Unemployment in Australia: Types, Trends, and Impacts on the Economy

This essay analyzes the level, types, and nature of unemployment in Australia, its implications on the overall economic conditions of the country, and the different policies and strategies implemented by the government to combat the problem.

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

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Introduction
The overall growth and development of a country and much of the overall welfare of
its residents considerably depend on the economic situations prevailing in the country and on
the dynamics experienced by the economy and its different components. The performance of
the economy of a country, on the other hand can be measured and observed from the
dynamics and performances of the different economic indicators of the country (Mankiw
2014). These economic indicators mainly include the Gross Domestic Product, inflation rate
and also the rate of unemployment in the country.
Among the different economic indicators of growth and overall well-being of the
economy, one of the primary ones is the rate of unemployment prevailing in the country. This
is because, this indicator sheds light on the overall labour market situations prevailing in an
economy, the level of job creation and employment generation, on which the level of wage of
the workers, their economic welfare depends, which in turn also have huge implications on
the aggregate demand as well as the total productivity and the overall economic growth of the
concerned country (Gandolfo 2013).
Keeping this into consideration, the concerned essay tries to analyse and discuss the
level, types and nature of unemployment which has been prevailing in one of the most
dominating and globally influencing developed economies of Australia. The essay thereby,
discusses the implications which the issue of unemployment has on the overall economic
conditions of the country and also highlights the different policies and strategies which have
been implemented by the government of Australia to combat the concerned problem.
Overall unemployment scenario in Australia
In general, there can be three broad types of unemployment which can prevail in an
economy, varying in their nature, extent and duration. While the frictional unemployment

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refers to the natural and short-term unemployment occurring in the transition period due to
shift of the workers from one job to another, the cyclical unemployment occurs as a part of
business cycle dynamics and economic contractionary phases (Gregory and Smith 2016). The
structural unemployment is a more long-term form of unemployment, which occur due to
structural shifts in the types of employment creation and the demand supply mis-matches of
the types of skills required for the same.
In this context, it can be asserted that the economy of Australia experiences huge
variations in the types of unemployment which is present in the economy over the years and
the traits of all the three types of unemployment, which have been discussed in the above
section, are found to be present in the concerned country. In 2011, the unemployment in
Australia was moderately high, mainly due to the business cycle contractions occurring in the
economy at that point of time, which in turn can be considered to be cyclical type of
unemployment and had its implications on the overall demand and productivity scenarios in
the economy (Gregory and Smith 2016). The country, apart from this, always experiences
frictional unemployment due to the constant transitions of the working population from one
job to another in the economy. However, in the last few years, due to sectoral shift in the
industrial sector of the country from basic manufacturing sector to the service sector
industries, a demand-supply mismatch of the required and present skill levels has been
occurring in the economy, thereby leading to a more long-terms and structural form of
unemployment in the economy.
Unemployment in the last five years in Australia
The unemployment trends in the overall economy of the concerned country, in the last
five years, have however been subjected to considerable period-wise fluctuations and
dynamics, both positive as well as negative, which can be seen from the following figure:

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Figure 1: Unemployment in Australian economy in last five years
(Source: Tradingeconomics.com 2018)
The dynamics in the rate of unemployment of the country can be explained and elaborated
according to different phases which are as follows:
Unemployment in 2013-2014
As is evident from the above figure, the rate of unemployment, used to be 5.6% in
2013, which was comparatively lesser than the previous and can be attributed to the increase
of nearly 9100 jobs in the economy during that period, of which however only 5000 jobs
were of full-time type while the number of additional part-time employments was 4100
(Whiteford 2014). This decline in the rate of unemployment in the country in 2013 was
however accompanied by a huge increase in the rate to up to 6.1% in 2014, when the labour
force participation decreased considerably. 26,700 jobs were lost in this year in the economy.
The increase in the unemployment was up to 6.4% by the end quarter of 2014.
Unemployment in 2015-2016
The huge increase in the rate of unemployment in the country in 2014, was to some
extent reduced in 2015 with a 1.5% increase in the level of employment generation in the

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country during this period of time. Much of this increase in the number of jobs were however
of part-time in nature but the this however increased the overall participation of the labour
force in the country. Full-time jobs were not considerably in this period, which in turn left the
economic welfare of the population of Australia to somewhat the same level (McLachlan
2013).
Unemployment in 2017
The unemployment rate in this year, remained more or less around 5.6%, which is
considerably high, thereby indicating towards the persistence of the problem of
unemployment in the country over the years. The conditions of full-time employment
generation can be seen to have declined even more. The number of workers seeking full-time
employment can also be seen to be increasing substantially.
Employment generation in the country (2013-2017)
As portrayed by the persisting high levels of rate of unemployment in Australia, it is
not that the economy of Australia has not created any job opportunities over the last five
years. Conversely, in terms of the aggregate job creation dynamics Australia actually
performed impressive with 12.44 million employed workers in the country in the present
period of time. However, the part-time employment has increased in the economy overall by
an impressive 20% against the less impressive growth of full-time employment opportunities
by only 15% (Ballantyne, De Voss and Jacobs 2014). This positive trends in the employment
generation in the country can however found to be off-set by the extent of unemployment
prevailing in the economy over the last five years, which can primarily be attributed to the
factors like increasing population (especially immigrant population) in the country and also
the structural shift in the industries of Australia, which in turn has led to the creation of skill
mismatch of most of the basic skilled workers in the country.

