Exploring Mismatch Unemployment: A Comparative Study of the UK and Australia

This assignment content comprises a collection of academic articles, books, and online resources on topics such as mismatch unemployment, the growth and role of financial institutions, monetary policies, inflation, and unemployment. The sources include studies by Şahin et al. (2014), Sheppard (2013), Hoffmann and Schnabl (2016), Argy and Nevile (2016), Yang et al. (2016), Horton et al. (2016), and various online resources from Australia and the United Kingdom, including factsheets on GDP growth rates, unemployment rates, inflation rates, and more.

GDP- Compare Australia with any other economy
and discuss their GDP last 2 to 5 years and factors
affecting their GDP
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Table of Contents
INTRODUCTION ...............................................................................................................................3
BODY...................................................................................................................................................3
Comparison of GDP of Australia and UK.......................................................................................3
Unemployment in Australia.............................................................................................................5
Inflation Rates..................................................................................................................................8
Discuss Australia’s Monetary or Fiscal policy during last 3 to 5 years. .......................................11
Economic Growth..........................................................................................................................14
CONCLUSION .................................................................................................................................15
REFERENCES...................................................................................................................................16
Illustration Index
Illustration 1: Australia GDP growth rate for 5 years...........................................................................4
Illustration 2: UK GDP growth rate for 5 years...................................................................................4
Illustration 3: Australia Unemployment rate for 5 years......................................................................6
Illustration 4: Unemployment in Australia ..........................................................................................7
Illustration 5: Major states and territories of Australia.........................................................................8
Illustration 6: Australian Inflation Rates............................................................................................10
Illustration 7: UK Inflation Rates.......................................................................................................10
Illustration 8: Australia monetary chart..............................................................................................13
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INTRODUCTION
Australia is a developed country comprising of mainland of Australian island and adjoining
islands. Australia has 13th largest mixed economy in the world with a political structure of federal
parliamentary constitutional monarchy with high GDP and low poverty. The country stands on very
good rank on the basis of quality of education, health, equal rights, life, civil liberties, political
rights and economic freedom. It maintains good human development index on the global platform .
Australian is blessed with wide variety of bio diversity which attracts lots of environment lovers
from all over the world. However environment protection is major challenge faced by the
politicians of Australia. It has six states and two territories with capital city as Canberra and largest
urbanised city is Sydney. Further it is wealthy country blessed with mineral ores with extensive
reserves for iron ores, coal, gold, uranium and substantial energy renewable resources. Major
income generating areas are mining, manufacturing, banking and telecommunications. Australia has
survived the tough times and has experienced continuous growth since then , it has very low public
debt, low unemployment and reasonable inflation rate with a sound financial system across the
nation. It is liberal country inviting foreign direct investments and less barriers on trade of goods
and services. Further this report compares Australia and UK on the basis of GDP , Inflation and
Economic growth. Moreover Australia is studied under economic microscope considering
employment rates, monetary and fiscal policy and various demographic parameters. Economy of
Australia is compared with UK on the basis of GDP growth rate and inflation rate. Economics is a
function of various demographic, geographical and political factors affected by interest and
inflation rates. Further overall growth of economy is discussed with several factors and their overall
negative and positive implications on the society.
BODY
Comparison of GDP of Australia and UK
Economic health of a country is primarily measured in the terms of its GDP growth. GDP is
gross domestic products which represents value of all the goods produced and services rendered
over a period. GDP is influences by several factors, however splitting them into major categories as
Demand Side Factors and Supply side Factors. Demand side factors is composed mainly of
consumer spending patters and supply side of productive capacity (Lo, 2013).
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Australian economy has witnessed 24 years of consistent growth and now an
unexpected fall in GDP growth in the third quarter of 2016. It was the first downfall since quarter
ending March, 2011. It has maintained Average growth rate of 0.85% since 1959 to 2016. Shrink of
0.5% in third quarter was due to contraction of net trades and investments in the Australian
economy. Volatility in prices of global commodities have affected Australian trade strongly thereby
causing the downward movement in GDP(Kubiszewski and et.al., 2013).
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Illustration 2: UK GDP growth rate for 5 years
(Source: UK GDP Growth Rate,2016.)
