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Hi5003 Economics For Business For Assessment Answer


Unemployment is signified by inability some labor market participants to obtain a job to support minimal standard of living. The nature and types of unemployment varies among nations depending on specific structure of the economy. Therefore, in analyzing unemployment consideration needs to be given on structure of the targeted country. Australia has passed with rapid change in its economic structure (Christiano, Eichenbaum and Trabandt 2016). The share of service industry has increased significantly while that of manufacturing sector declined. Manufacturing sector of Australia hiring a significant proportion of labor force, a decline in manufacturing causes unemployment among many people. Construction and mining are two sector that generate huge unemployment in Australia. A declining trend in both the sector following a global slowdown and housing market crisis worsen the labor market condition in Australia. The nature of jobs has also been changed overtime.  

The implication of unemployment is not limited to economic domain. The unemployment problem extends far beyond.  Persistent unemployment imposes budgetary, financial and social implication. The unemployed people are unable to supply necessary support to sustain daily life. The uncertainty resulted from unemployment of current generation trickled down to next generation (Rothstein and Valletta 2017). Unemployed persons are unable to send their children to school and lack of formal education creates further unemployment.  The worsening condition of health and education leads to social deterioration.

The paper critically analyzes dynamics of unemployment in Australia.  The unemployment problem of Australia is discussed along with causes of unemployment, unemployment among different groups of people, unemployment in different states and government policies to achieve full employment in Australia.

Several factors explain causes of unemployment in a nation. Like other nations, in Australia also unemployment is caused by structural and cyclical reasons. Structural unemployment is the outcome of skill shortage. This occurs when workers lack skills required to perform specific type of jobs. One example of structural unemployment in Australia is the unemployment resulted in manufacturing industry from adaptation of automation technology (Keynes 2016). An advanced knowledge and skills are required to sustain jobs in the industry. Those who lacked such skills became unemployment. Business cycle fluctuations another factor responsible for time to tome unemployment in Australia. The business cycle phases are describing by period of expansion and recession. During recession following a slowdown in economic activity labor demand decline causing unemployment to increase significantly. Production and output expands during phase expansion. As demand for labor increases, unemployment falls. Unemployment caused by cyclical fluctuation is termed as cyclical unemployment (Gregory and Smith 2016). The economy experienced recessionary pressure during early 1990s and in 2008 resulted from global financial crisis. Another short-term unemployment is frictional unemployment. People experiences a short-term unemployment while shifting between two jobs. In addition to these forms of unemployment, other labor market problem includes hidden unemployment, disguised unemployment and underemployment.


The last five years of Australian labor market is characterized by several upswings and downswings. Starting with 2013, the measured rate of unemployment in the last quarter was 5.8%, one percentage point lower than that exited one month back. Nearly 712,500 people accounted to be unemployed in the labor market during this year. Owing to improvement in labor market condition the underutilization rate decreased. Underutilization though had declined but is failed to mark any improvement in the rate of labor force participation. The number of employed persons increased. More than 1800 persons added to the group of employed people. There was a considerable increase in full time employment and decline in part time employment. This trend was reverse female participant in the labor market (Carvalho 2015). Full time employment for females declined completely that pf part time employment increased. The labor market condition worsens in 2014 with rate of unemployment hiked to 6.3%.  There were 777700 unemployed persons in labor market as against 712500 in 2013 ( 2018). The increased unemployment rate further increased the underutilization rate in the labor market. Lack of employment opportunities aggravates the problem of underemployment. It is a state of employment where people are hired in a job that requires a low-level skill than the worker possesses or they are hired for a shorter hour of working than they desired. In this year, part time employment among both male and females’ participants increased significantly. The full time employment though has slightly increased for male members of the labor market but for females, the statistics of full time employment went down.

The state of labor market improved in between 2015 to 2016.  The labor market experienced a gain in form of increase in the level of unemployment. Employment growth during this year was the highest in the past 10 years. The gain in employment was due to an increase in part time jobs. The part time employment during 2016 was 3,740,000 (Healy 2016). The full time employment on the other hand experienced only a modest increase. In all, unemployment in 2016 fell by 3.1 percent.  Along with a decline in unemployment, the participation rate among the labor force increased by 0.1 percentage point.  As participation in the labor, market mostly occulted in firm of part time employment the average hours of working reduced significantly.  In spite of the fact that employment grew by 3.8 percent there was a decline in working hours on an average by 0.6 percent. The growth of part time and full time employment in was 3.3% and 1.35% respectively. Persistent increase in underemployment further worsens the labor market condition. Rate of underemployment grew by 2 percent in 2016 (Murtin and Robin 2016). The growth of full time employment fails to offset underemployment rate in the labor market. The excess supply of labor is the main force behind growing underemployment statistics.

