Unemployment and its Causes in Sri Lanka and Australia

This article discusses the causes of unemployment in Sri Lanka and Australia, measurement of unemployment rate, underemployment classification, and policies to reduce unemployment.

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the Student:
Name of the University:
Author Note:

1ECONOMICS ASSIGNMENT
Answer to 1
In present times, unemployment remains a major issue in Sri Lanka. In fact, the number
of the unemployed people is increasing on a daily basis. The issue is however prevalent between
the age group of 20 to 30 years. The primary reasons for the unemployment have been the
outmoded system of education and the lack of required skills of the people (Velnampy,
Achchuthan & Kajananthan, 2013). Further, the Sri Lankans prefers private jobs to government
sector jobs. Another reason for unemployment has been the lack of the computer knowledge
among the people.
Answer to 2
The unemployment is measured as percentage of the people in labor force that remains
unemployed. Measurement of the unemployment rate requires identification of the people
forming the labor force that represents the sum total of the employed and unemployed (Feng &
Hu, 2013). However, in Sri Lanka, unemployment is measured as a rate that considers measuring
number of the people looking actively for the job as the percentage of labor force. The rate of
unemployment decreased to 4 percent from 4.20 percent in the fourth quarter of 2017.
Answer to 3
The causes of unemployment in the Australian economy are as follows:
 Unemployment was due to the shutdown of the industry
 Decrease in the spending of infrastructure during the harder economic times

2ECONOMICS ASSIGNMENT
 Increase in unemployment was due to off shoring
 Recession is a factor contributing to the increase in the rate of unemployment
 The aspect of immigration also contributed to the unemployment factor
 The introduction of automation and technology also contributed to unemployment
Answer to 4
Underemployment classification of the labor force includes the highly skilled workers
working for lower paid jobs(Li, Duncan & Miranti, 2015). On the other hand, underemployment
represents a measure of the part time workers who are actually available for more working hours
for certain economic reasons. The job market of Australia is overstated by the surge of the casual
positions and the inability of the workers in securing greater hours. The changing nature of the
labor market portrays greater job availability in the service industries thereby relying lesser on
the full time employees when there persisted a warning signal of the investment boom in mining.
Answer to 5
The rate of unemployment varied from one Australian region to another due to the
difference in the socio-demographic environment and the conditions of the labor market. For
instance, there are certain are areas that on a limited industries for the maintenance of the
population size, income levels and the infrastructure. Job loss in these industries might result in
higher levels of unemployment since those people are unable to find jobs elsewhere.
Answer to 6

3ECONOMICS ASSIGNMENT
The policies that the Australian government can implement for decreasing unemployment
include (Gregory & Smith, 2016):
 Implementation of Fiscal Policy that involved reducing taxes for boosting
aggregate demand
 Implementation of Monetary Policy that involved cutting the rates for boosting
the aggregate demand
Answer to 7
The government can reduce unemployment in Sri Lanka by boosting the economic
growth. The adoption of an expansionary fiscal policy can also reduce unemployment in the
country since it helps in increasing the aggregate demand and rate of the economic growth. This
is achieved through cutting of taxes and increase of the government spending.

4ECONOMICS ASSIGNMENT
References:
Feng, S., & Hu, Y. (2013). Misclassification errors and the underestimation of the US
unemployment rate. American Economic Review, 103(2), 1054-70.
Gregory, R. G., & Smith, R. E. (2016). 15 Unemployment, Inflation and Job Creation Policies in
Australia. Inflation and Unemployment: Theory, Experience and Policy Making, 325.
Li, J., Duncan, A., & Miranti, R. (2015). Underemployment among Mature‐Age Workers in
Australia. Economic Record, 91(295), 438-462.
Velnampy, T., Achchuthan, S., & Kajananthan, R. (2013). Foreign Direct Investment, Economic
Growth, and Unemployment: Evidence from Sri Lanka. Annamali Business Review, 4(1),
2013.