Unemployment in Australia: Causes, Measurement, and Policies

Running head: ECONOMICS
Economics
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1ECONOMICS
Table of Contents
Introduction................................................................................................................................2
Measurement of unemployment.................................................................................................2
Causes of unemployment in Australia.......................................................................................3
Underemployment in Australian economy................................................................................4
Reasons for variation in unemployment across different regions of Australia..........................7
Policies to decrease unemployment...........................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

2ECONOMICS
Introduction
Unemployment now has become a growing concern for the economy of Sri Lanka. As
per the report of central Bank, number of unemployed person is 700,000. Fifty percent of
total unemployed person is female. More than 80 percent of the unemployed persons are in
rural areas. Unemployment is more prevalent among people belonging to the age group of 20
to 30 years. Number of factors explain unemployment in Sri Lanka. One reason for
unemployment in Sri Lanka is the system of outmoded education and lack of appropriate
skills. For youths, it is not possible to be completely trained while leaving college or
universities. They need some time to gather skill. The economic growth of Sri Lanka is
relatively slower than development of labor force aggravating unemployment problem of
unemployment in Sri Lanka (Samaranayake, 2016). The law of labor in the labor market
limits the job generation program. In the last few years, a number of private companies in Sri
Lanka has closed down because of a number of factors including North East war.
Unemployment has also been increased due to deterioration of agricultural sector.
Measurement of unemployment
Unemployment also refers to a condition of joblessness occurs when some members
of labor force remain without job and actively looking for jobs. Unemployment is measured
with the objective of determining unemployment rate. It is the percentage of labor force that
is computed by dividing number of unemployed persons by total labor force of the economy.
Measuring unemployment is needs identification of people who are in the labor force. Labor
force includes both employed and unemployed persons. Finding out who is employed or
unemployed require practical judgment such as how much paid work a person needs to
considered them as to have a job as well as counting how many people actually have jobs or
not. In Australia, Australian Bureau of Statistics collects the labor market data. ABS carries

3ECONOMICS
out survey in each month known as Labor Force Survey. In the Labor Force Survey,
approximately 50,000 people of labor force participate. People of aged 15 and above are
included in the survey (rba.gov.au., 2018) People are broadly categorized as employed,
unemployed and not in the labor force. Using this information ABS then computes
unemployment rate, participation rate and other relevant statistics.
Causes of unemployment in Australia
In Australia, three dominant causes of unemployment are structural unemployment,
frictional unemployment and cyclical unemployment.
Structural unemployment: An economy experiences structural unemployment because of a
mismatch between skill of workers’ and available jobs. For example, when a country
undergoes structural changes, significant changes in industrial structure, change in type of
jobs because of technological change and change in location of jobs. During this time,
workers with redundant skills suffers from structural unemployment. Structural
unemployment can result even in times where there are plenty of available jobs. This is the
reason why Australia experienced a decline in number of workers in the power industry since
1989. This was because of job growth in other sectors of the economy. Some form of
structural unemployment also caused due to changes in dynamics of population. The
population of Australia is aging and Australian schools now experiences fewer students to
enter the school. The problem in turn converts to less availability of jobs to teacher in
primary and high school section (Gustafson, 2015). Several reforms have been initiated in
Australia in order to improve competitiveness of Australia in world market. This includes cut
in manufacturing industry displacing many of the well-paid workers from their existing jobs.
Frictional unemployment: The regular movement of labors causes this type of
unemployment occur in the labor market. This may be workers leaving one job in order to