Employment had not increase in all the states. Generation of employment opportunity depends of the sectorial composition. The mining boom of Australia had ended causing a large economic transition. With contraction of mining industry, states that depends on mining heavily experienced a decline in industrial output and hence faced bigger problem of unemployment ( 2018). On the other hand, states that give priority to non-mining industries and service sectors experienced a growth in output along with employment opportunities.

The recorded unemployment rate over 2017 was 5.6%. The labor market condition improved with creation of various news jobs focusing mainly on full time employment. Among 54,000 new job created only 14,000 were part while rest are full time ( 2018). The push in labor marker through full time job creation was however unable to reduce jobless rate. This was the time when a number of female participants joined the labor force. The participation rate among females increased to become 60 percent. Increase in average working hours is relatively smaller which rise by only 0.4 percent.  The incidence of underemployment remained considerably high.

High rate of underemployment pushed wages downward. The employment growth thus was unable to bring a wage growth and hence, failed to increase economic growth. The latest statistics of unemployment in March 2018, showed an unemployment rate of 5.5%. The observed unemployment rate matched with the market consensus rate. With creation of new job opportunities, the statistics for unemployed people marked a decline by 2400 ( 2018). The tendency of people to search for full time employment increased while that for part time employment decreased. Still the statistics for full time employment was far less than the expected number of increase. Part time employment on the other hand has continued to increase. The employment rate has remained steady at 61.9% in April 2018.

The intensity of the unemployment problem varies among different groups. Not all members of the labor force are equally vulnerable to the problem of unemployment. Given the current state of the Australian economy, unemployment is in worst form among youths, immigrants and single people. The long-term unemployment has a destructive effect on Australian economy. The rate of unemployment also varies among different states of Australia.

After completing education young people join the labor force. They have formal education base, but lacks experiences. Therefore, they require some time to settle down in the labor market and perform according to the requirement of available jobs. Data reveals that nearly one third of young Australians fails to find jobs suitable for them. Young people in Australia is found to be either unemployed or underemployed. The youth unemployment rate in Australia in 2017, reached to a recorded high level of 18 percent, a rate far higher than an overall rate of 8.6% ( 2018). Presence of youth unemployment has become one distinct feature of Australian labor market over the past few years. The rate of youth unemployment surged from its previous level of 13.5%. The youth unemployment is more prominent among young members who do not have university degree and hence lacks skills and qualification. People with low level of education are unable to match the skill requirement in phase of economic transition. The youth unemployment rate in Australia has now reached to its highest level since the hit of global financial crisis in 2008. There are currently more than 650,000 people in the labor force aged between 15-24 who are searching either for jobs or are underemployed ( 2018).  Underemployment measured as a different hours of young people willing to work and that of actually working hours has been widened rapidly over the last few years. In 2014, there were 39.3% students engaged in casual work.  For part time work, the corresponding statistics is 35.8%. Both the rates are the highest since 2001. For service industries the opportunity of jobs for young people however has increased somewhat. The percentage of people aged 15 to 19 years and that between 20 to 24 years working in service industries were 70% and 40% respectively in 2016 as compared to 30% and 10% in 1984 ( 2018).


Unemployment among migrants are blamed for surging unemployment problem in Australia. Immigrant coming from Middle East have bolstered the unemployment rate. The jobless rate among these immigrants found to be 33 percent in the first five years of their arrivals (Jones et al. 2015). The immigrant unemployment report has revealed that the incidence of unemployment among Middle East immigrants has doubled within a decade. Every one among three immigrants from this is found to be unemployed. The jobless rate among immigrants originated from North Africa and Middle East is higher as compared to immigrants group belonging to Europe or Asian counterpart. Unemployment rate among the immigrants is far above the national average. The European and Asian migrant job a lower jobless rate as compared to workers born in Australia (Clarke and Skuterud 2016). Unemployment rate among Middle East immigrants is as high as 17.5 percent as compared to 1.9 percent for those belonging to Southern and Eastern Europe ( 2018). Lack of skills to Middle East immigrant over English language is the primary hurdles for them to find jobs in Australia.


Disparity is found to exist among different states and territories of Australia. In the end of first quarter of 2017, a growth in employment was observed for almost all states and territories with only exception in New South Wales. Employment has increased largely in Victoria and Queensland. The two states add respective number of 5100 and 4400 persons in the employed group. In contrast, employment has declined in New South Wales by nearly 1000 persons. Since the first quarter of 2016, the largest employment growth has observed in Victoria, South Australia and Northern Territory. Over the same period employment declined in New South Wales and Western Australia. There was an increase in trend unemployment rate by less than 0.1% point in Victoria and New South Wales ( 2018). The rate of unemployment remained steady in South Australia and Queensland. Except these two states, unemployment has decreased in all other States and territories.