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Unemployment in different sectors of the economy
The level of unemployment in Australia, as discussed above, is however not uniform
across all the regions, ages, genders and industries in the country and some sectors of the
country can be seen to be more affected in this aspect than the others, which are discussed as
follows:
Unemployment across different industrial sectors
As discussed in the above sections, the industrial sector of the country has been
experiencing a sectoral change over the last few years. The primary trend which can be
observed in the aspect of sectoral shift is that in the recent periods, the service sector
industries in the country have been developing significantly, but mostly at the cost of the
shrinkage of the agricultural and basic manufacturing industries (Dyster and Meredith 2012).
This in turn has led to the creation of a distortion in the job creation in the different sectors
which can be seen from the following figure:
Figure 2: Sectoral job creation in Australian economy in 2017
(Source: Budget.gov.au 2018)

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Thus, from the above figure, it is evident that while jobs are getting created
considerably in different service sector industries, the manufacturing sector and mining sector
have lost huge number of jobs, which with the presence of a major population of basic skilled
workers in the economy, have aggravated the unemployment crisis in the manufacturing
sector of the country, thereby influencing the aggregate unemployment rates over the last five
years.
Unemployment across different regions
The rate of unemployment in Australia, can also be seen to be considerably varying across
different geographical regions of the country.
Figure 3: Different levels of unemployment across different regions in Australia in 2017
(Source: Lmip.gov.au 2018)
The unemployment rate has been highest in the South and West Australian region in
the current period and both of these regions have been experiencing a considerable fall in the
creation of full-time jobs in the last few years, most of the lost jobs belonging to the

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manufacturing sectors of the country. Huge immigration to these areas, over the years, has
also contributed to the problem. On the other hand, Victoria and Australian Capital Territory
can be seen to be at a better position in this aspect.
Youth unemployment
One of the worst forms of unemployment which can exist in any country is
unemployment among the youth population as this has long-term and mostly negative
implications on the country as a whole. In this context the level of unemployment among the
youths of Australia, in the last five years can be seen to be as follows:
Figure 4: Australian youth unemployment rate in the last five years
(Source: Tradingeconomics.com 2018)
The youth population of the country, consisting of people between 15 to 24 years can
be seen to be experiencing a considerable increase in the level of unemployment from 2013
to 2015, with the youth unemployment rate increasing to as high as 14.5% by 2015, which
although decreased to some extent in the following years, the rate has however been
subjected to considerable fluctuations and even in the last hew years, nearly 12% to 13%
youth unemployment can be seen to remaining (Carvalho 2015). This can be seen to be
supported by the empirical evidences of consistently declining labour force participation rate

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of the youths, many of whom have been intentionally leaving to pursue higher studies and
many of whom, in spite of being eligible and willing to work, are not finding employment
scopes.
Unemployment across genders
One of the most visible form of unemployment disparity in Australia, can be found
across the different genders of the country. The female working population of the country not
only face the issues of gender pay gaps and less employment scopes but also faces
discriminations regarding working hours and types of employment too. 9.5% of the total
female workforce has insufficient working hours as compared to only 5.5% in males and
there exists 23% wage gap in the country (Addiso and Ozturk 2012). The labour force
participation of the female population is only 65% against nearly 80% participation of the
males. The number of females in part time jobs (44%) is also strikingly higher than the
number of males (15%), which is striking for an economy as developed as Australia.
Unemployment in immigrants
The problem of unemployment is much more acute among the immigrants than the
normal residents of the country as they are six times more prone to unemployment than the
residents. The total percentage of unemployed immigrants in Australia is nearly 33%, much
of which is due to the problem of skill mismatch. The African and Middle Eastern
immigrants, are especially seen to be suffering more than the Asian ones in terms of higher
unemployment (Addiso and Ozturk 2012).
Overall impacts of unemployment on the economy of Australia
The impacts of the persisting levels of unemployment in different sectors of the
economy of Australia is widespread and long-term. The primary impact of the unemployment
problems in the country can be seen to be on the overall levels of productivity in the country,

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which can be seen to be considerably declining in the last five years, as can be seen from the
dynamics in the GDP of the country:
Figure 5: GDP of Australia in the last five years
(Source: Tradingeconomics.com 2018)
With the increase in unemployment, the overall purchasing power and economic
abundance of the population of the country have decreased gradually which in turn has led to
a fall in their aggregate demand, thereby hampering the total productivity of the country, as
can be seen from the falling GDP (Wanberg 2012). Apart from that the real wages in the
country has also gone down over the years as due to lack of employment scopes, the workers,
especially the basic skilled ones are forced to work in low salaries.
Government policies
The government of Australia has been emphasizing on the problem of unemployment
in the country seriously and with the objective of attaining full-employment in the country in
the coming years, the same has initiated different policies like the Indigenous Employment
policy, the National Employment Strategy and many others. Apart from that the government
of the country has also rolled out different unemployment benefit programmes in order to

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retain the discourages job seekers in the labour force (Carvalho 2015). Jobs have also been
started to be created under the policy framework of the country, as can be seen from an
addition of 300,000 jobs in different sectors of the country in 2017 only. Addressing the skill
mismatch problems arising in the economy due to structural shifts, the government of
Australia has been rolling out different training and skill development vocational courses and
has also been implementing free market mechanisms for faster and more efficient job
allocations.
Conclusion
The above discussion, highlights the presence of the problem of unemployment in the
developed and otherwise stable economy of Australia, which is persistent in different
magnitudes, across different states, regions, ages, genders, skills and population in the
country. The impact of such unemployment has been considerably negative on the overall
economy of the country, as can be seen from the decline in the overall productivity as well as
wage rates in the last five years. The government of Australia has however initiated different
employment supporting and generating policies to address these issues, which include
training programmes, skill development courses, financial aid to unemployment workers,
creation of full time and part time employments in the economy and others in order to address
this issue of acute concern in the contemporary period in the country.

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