Illustration 1: Australia GDP growth rate for 5 years
(Source: Australia GDP Growth Rate,2016.)

On the other hand, UK economy witnessed the growth in GDP up to 0.6 % in the second and
third quarter of 2016 due to increase in household expenditures and slight rise in fixed investment.
Further UK economy is dominated by service sector with 79% contribution to GDP. UK economy
maintained the GDP growth at 0.6% in second quarter despite the fall in first quarter of 2016 due to
European Union Referendum. Since 1955 to 2016 UK has maintained average growth rate of GDP
at 0.61%. Besides very low interest rates, economic growth in UK was sluggish during 2009-2013
due to lack of confidence and restricted bank lending. Consumer confidence was shaken which
stimulated them to save and invest instead of spending. In 2014 UK had seen good economic
growth after the downward movement in 2012. Imbalance in UK economy is due to unbalanced due
to service sector performance, reliance on government spending and major ultra loose monetary
policies of UK. 2011 was year of relief for UK as it witnessed the consistent growth since global
recession however it was back in condition of recession by the end of first quarter in 2012.
It can be concluded from above secondary analysis that, despite the fact that GDP of UK is
$2.86 trillion in comparison to Australia at $1.34 trillion, growth rate in GDP is greater in Australia
as compared to UK. Further UK is unbalanced whereas Australia has seen the consistent growth rate
over the years.
Unemployment in Australia
Unemployment rate refers to number of jobless people in the economy divided by total
labour force in an economy. These are the persons who are willing to work and searching for jobs.
Unemployment is affected by the current interest rates and expected future interest rates and various
other factors of the economy such as inflation etc.
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Unemployment is a serious concern for Australian economy. There is significant shift from
full time employment towards the part time employment. There are four types of unemployment
which are explained below:
 Structural Unemployment : This is the type of unemployment caused due to some structured
problem in the economy. This is caused due to lack of demand of workforce in the market due to
technological advancement. Further this may be caused due to changes in taste and preference of
the customers. Australia is facing the threat of structural unemployment.
 Frictional Unemployment : this is the temporary unemployment due to time lag between the
people moving from one job to another. This shift in job is due to change in employee's mindset and
better opportunities. Further migration or change in interest may be the reasons behind such
frictional unemployment.
 Seasonal Unemployment : Seasonal unemployment is caused due to change in demand for
workforce during particular period.
 Cyclical Unemployment : Cyclical unemployment is caused due to lack of demand in the economy
for people who are willing to work. This is in elasticity with the recession which implies that
employment decreases when the demand for products and services decreases, however
unemployment is eroded when economy is at boost(Şahin and et.al., 2014).
Issues of Unemployment : Unemployment in the economy causes stagnant economic growth. If the
economy faces unemployment it decreases the income of the family and thereby decrease in
consumption which will reduce the demand for production of goods and services. This will impact
government wealth by reduced taxes and tariffs, further government will face shortage of funds to
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Illustration 3: Australia Unemployment rate for 5 years
(Source: Australia Unemployment Rate, 2016)

spend on social and infrastructure problems faced by the Australian economy.
Government Policy Of Australia for handling unemployment : Government has tried to solve
the great problem of unemployment by reducing the minimum wage rates, therefore stimulating the
employers to hire more labourers and assisting in reducing the unemployment. Further Australian
government approves more Financial investment and development for creation of job opportunities.
Moreover p[art time jobs and free lancing is introduced to solve the problem of unemployment in
Australia.
Australia is divided into six states and two territories which are depicted in the following figure.
Further unemployment in different states of Australia is demonstrated below:
Western Australia faces worst rates of unemployment which was probably due to liberal
national government policies. The sluggish situation can be improved by government investments
in large scale infrastructure and manufacturing industry.
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Illustration 4: Unemployment in Australia
(Source : Unemployment Rates (15+) by State and Territory, November 2016 (%),2013.)

Queensland is facing the worst problem of youth unemployment which is major issue.
Further New South Wales faced 4.9% of unemployment with the 64% population engaged in full
time employment and another 34% in the part time jobs. Tasmania has seasonally adjusted the
unemployment rate to 6.5%. Southern Australian depicts the high rate of unemployment but the
government is optimistic about it and budget contains huge expenses for stimulating the job
opportunities by granting financial assistance to the business. Grants to business will encourage new
ventures and ultimately leading to growth in employment sector.
