Australia's Labor Market Challenges

This assignment delves into the complexities of Australia's labor market. It examines current unemployment rates, explores the impact of various economic factors (e.g., mining, global financial crisis), analyzes the role of education and skills in job attainment, and considers policy responses aimed at addressing unemployment challenges.

Running head: UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
Unemployment in Australia last 5 years
Name of the student
Name of the University
Author note

2UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
Introduction:
Unemployment in an economy is a persistent factor in all economy and over the time,
it fluctuates depending upon the various factors. It stunts the economic development and
growth of the country and influence the sustainability of the economy (Balewski 2015).
Unemployment reduces the disposable income of the households leading them to fail to meet
the autonomous expenditure (Guardiola and Guillen-Royo 2015). When it comes to
Australian economy, the effect of unemployment has been persistent in the economy (Ball,
Jalles and Loungani 2015). This essay is meant to analyze the unemployment in Australia
during the last 5 years and it will discuss the various factors that have caused the economy to
have it. Besides this, the essay will put some recommendations in order to overcome the
burden of unemployment.
Unemployment rate in Australia:
With the rapid expansion of global economy and reduction in death rate around the
world, unemployment has risen over the time in Australia (Saunders, Wong and Bradbury
2016). When it comes to Australia, then the economy is one of the most stable and
sustainable western economy that has diverged economic structure. Though most of the job
creation in Australia comes from the mining industry, but recent government spending has
paved the path for new sectors, which is expected to provide more jobs (Fleming and
Measham 2015). According to the figure 1 the unemployment rate of Australia is 5.4%,
which is the lowest since 2013. Reduction in the level of unemployment is the direct
implication of the fiscal and monetary reform of the country. During 2015, the
unemployment rate was the highest, which was originated mainly because of the reduction in
the demand in the world market. Besides this, cyclical unemployment was another leading
factor that has caused the rise in unemployment (Cuéllar-Martín, Martín-Román and Moral
2017). With effective steps from the government, unemployment has felled and if the

3UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
scenario remains constant, then the government is expecting to generate more than 2 million
jobs within the next decade (Hajkowicz et al. 2016).
Figure 1: Unemployment rate in Australia
Source: (Tradingeconomics.com, 2018)
Figure 2 depicts that the rate of unemployment for the age group of 15 to 64 years is
comparatively moderate. Downward sloping curve of the figure 2, suggest that the more
people are coming into the job market and higher level of participation rate of the Australian
people has helped the government to curtail the unemployment rate for the country
(Hawthorne 2016).
Figure 2: Unemployment rate in Australia for 15-64 age groups
Source: (Fred.stlouisfed.org, 2018)

4UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
Family utilization level of Australia is predictable at 64.9% that highlights the country
has contained the unemployment level to a steady state (Mavromaras, Sloane and Wei 2015).
This level of unemployment acts as the stimulus to the economy according to the Keynesian
theory of capitalism, however, it is higher than the 4% (Keynes 2016). Thus the country need
to put more amount of focus to bring it down to the optimum rate of unemployment leading
the country towards the better sustainability.
Types and Issues of Unemployment in Australia:
Level of unemployment in the Australian market is present since the time of great
depression and it varies depending upon the aggregate demand of the mining industry
(Cunningham 2015). Though Australia has diverse economy, but most of its employment
generation comes from the mining industry. Thus whenever, there is any shock in the mining
industry, the employment level tends to alter. This phenomenon can be seen by analyzing the
economic performance of the Australian market during the 2006 to 2010. With reduction in
demand in the mining industry, employment rose during that session. However, it is
important to mention that Australian economy performed well compared to the other nations
those have been facing recession during the 2008 with high demand of the mining products in
the world market (Bamiatzi et al. 2016). Economists argue that employment is one of the
drawbacks of the globalization and reduction in trade barriers has caused the Australian
economy to face higher amount of unemployment. In order to analyze the unemployment
status of Australia and to discuss the various form of unemployment present in Australian
economy during the last five year considering the participation rate and female employment
status is important.
With the help of participation rate, the number of active member in the total
workforce of an economy can be analyzed. It aids to discuss the scope of job creation in the
economy and analyzes how well it has performed during the stipulated time (Nguyen 2016).

5UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
Higher level of participation rate depicts greater number of population of an economy is
actively working or looking for work. Figure 3 depicts the labour force participation rate in
Australia and according to the diagram it can be seen that presently the participation rate of
Australian economy at moderate level. Though there has been a drop in participation rate
back in 2014 owing to the political turmoil and reduction in demand of the mining industry,
the economy was potent enough to bring back the participation rate to its mean once again by
the end of 2016.
Figure 3: Labour force participation rate in Australia
Source: (Tradingeconomics.com, 2018)
Women employment is another important factor that depicts the performance of an
economy (Fuchs 2017). With higher level of women employment, it is expected that
economy is growing towards sustainability. Figure 4 depicts the women employment of
Australia and it describes that during the 2014, women employment was highest during the
last five years. Comparing it with the Australian economic performance one can find that the
economy has grown at a higher rate during the same period. However, during the third
quarter of 2017, there has been a reduction in women employment and its impact can be seen
in the total employment scenario from the figure 1.

6UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
Figure 4: Female unemployment in Australia
Source: (Fred.stlouisfed.org, 2018)
One of the main reasons of the unemployment in Australia is structural
unemployment. Besides this, there is frictional unemployment and cyclical unemployment
that leads to rise in overall unemployment status of the country (Qi et al. 2015). Researchers
have showcased that Frictional unemployment is the main reason of the reduction in
employment status for the women, where as lack of long term employment along with the
cyclical and structural unemployment is the main reason that has caused reduction in
employment in the whole country (Jackson 2014).
Government policies to address unemployment:
Australian economy has a strong macroeconomic framework and the Australian
government is aimed to reduce the unemployment level of all type. High labour participation
rate and growth in productivity has aided the Australian economy to constrain the
unemployment rate in the economy to a sustainable rate and it is expected that with rise in
aggregate demand of the Australian mining industry, rate of unemployment will slid further
(Carson and Kerr 2017). Political factors and the fund allocation are one of the main
parameters that alter the rate of unemployment. Besides this, government expenditure and
rise in level of infrastructural development is the driver that leads to high rate of employment.

7UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
Australian government is aimed to produce 2 million jobs within next decade and in order to
achieve this; government has restructured its fiscal as well as the monetary policies.
Australian government is takes the fiscal risks into account and consider the national
saving adequacy and the effect of policy on the future generation in order to curtail the level
of unemployment (Argy and Nevile 2016). Besides this, government has taken various
initiatives since 2010 to reduce the unemployment level. Some of the reform by the
Australian government to reduce the unemployment in the economy is mentioned below
(Gregory and Smith 2016):
1. Council of Australian Governments has introduced National Reform Agenda (NRA)
in order to bring in growth in productivity and enhance the labour participation rate.
2. Government has introduced essential training institutes throughout the country, which
are aided to provide necessary skills to the workforce to sustain in the job market.
3. Government in their recent fiscal policies has provided emphasis to rise the labour
force participation and as a result there is a rise in participation rate since 2016,
depicted in figure 3.
4. As a stimulus to the employment, government has brought in the mature ages worker
tax offset.
5. New resource allocation structure of the Australian government is aimed to provide
equal distribution to all the sectors, which will certainly reduce the magnitude of
disparity in the Australian service sectors, curtaining the level of unemployment.
Though there were recession back in 2008 and the Australian mining industry has
been going through stagnation since 2006, fiscal policies taken by the government has been
fruitful for the last five years from now. Recently the Australian mining industry is facing
boom with the rise in aggregate demand, which is acknowledged as the outcome of the fiscal
policies of the Australian government. One of the major problems of the Australian economy

8UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
was that they lack to produce long-term employment. However, recent reformation in the
working sector and policies taken by the government has aided the Australian economy to
provide long-term employment (Argy and Nevile 2016). When it comes to fiscal policies of
the Australian economy, then the Reserve Bank of Australia (RBA) has taken strict steps to
maintain the smooth flow of the economy. Monetary policies of the RBA have guided the
Australian economy to reduce the scope of unemployment. RBA has taken strict actions
against the Non Performing Assets of the banks, that has bought in the required liquidity in
the market leading to rise in the job creation and decrease in the level of unemployment
(Kriesler and Lavoie 2015). Thus, it can be said that government of Australia has a strong
hold on its economy and with their fruitful monetary and fiscal policies; the government has
able to curtail the level of unemployment for the country.
Unemployment in Different States of Australia:
Unemployment rate follows the economic cycle and depending upon the financial
condition of the economy it changes over time. For instance, if the economy faces boom, then
the unemployment rate tends to fall, and if the economy is falling or facing recession, then
the magnitude of employment will rise (Christiano Eichenbaum and Trabandt 2016). Figure 5
shows that the unemployment structure of economy follows the economic cycle and over the
period of 5 years, ranging from 2012 to 2016, the level of unemployment remained constant
for the different regions of Australia. However, Western Australia faced the maximum
reduction in unemployment during the 2013, owing to the rise in aggregate demand (Tonts,
Plummer and Argent 2014). In the wake of global financial crisis back in 2008, Australian
economy performed well due to rise in demand of Australian mining industry, which can be
termed as the probable cause of reduction in unemployment during the same period.
However, from the figure 5 it can be seen that Australian economy has faced a growth in
unemployment since 2013, and the reason behind this is reduction in demand of Australian

9UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
mining goods and rise in demand of Chinese products in the global market. Figure 5 shows a
detailed comparison of unemployment rate of the various state in Australia and it describes
that the rate of unemployment of New South Wales, Victoria, Queensland and Western
Australia, which are acknowledged as the economic hub of the country. There is a common
belief that employment rate is lower in the Western Australia if it is compared with the recent
seasonal data (Kotey and Rolfe 2014). Mining industry of the Australia is located in the part
of Western Australia that makes it prone to employment shock due to change in demand and
financial condition of the country. Rise in unemployment during 2013 supports the
proposition and the Australian economy has faced a reduction in employment due to rise in
Chinese products in the world market (Argy and Nevile 2016).
Figure 5: State wise unemployment rate
Source: (Dividend.net.au, 2018)
South Australia was the deprived section of the country, thus the government has
taken strong initiatives to bring it into the line with the Western Australia. Recent
infrastructural development along with the monetary support from the central government has
aided the southern Australia to become more productive and reduce its unemployment.
Moreover, there have been various private-public partnerships in the southern region of the
country, which has aided these states to reduce its unemployment level. Recent fiscal and
5
6
4
2
3
7 NSW
VIC
QLD
WA

10UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
monetary policies from the government along with the structural changes in the labour
market, has helped the Australia to reduce its overall unemployment rate that can be seen by
the figure 5. Since 2016, there is a reduction in unemployment, which is direct outcome of
the government policies taken back in 2010 to 2012. Thus, it can be said that, though there is
disparity in the employment status of the various regions in the country, overall percentage of
the unemployment is under a manageable situation.
Recommendation:
Unemployment in Australia is reducing at a steady state and the government is aimed
to reduce it to further with a job creation of 2 million within next decade. In order to achieve
this target the Australian government should take policies that can successfully reduce the
unemployment level. Some of the recommendations for the Australian government to achieve
their target are mentioned below:
1. One of the main issues of Australian unemployment is lack of skill in the workforce.
Thus, government should focus on long run strategy to develop the skill of the
workers.
2. High tax rate in Australia is another reason that causes voluntary unemployment.
Thus, government should reduce the tax level that can be achieved through a
reduction of tax in national insurance scheme.
3. Government should take necessary steps to provide necessary stimulus to the
aggregate demand that will enhance the scope of employment in a cyclical way and
crowd out the curse of the unemployment from the economy.
4. Increasing the work incentive is another good way to enhance the scope of
employment and reduce the magnitude of unemployment.
Conclusion:

11UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
Unemployment is one of the prominent phenomenons that have been persistent in the
western economic and Australia is no exception. The country has faced a high unemployment
since the post cold war scenario back in 1970, however recent reform and structural changes
of the economy has reduced the burden. The above analysis has displayed that the country
has a strong macroeconomic structure along with effective government policies that has aided
the country to reduce the magnitude of unemployment to a great extend. With high level of
employment for the Australian citizen who lies within the 16 to 64 age groups depicts that the
Australian economy has good amount of job creation, which will help the economy to curb
the unemployment rate in coming years further. Moreover, rise in demand of the Australian
mining industry will assist the country to crowd out the present unemployment rate from the
country that will lead the country towards a sustainable rate of growth. To conclude it can be
said that the unemployment rate of Australia is comparatively low compared to other
developed nation and along with the high rate of growth; Australian economy will certainly
be successful to achieve its target.

12UNEMPLOYMENT IN AUSTRALIA LAST 5 YEARS
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