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Australian Unemployment Causes

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Added on  2019-10-31

Australian Unemployment Causes

   Added on 2019-10-31

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Running Head: Australian Unemployment CausesAustralian Unemployment Causes and Government’s PoliciesBy (Name)(Tutor)(University)(Date)
Australian Unemployment Causes_1
Australian Unemployment Causes2Australian Unemployment Causes and Government’s PoliciesUnemployment CausesProduction costsThe higher production costs for the Australian manufacturing sector are discouraging investment in this sector; the lower the level of investment the lesser the labor demanded. The high costs discourages business expansions; contraction of businesses results in a lay-off of someworkers and the unemployment rate hikes. The unemployment caused by these factors is referredto as cyclical unemployment. The high costs at the extreme case cause structural unemployment; this is where businesses in a certain sector decided to evade the high production costs by transferring their operations to overseas where they find favorable costs (Sebastian, 2015).Fast Population GrowthThe fast growth of Australian population is responsible for the hiking unemployment rate. High population leads to the exhaustion of the available limited resources. This explains thepresence of high unemployment rate in the Australian states with the highest size of population. Population growth influences the size of the labor force; a large size means that there is an increased supply of labor (SyamRoy, 2017). According to Farrer (2015), the population growth for the working-age is greater than the rate of job creation. The oversupply of labor in the labor market results in an increased unemployment rate given that this market is not flexible.Minimum wagesThis is a higher wage set above the market equilibrium wage meant to promote the workers standard of living. There has been some discrepancies of whether the minimum wage results in a reduced or increased unemployment. In one case it is argued that the minimum wage is meant to promote creation of employment. How? The minimum wage raises the workers income enabling them to raise their demand in the economy; the higher demand creates a need for increased production and thus a need for increase labor demand. However, on the direct impact, we can consider a higher minimum wage to raise the unemployment rate. How? The high minimum wage on employers raises their production costs since it is an additional cost. Thus, at a higher cost, the profitability falls and thus employers cut some of their workers (Neill, 2015). The price for labor is wages; economically, demand falls when the prices are high. The minimum wages leaves the employers with only two option for all those workers whose wages were below the set minimum wage; they can either stick to the regulation and raise their income
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