Inflation Rates
Inflation rate refers to rate at which general price level of all the goods and services in the
economy are rising. Increase in inflation rate reduces the purchasing power of the consumer and
affects the economy adversely(Galí, J., 2015). Inflation is caused by either supply side factors or
demand side. Inflation rate is determined by taking into consideration defined product basket
consisting of rent, clothing, telecommunication, grocery items, federal fees and taxes in addition to
raw material such as oil, wood etc. Societal beliefs and consumer spending patterns affects the
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Illustration 5: Major states and territories of Australia
(Source :Australia Facts, 2016.)

inflation rates and the strength of economy to deal in case of adverse conditions.
Basis of Comparison Australia United Kingdom
Inflation rates Australia witnessed growth in
inflation rates in quarter ending
September 2016 as 1.3%. The
target inflation rate on an average
by Australian government is 2%-
3%.
UK expressed inflation rate at 1% in
September, 2016. Whereas in UK
average inflation rate from 1989 to
2016 was recorded at 2.59%.
Causes Of Inflation Major pressure and reason for
inflation of September 2016 was
due to pressure from food industry
and non alcoholic beverages as the
flood affected adversely the supply
of fruits and vegetables. Average
inflation rate in Australia from
1951 to 2016 was observed to be
5.10%. Major cause of inflation is
adverse weather conditions in the
major growing areas.
Inflation in September 2016 was
caused by boost in cost of clothing,
hotels and motor fuels. However
inflation rate boost in October 2014
was due to cost of footwear, clothing,
culture furnishings and recreation.
Government policy Government grants and relief to
the flood prone areas were
provided to bring the situation
under control and to achieve the
target inflation rate by Australian
government. Cost of production
can be adjudged to handle the
problems in relation to inflation.
Government can restrict the demand
boosted by controlling the prices
through increasing the interest rates
therefore resulting into contracting
money supply in the economy. Also
high direct taxes or lowering the
government expenditures will reduce
the income and reduce circular flow of
money in economy.
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Illustration 7: UK Inflation Rates
(Source: United Kingdom Inflation Rates, 2016.)
Discuss Australia’s Monetary or Fiscal policy during last 3 to 5 years.
Fiscal policy is one of the important terminology which reflected the use of government
revenue and expenditure to influence the economy (Argy and Nevile, 2016). The Australian
economy has developed several fiscal policies to facilitate their citizens by emphasises on the
current policies to reduces its negative effect on an individual. The development of fiscal policies
will stabilize the negative effect created on the business due to the changes takers places in the
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Illustration 6: Australian Inflation Rates
(Source: Australia Inflation Rates, 2016.)

external environment. The taxation and other government expenditures changed over the years for
the benefit of the whole economy. The Australian government has propounded several fiscal
policies in a half decade starting from 2012-2016 are given as below:
Enterprise tax plan- The authority has sanctioned this particular plan in order to support the
localities to get benefit from the policy. This policy has increases nation and household incomes by
giving subsidies in form of incentives to various kinds of businesses (Hoffmann and Schnabl,
2016). The incentives are provided to different business in order to invest and generate higher level
of employment in the country. The current aim of this policy to increases the payment of tax among
the businesses and all other local citizens. The strategic approach followed by the government will
raise the compliance among the corporate and the local citizens. The awareness for paying tax in the
corporate world is done through reducing the tax rates for the businesses. The lowering of tax rates
for the companies will in turn support the whole society by increasing jobs along with higher wages
provided to all the candidates. The current policy has two dimensions who focuses on increasing
government revenue and social perspective for increasing job opportunities in the Australia.
Superannuation- Other policy of the fiscal is to support the rights and duties enjoyed by the
employees in the organization. The current policies will help in improving the current system by
focusing on the three core principles such as sustainability, flexibility and integrity. This particular
system are rectified in order to protect the interest of various individuals whose money will be
protected under the custody of the government (Yang, Wang and Wang, 2016). This amount will be
given to these people on their retirement or in exchange of their pension according to their
employment terms and conditions. This pension reform will help all individuals to get fair amount
of pension or superannuation fund which is saved throughout the life of their employment contract.
