3. Economic issues - Unemployment Flashcards
Unemployment is measured as…
the percentage of the Australian labour force classified as unemployed.
Labour force can be calculated as…
Total Australian Labour Force = Employed (full time + part time) + Unemployed
Employed persons are…
anyone over the age of 15 who worked for at least one hour per week (or was on paid leave) PLUS Employers who had a job, business or farm PLUS Unemployed who were actively seeking work.
Influences on size of the labour force
Size of population / level of net migration / age distribution / participation rate of working age population (heavily impacted by young workers looking for their first job, mothers returning to the workforce and mature age job seekers)
Labour force participation rate formula
(Labour force / Working-age population) x 100
Unemployment trend
Unemployment peaked at 11% during 1992 but has steadily declined and then stabilised due to sustained economic growth (until COVID-19).
Types of unemployment
Cyclical / Hardcore / Structural / Long term / seasonal / Frictional / Underemployment
Cyclical unemployment
Unemployed caused by downturn in the economic cycle
Hardcore unemployment
Unemployed persons who have undesirable characteristics such as ex-criminals or drug users
Structural Unemployment
A mismatch between the skills of the unemployed and the skills required in jobs available.
Long term unemployment
Unemployed for more than 12 months
Seasonal unemployment
Unemployed due to the seasonal nature of some jobs
Frictional unemployment
A period of unemployment when between jobs
Underemployment
Those part-time/casual employees who are willing and are able to work more hours.
Causes of unemployment
decrease or deficiency in aggregate demand - Cyclical unemployment
Structural cahnge - structural unemployment
Wage expectations
NAIRU (Non accelerating inflation rate of unemployment) refers to…
the rate of unemployment that is consistent with a constant rate of inflation or no change in inflation. (the lowest unemployment rate which can be sustained without a rise in Inflation)
Main groups affected by unemployment
Young people (lack of skills, experience, training and education)
Workers with lower levels of education
Workers in unskilled occupations
Groups like recent migrants, ATSI, sole parents, industries in structural change
Effects of unemployment
- Opportunity Cost of lost output and income
- Loss of human capital
- Loss of self esteem and dignity
- Increased tax burden
- Less equal distribution of income
- Social costs
Policies to reduce unemployment
- Expansionary monetary policy (cutting interest rates)
- Expansionary fiscal policy (increase in spending/reduction in taxes)
- Industrial relations (employer - employee relationship)
- Microeconomic reform
