Unemployment Trends in Australia: A Five-Year Analysis

This essay studies the trends in unemployment aspects prevailing in the economy of Australia over the last five years. It explores the different types of unemployment which have been prevailing in the economy over the last few years and their impacts on the economy as a whole. The essay also highlights the policies and strategic framework taken up by the Australian government to solve this issue of concern.

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, over the years and the welfare of
the population of the same considerably depend on how well the political, social and
economic aspects of the concerned country perform and also on the level of stability in these
aspects. Of this, the economic aspects of the country and its growth and dynamics contribute
considerably to the country’s progress over time and to the level of welfare enjoyed by most
of the residents of the country (Mankiw 2014). There are different macroeconomic indicators
which act as yardsticks in measuring the performance of the economy of a country from
different perspectives. The primary ones of these macroeconomic indicators include the
Gross Domestic Product, the rate of inflation as well as the rate of unemployment prevailing
in the country at a particular point of time.
The level of unemployment present in a country and its changes over the years act as
indicators of the overall situations in the labour market of the concerned economy. The rate
of unemployment prevailing in a country highlights the number of people in the labour force
of the same, who in spite of being eligible to work and also willing to work do not find any
job. The dynamics in the rate of unemployment, in its turn, shows the situation of the job
creation in the economy and the demand supply mismatches in the labour market (Agénor
and Montiel 2015). This in turn also indirectly influences the wage growth and economic
abundance of the population of the country, which have implications on the growth of
aggregate demand and overall economic productivity in the country.
Keeping this into account, this essay tries to study the trends in unemployment aspects
prevailing in one of the most developed and significant economies across the globe, the
economy of Australia, over the last five years. The essay also focusses on exploring the
different types of unemployment which have been prevailing in the economy over the last

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few years and their impacts on the economy as a whole, thereby trying to discuss and
highlight the policies and strategic framework taken up by the Australian government to
solve this issue of concern.
Unemployment scenario in Australia, as a whole
The economy of Australia has over the years developed considerably and is till date
one of the primary dominant economy in the global framework. Much of this development
and economic prosperity of the country and a higher than average general living standard of
the major share of the population of the same can be attributed to the robust and impressive
growth of the industrial, service, commercial sectors and employment generation as well as
stable government policies in the country.
However, in spite of employment generation and industrial and commercial prosperity
of the country, unemployment has remained one of the issues of concerned over the years in
Australia. Australia, as a whole, shows the presence of all the three broad types of
unemployment trends in its economy which are as follows:
Frictional Unemployment- This type of unemployment occurs due to the short-term
and natural transitional unemployed phase of the workers who shift from one job to the other.
Cyclical Unemployment- This form of unemployment generally occurs in the phases
of economic contractions or slowdown and are reduced with the recovery of the economy.
Structural Unemployment- This form of unemployment is a comparatively long-term
and more severe one than that of the former two types. Structural unemployment occurs when
there are shifts in the types of jobs created, creating a mismatch between the level of skills
present among the workers and the level of skills required in the economy (Gregory and
Smith 2016).

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Australia, over the years, has experienced frictional unemployment in different
magnitude as job changes and job switching are common phenomena in the country. On the
other hand, cyclical unemployment can also be seen to be occurring during certain periods of
time, like that in 2011, when the economy was going through an acute contractionary phase
in its business cycle and the effects of the same could be seen on the overall productivity,
demand and employment scenario of the country (Gregory and Smith 2016). In the last few
years, however, the economy of Australia has been experiencing a shift in the industrial
domain, from basic manufacturing sectors to an expanding service sector, which in turn has
led to the creation of a mismatch of demand and supply of the level of skill required and
present with the workers. This in turn, hints towards the presence of structural unemployment
trends in the economy in the contemporary period, which if present, may lead to long-term
and more serious repercussions on the economy of the country as a whole (Eichengreen and
Hatton 2012). Keeping this into consideration, the unemployment trends in the last five years,
in the country, are discussed in the following sections.
Australian unemployment in the last five years
The overall stable economy of Australia, however, in the last five years, as discussed
above, faced considerable issues regarding unemployment issues cropping up in the country,
due to both endogenous as well as exogenous factors. The dynamics in the rate of
unemployment as a whole, in the last five years, in the country, can be seen as follows:

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Figure 1: Rate of unemployment in Australia in the last five years
(Source: Tradingeconomics.com 2018)
As is evident from the above figure, the rate of unemployment in the economy of
Australia, has faced considerable dynamics in the last five years and there have been both
positive as well as negative fluctuations of different magnitudes in the concerned period of
time.
The rate of unemployment can be seen to be moderately low, at 5.6% in 2013, which
can be attributed to the increasing number of jobs getting created in the economy during that
period of time. Nearly 9100 jobs got created in the economy of Australia in 2013, of which
4000 were of that of full-employment type and the rest 5100 could be seen to be of that of
part-time type (Zimmermann et al. 2013). However, the job creations in the economy, in
2013, could be seen to be considerably shadowed in 2014, with a huge number of losses of
jobs in the country. More than 26,000 jobs could be seen to be disappearing from the
economy, which in turn led to the increase of the rate of unemployment in Australia, from
5.6% to 6.1% in the first quarters of 2014 to as high as 6.4% by the end quarters of the same
year.

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The acute unemployment crisis, arising in the country, in 2014 could be seen to be
reduced to a considerable extent, mostly due to the increase in the employment generation in
the economy during that period of time. However, these new jobs created in the economy
were mostly of part-time types which though increased the participation of the labour force of
the country, could not increase the economic welfare of the residents and their security to a
considerable extent. The number of full-time jobs created during this period can be seen to be
considerably small as compared to the increase in the part-time employment scopes in the
economy of Australia (Kryger 2015).
The trends more or less remained consistent in the economy in 2017, with the rate of
unemployment reducing to 5.6% by 2017, which although small than that of the rates of
unemployment prevailing in the country in 2014, can be still seen to be considerably high
which in turn can be seen to indicate towards the fact the problem of unemployment still exist
in the economy in the last five years.
Employment generation in the last five years
From the initially low, then significantly increasing and lastly moderately decreasing
rate of unemployment indicates towards the fact that over the last few years, employment
scopes of different types have been generated in the country, with the number and magnitude
of employment generation varying with time. In the last five years, the total number of
employed population in the country can be seen to be increased to 12.44 million, which
indicates towards impressive performance of the employment generation dynamics in the
country. Nearly 300,000 jobs can be seen to be created in the economy in 2017 only, which
however has decreased the burden of unemployment in the economy to some extent. The
growth of part-time employment scopes over the last five years can be seen to be 20% against
15% growth of part-time jobs in Australia.

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However, in spite of the creation of employments in the country, the problem of
unemployment in the country can still be seen to be persisting in the economy in the last five
years. These trends in unemployment and the nature of the same across the country can be
seen to be explored and discussed in the following sections.
Unemployment nature and differences in the Australian economy
The problem of unemployment prevailing in Australia can be seen to have different
magnitudes and different types and the acuteness of the crisis can also be seen to vary across
age, gender, types of industries in the country. The primary differences and noticeable forms
of unemployment prevailing in the country are discussed as follows:
Youth unemployment in Australia
The most bothering form of unemployment which can be seen to be persistently present in
the economy of Australia, though with varying magnitudes at different point of time is the
problem of youth unemployment in the country, which over the last five years, can be seen to
be as follows:
Figure 2: Youth unemployment rate in Australia over the last five years
(Source: Tradingeconomics.com 2018)