The changes incorporated by the government states that options has introduced in claiming the
facilities offered to all the employees. The concessions are provided to all the employees who take
fewer contributions from the fund to claim tax refund. Other alternative suggest that it is given to
that employees who attained the age of 75 or less. The options are under the hand of employee to
contribute their amount of superannuation towards their spouse' total fund in order to get higher tax
deductions and reliefs from the side of government.
Monetary policies are act as a controller who impose obligations on the economy in order to
compensate the higher effects in the existing country (Argy and Nevile, 2016). The central and apex
authority of the economy will impose controls in order to control the supply of money movement in
the whole economy. The higher money supply will create recession or inflation in the market. The
current movement can be controlled by charging higher rate of interest and targeting specific
inflation rate in reducing the movement of cash supply in the whole economy. There are various
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monetary policies developed by an Australian government during the period of 2012-2016 to
support the overall economy from the external market effects which is given as below:
Interest rate- the apex authority of the Australia who handles the matters related to the money
supply and the cash control approach followed by the country (Horton, Samiei, Epstein and Ross,
2016). The Reserve bank of Australia has cut down its interest rate from 1.75% to 1.50% to
strengthen the current economy to enlist in globally. This concept will relate to the low inflation
where interest rates are slowed down to increase the overall pace of the economy to beat against the
various countries. The current decisions taken by the RBA is due to the potential risk from the
housing markets but the results will not favour the economy. The Australian economy still suffers
from the housing market risks apart from lowering their current rate of interest.
Illustration 8: Australia monetary chart
(Source: Hoffmann and Schnabl, 2016)
The above chart of the monetary policy is clearly showing that the economy is slowing its
pace by depicting extra line nancy while handling strong matters. The monetary policies are
diminishing over the years which is not a clear sign of good and stable economy of the Australia.
Inflation rate- The current revealed that the inflation rate of this economy has decreases over the
period from 1.3 to 1.0% due to the efficiency of the labour incurred in the overall economy. The
labours are important aspects of the whole country who held responsible in setting the higher limits
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of standards which will help an organization in order to operate with high precision. The changes
take places in the behaviour of the labour will further create trouble for an economy. The current
lower level of inflation rate are not beneficial for the businesses operated in the Australia as they
matter a lot in the whole economy (Hoffmann and Schnabl, 2016). The policies are set in the
Australia to facilitate the local citizens of this country by providing extra preferences in terms of job
opportunities and all other matters solved by the economy. The monetary policies are weak as
compare with the different fiscal policies framed by the economy. The fiscal policies are strong as
compared to the monetary policies prepared by the legal authority. The overall economy can be
managed by imposing tough regulations in form of interest and inflation rates. The rational behind
devising these policies to raise the scope of overall business entity in relation to the external and
global world.
Economic Growth
Society is a major platform to measure the overall economic growth of the country. It clearly
depicts the population diversity their taste and preferences, their spending patters define the growth
and development of economy.
Australia has performed well during the past years and is a financially strong and stable
country. It has witnessed continuous growth and low poverty as well as maintained unemployment
rates over the years. Australia faced the negative growth in GDP in third quarter of 2016 since 2011.
The Australian economy is facing a gradual shift from mining companies to other industries.
However lowering of interest rates in the economy has boomed the property investment market.
However fall in quarter third is expected to be overcome in quarter 4 by adopting the appropriate
policies and measures. Australian economy is continuously growth with Unemployment rate at
5.7%, Interest rate at 1.5% further balance of trade maintained at AUD1243 million. Further all the
economic reforms and consistent growth has enhanced the overall standard of living of the citizens
and shift in their spending patters. However due to decrease in employment especially in youth has
affected the society adversely. Moreover stringent financial policies has restricted the consumers to
spend more and therefore contracted the growth of overall economy.
Economy of UK is one of the largest economies of the world but due to unbalanced growth
and loosely formulated policies it has faced several challenges. UK's economy recently faced a
major challenge due to exiting from the European Union as both the construction and
manufacturing industries faced a sluggish outlook. For 2015, GDP was observed at 2.2% which was
2.9% in year 2014. Consumer spending and services are expected to grow as the interest rates and
inflation are maintained low(Sheppard, 2013). Further growth in economy attracts immigrants from
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the neighbouring country which impact the society and increased the labour force. Further child
poverty in UK has adversely affected the society . Rapid increase in population due to free and
liberal trade policies has attracted people from world wide which has affected the standard of living
adversely. Further government was unable to control the supply of cheap liquor and alcohol which
has affected UK economy drastically. There is massive increase in drug addiction in Australia.