Effective policy measures are taken by Australian government to achieve a full employment level in the economy. Depending on current state and characteristics of labor market, different schemes are designed to generate employment in the economy. Some previous policies of Australian government include National employment strategy for aborigines, establishment of Council of Education and Development Program (CEDP), Indigenous Employment Policy, implementation of job networking program and other policies for developing employment (Cheshire 2016). With a change in labor market, characteristics and nature of unemployment new sets of policies are however undertaken by the government.

With passes of time, youth unemployment has become most disturbing factor in the Australian economy. Realizing the problem of youth unemployment government has undertaken certain strategy in its 2015-16 budget. The budget of the concerned year included employment packages consisting of new measures of youth employment. The government has eliminated Commitment Bonus. Changes have also been made in Dole program that are expected to generate a saving of $494.2 million in the next estimated period ( 2018). Under the new measure, the job seekers who are ready to join jobs are required to participate in the work for Dole after a participation period of 12 months in job active rather than earlier six months’ period. This is expected to improve the job opportunity for the job seekers along with improvement in employability.

Some reforms have also been made in the existing employment promotion schemes. The new Community Development Program has replaced earlier policy of CEDP. The new scheme requires a greater involvement of the central government (Morris and Wilson 2014).  Under new policy, emphasis has given on increasing the working hours and non-compliance of the policy is subject to greater penalties.

In the essay, a brief discussion has made on recent unemployment statistics of Australia. Different forms of unemployment in Australia include structural, cyclical and frictional unemployment. The combined effect of different forms of unemployment combined to result in a steady long-term unemployment. In the last five years, there is an increasing trend in unemployment on an average. Some improvement in the unemployment has been though observed but is has resulted mostly from increase in part time employment. The growth of part time employment give rise to the problem of underemployment and underutilized capacity of the labor market. Part time employment are more prominent among female participants that their male counterpart.

The risk of unemployment is higher for some specific groups in the labor market. In the economy, there is a persistent problem of youth unemployment. The youth unemployment has reached to its highest level in recent years. Some job opportunities for young member though have created in the service industries but this has failed to solve the problem of widespread youth unemployment. Unemployment tends to be higher among immigrants especially those coming from Middle East nations. Lack of English knowledge works as a barrier of get jobs in Australia. A differential in generation of employment opportunity has observed among states and territories. In order to address the unemployment corrective policy measures are taken by the government that are expected to solve the unemployment problem soon.

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Carvalho, P., 2015. Youth unemployment in Australia. Policy: A Journal of Public Policy and Ideas, 31(4), p.36.

Cheshire, L., 2016. Governing rural development: Discourses and practices of self-help in Australian rural policy. Routledge.

Christiano, L.J., Eichenbaum, M.S. and Trabandt, M., 2016. Unemployment and business cycles. Econometrica, 84(4), pp.1523-1569.

Clarke, A. and Skuterud, M., 2016. A comparative analysis of immigrant skills and their utilization in Australia, Canada, and the USA. Journal of Population Economics, 29(3), pp.849-882. (2018). Unemployment, total (% of total labor force) (modeled ILO estimate) | Data. [online] Available at: [Accessed 21 May 2018].

Davidson, H. (2018). Third of Australian youth have no job or are underemployed, report finds. [online] the Guardian. Available at: [Accessed 21 May 2018].

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.

Healy, J., 2016. The Australian labour market in 2015. Journal of Industrial Relations, 58(3), pp.308-323.

Jones, K., Owen, D., Johnston, R., Forrest, J. and Manley, D., 2015. Modelling the occupational assimilation of immigrants by ancestry, age group and generational differences in Australia: a random effects approach to a large table of counts. Quality & Quantity, 49(6), pp.2595-2615.

Keynes, J.M., 2016. General theory of employment, interest and money. Atlantic Publishers & Dist. (2018). Welcome to the Labour Market Information Portal.. [online] Available at: [Accessed 21 May 2018].

Morris, A. and Wilson, S., 2014. Struggling on the Newstart unemployment benefit in Australia: The experience of a neoliberal form of employment assistance. The Economic and Labour Relations Review, 25(2), pp.202-221.

Murtin, F. and Robin, J.M., 2016. Labor market reforms and unemployment dynamics. Labour Economics.

NewsComAu. (2018). Too many Aussie youth are choosing education over skills. [online] Available at: [Accessed 21 May 2018].

NewsComAu. (2018). Unemployment rate among new Australians doubles. [online] Available at: [Accessed 21 May 2018].

Rothstein, J. and Valletta, R.G., 2017. Scraping by: Income and program participation after the loss of extended unemployment benefits. Journal of Policy Analysis and Management, 36(4), pp.880-908. (2018). Australia Youth Unemployment Rate | 1978-2018 | Data | Chart | Calendar. [online] Available at: [Accessed 21 May 2018].


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