low value. There are arrangements for pensioners for having a deduction in the rate but no such benefit for unemployed persons. Australian Treasury reported that the income support given as unemployment benefit only cover one third of the labor market wage. Hence, the unemployed people still face financial crisis (Atkin et al. 2014). Financial crisis due to unemployment status is more severe for those who has burden of rent or mortgages, education expenses for young members of the family and have other dependent family members. Financial and family responsibilities are reflected from the incidence of late marriage, adults participating in the labor force at an early age of their life without even completing their education.  Therefore, youth allowance should be extended to provide income assurance to young members of the labor force, in case their parents fail to provide such support or assurance.

High proportion of unemployed person imposes additional burden on government budget. Treasury suggested that the burden on federal budget is channelized through the need of a tax cut affecting the present and future revenues of the government. Federal government needs to increase transfer payment for supporting a large number of pension receivers including those who lose their jobs at an early age. With financial instability among the unemployed persons, there are greater burden on government to spend on education, health and other social services. In all, with a continuous unemployment problem the economy accounts a very slow growth rate.

From the very beginning, Australian government is aware of the unemployment condition in the economy. Considering structure of the economy government designs different schemes to reduce unemployment problem. Some of earlier policies of the government are National Employment Strategy for Aborigines, Establishing Council of Education and Development Program (CEDP), Working Nation Initiatives, Indigenous Employment Policy, Introduction to Job network and Aboriginal Economic development policies. However, with changing dynamics in 21^st century the government has introduced some new policy and modified some of the existing schemes (Edwards, Othman and Burn 2015). Recent policy initiatives for achieving a full employment condition are the following.

Earlier job network program has been replaced by Job Service program. The program is considered as the main program to promote primary employment in the Australia. The replacement is made to improvise the connection between the assistance given to labor market, training, vocational education program, opportunities for apprenticeships including training and employment program organized by state and territory government. Job Services program gives more focus on job seekers who are at a disadvantageous position in comparison to Job Network program. Funding in the scheme had started from 1^st July, 2012.

Government has made changes in its Indigenous Employment policy. Wide range of changes has been done in different areas under this scheme. The changes include areas such as Voluntary mobility assistance, training programs for literacy and language, extending support to medium and especially small sized business houses, mentoring and training program prior to providing permanent employment. The range of the program as also extended with setting its target for regional industries and areas having considerable labor demand.

CEDP policy is replaced with Community Development Program (CDP). CDP is considered as a more superior scheme in effectively improving employment condition. The new policy involves greater control of central power. It imposes greater penalties for non-fulfillment and increases the working hours. A rapid increase in penalties and financial hardship is observed among the participant class.

In 2017, Senate has set inquiry commission for CDP. This step is taken to capture the effect of CDP on individual (González-Chica et al. 2017). Any employment program apart from having its impact on individual also affects their families and communities. The CDP program is questioned in terms of increasing financial hardship of participates and thus aggravating poverty situation in some remote areas in Australia. The inquiry is made to reflect the true impact of CDP scheme.

Conclusion

The essay has made an analysis of the state of unemployment in the Australian context. Australia suffers from different types of unemployment such as structural unemployment, frictional unemployment and cyclical unemployment. People in Australia also experience long-standing unemployment. The problem of unemployment is more severe among the youth population. Analysis has been made on overall unemployment status of the nation as well as state wise unemployment is also considered. Some states have made significant progress in reducing unemployment. These states include Northern Capital Territory, Australian Capital Territory and Northern South Wales. On the other hand, unemployment condition is worsening in states like Queensland and South Australia.

In Australia, the tendency of people to join a part time job is increasing. Increasing participation in part time jobs shows an overall improvement in national unemployment. Unemployment has adverse impact on different aspect. The financial instability of the unemployed persons affects their family members and communities. Government participation to tackle unemployment problem results in deficit budget. With greater number of unemployed people, government has to made heavy investment in providing different social services. In order to mitigate unemployment problem Australian government launches different schemes and actively works on those schemes. The steps of the government are expected to improve employment landscape of the nation.

References

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Argy, V.E. and Nevile, J. eds., 2016. Inflation and Unemployment: Theory, Experience and Policy Making. Routledge.

Atkin, T., Caputo, M., Robinson, T. and Wang, H., 2014. Macroeconomic consequences of terms of trade episodes, past and present.

Department of Employment. (2017). Analysis of trends in the Australian labour market. [online] Available at: https://www.employment.gov.au/annual-report-2016/analysis-trends-australian-labour-market [Accessed 20 Aug. 2017].

Edwards, J., Othman, M. and Burn, S., 2015. A review of policy drivers and barriers for the use of anaerobic digestion in Europe, the United States and Australia. Renewable and Sustainable Energy Reviews, 52, pp.815-828.

González-Chica, D.A., Adams, R., Dal Grande, E., Avery, J., Hay, P. and Stocks, N., 2017. Lower educational level and unemployment increase the impact of cardiometabolic conditions on the quality of life: results of a population-based study in South Australia. Quality of Life Research, 26(6), pp.1521-1530.

Gregory, R.G. and Smith, R.E., 2016. 15 Unemployment, Inflation and Job Creation Policies in Australia. Inflation and Unemployment: Theory, Experience and Policy Making, p.325.

Lmip.gov.au. (2017). Welcome to the Labour Market Information Portal.. [online] Available at: https://lmip.gov.au/default.aspx?LMIP/LFR_SAFOUR/LFR_UnemploymentRate [Accessed 20 Aug. 2017].

Manning, H., 2016. South Australia January to June 2016. Australian Journal of Politics & History, 62(4), pp.637-643.

Tradingeconomics.com. (2017). Australia Unemployment Rate | 1978-2017 | Data | Chart | Calendar. [online] Available at: https://tradingeconomics.com/australia/unemployment-rate [Accessed 20 Aug. 2017]