Therefore it can be concluded that economy of the country strongly affects the economy
both in a positive and negative manner. Further Australian economy is balanced and consistently
growing economy whereas UK economy is unbalanced. Although UK has survived major recession
and recently faced bre-xit that was exit from European Union which affected its society at large.
Australian economy is financially stable and therefore equal rights are supported. Citizens of
Australians maintains work life balance and better health index as compared to UK whose major
population is drug addict.
CONCLUSION
From the above report it can be concluded that Australian economy is one of the most
strongest and developed economy. Major reason behind continuous growth and success is its natural
wealth consisting of mineral ores and energy reserves. Education is the sector Australia has excelled
therefore hub for students across the globe which brings into lots of income for company and highly
educated human resource. Further financially stable banking system is backbone of Australia's
growth and reason behind industrial growth and shift from mining industries to non mining sectors.
Further huge natural resources of Australia has made them exporter of raw materials to the fast
growing economies of World such as /china and being benefited with its growth and development.
Further excellent fiscal policy with appropriate rules and regulations regarding overall success of
country by controlling interest rates and inflation index made the country's economy grow.
Monetary policy of Australia however needs to be looked upon and considered in light of
liberalization and frameworks.
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REFERENCES
Books and Journals
Lo, A.Y., 2013. Carbon trading in a socialist market economy: Can China make a
difference?. Ecological Economics. 87. pp.72-74.
Kubiszewski and et.al., 2013. Beyond GDP: Measuring and achieving global genuine
progress. Ecological Economics. 93. pp.57-68.
Galí, J., 2015. Monetary policy, inflation, and the business cycle: an introduction to the new
Keynesian framework and its applications. Princeton University Press.
Şahin, A., and et.al., 2014. Mismatch unemployment. The American Economic Review. 104(11).
pp.3529-3564.
Sheppard, D.K., 2013. The Growth and Role of UK Financial Institutions, 1880-1966. Routledge.
Hoffmann, A. and Schnabl, G., 2016. Monetary policies of industrial countries, emerging market
credit cycles and feedback effects. Journal of Policy Modeling. 38(5). pp.855-873.
Argy, V. E. and Nevile, J. eds., 2016. Inflation and Unemployment: Theory, Experience and Policy
Making. Routledge.
Yang, G., Wang, H. and Wang, Z., 2016. Different types of monetary policy instruments and
regional housing prices: A comparative study on the influences of regulation in China. Journal
of Shanghai Jiaotong University (Science). 21. pp.343-349.
Horton, M. M. A., and et.al., 2016.Exchange Rate Developments and Policies in the Caucasus and
Central Asia. International Monetary Fund.
Online
Australia Facts, 2016.[Online].Available
through<http://www.kids-world-travel-guide.com/australia-facts.html>. Accessed on 7th
January, 2017.
Australia GDP Growth Rate,2016.[Online].Available
through<http://www.tradingeconomics.com/australia/gdp-growth>. Accessed on 7th January,
2017.
United Kingdom GDP Growth Rate,2016.[Online].Available
through<http://www.tradingeconomics.com/united-kingdom/gdp-growth>. Accessed on 7th
January, 2017.
Australia Unemployment Rate, 2016.[Online].Available
through<http://www.tradingeconomics.com/australia/unemployment-rate>. Accessed on 7th
January, 2017.
Unemployment Rates (15+) by State and Territory, November 2016 (%),2013.[Online].Available
through<http://lmip.gov.au/default.aspx?LMIP/LFR_SAFOUR/LFR_UnemploymentRate>.
Accessed on 7th January, 2017.
Australia Inflation Rates, 2016.[Online].Available
through<http://www.tradingeconomics.com/australia/inflation-cpi>. Accessed on 7th January,
2017.
United Kingdom Inflation Rates, 2016.[Online].Available
through<http://www.tradingeconomics.com/united-kingdom/inflation-cpi>. Accessed on 7th
January, 2017.
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