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The youth unemployment in the country refers to the level of unemployment which
prevails in the population of 15 to 24 years in the country and this has immense implications
on the overall economy as the country which cannot create jobs for the future workforce may
have to face considerable stagnation and economic slowdown in the years to come. In this
context, the unemployment rate among the youths of the concerned country can be seen to be
increasing visibly from 2012 to 2015, with the rate being as high as 14.5% in the same year
(Zimmermann et al. 2013). The rate can be seen to be decreasing to some extent post 2014,
but however cannot be seen to be decreasing below 12% in the last few years. The main
reasons behind the same can be the lack of creation of jobs for the youths of the country and
also for the increasing number of students pursuing higher education in the contemporary
period.
Disparity in unemployment between male and female population
Australia, though being one of the most developed economies in the global scenario,
shows considerable disparity when it comes to the aspects of unemployment related aspects
in the country. Unemployment in the country, even in the last few years also, can be found to
be significantly high among the female population than among their male counterparts, as can
be seen by the differences in the labour force participation rate of both the genders in the
country (Addison and Ozturk 2012). While the labour force participation of the male
population of the country can be seen to be nearly 80%, that of the female population of
Australia, in the recent periods, can be seen to be as los as 65%. Also 9.5% of the total female
workforce in the country faces the problems of insufficient wage hours, which in turn is faced
by only 5% among the male population.
Apart from disparity regarding the participation rate and work hours, the female
labour force of the country also faces the problem of wage disparity with nearly 23% gap in

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the male and female workers’ wages in the country, even in the recent period of time. Also,
the participation of the female labour force in part time jobs is 44% which is almost thrice
that of the participation of male labour force in these kinds of jobs (15%).
Sectoral shift and related unemployment in Australia
One of the most serious and long-term forms of unemployment which can occur in a
country is that of the structural unemployment, as has been discussed above. This type of
unemployment can however be seen to be cropping up in the country in the last few years,
much of which can be attributed to the fact that the Australian industrial sector has been
experiencing a paradigm shift in the types of business cropping up in the recent period. Much
of the boom in the manufacturing sector of the country as well as in its mining and
construction industries are withering away whereas the service sector industries of the
country have been increasing in magnitude over the last five years, as can be seen from the
following figure, showing the patterns of jobs created in the last in the economy of Australia:
Figure 3: Types of jobs created and lost in Australia in 2017
(Source: Budget.gov.au 2018)

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As is evident from the above figure, due to the skill mismatch arsing in the economy
in the current period, owing to the sectoral shift in the industrial domains, much of the
manufacturing sector jobs are lost, thereby creating acute unemployment crisis among the
workers in these sectors, who due to their moderate level of education and skill cannot be
absorbed in the highly skilled and capital-intensive service sector jobs.
Unemployment crisis among the immigrant population
Australia, over the years, due to its economic prosperity, has attracted huge number of
economic immigrants in the country. However, these immigrants, in the recent years, face
huge crisis of unemployment, with the rate of unemployment being six times higher among
them. Nearly 33% of the total immigrant population of the country remains unemployed, with
the crisis being more acute among the African and Middle Eastern ones (Abdelkerim and
Grace 2012).
Implications of unemployment on Australian economy
In the presence of persisting crisis of considerable levels of unemployment in a
country, the overall economic purchasing power of the residents of the country decreases,
which in turn reduces the aggregate demand and thus the overall economic productivity in the
country in the long run. This can be seen to be happening in case of Australia, as can be seen
from the GDP of the country over the last five years:

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Figure 4: Australian GDP in last five years
(Source: Tradingeconomics.com 2018)
This can also be seen to be accompanied by low real wage rates in the country as due
to the lack of demand for labour, the bargaining powers of the workers can also be seen to be
diminishing (Addison and Ozturk 2012).
Policy Framework of Australia
The problem of unemployment being a chronic issue of concern with widespread
implications, the government of Australia has already initiated to design and implement
strategies and policies to combat the same. Several policies, like that of National
Employment Strategy as well as Indigenous Employment policies can already be seen to be
in action in be country and in the last year only 300,000 jobs have been created (Whiteford
2014). Apart from this, the government of the country has also initiated vocational training
and skill development courses to reduce the structural unemployment burden in the country
and the educational framework of the country has also been modified with professional and
employment related trainings embedded in them (Zimmermann et al. 2013). Efficiency has
also been increased in allocating jobs to the job-seekers in the economy in the recent period.

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Conclusion
As is evident from the above discussion, the economy of Australia, in spite of being
one of the largest and most developed ones in the global framework, has been facing the
crisis of persistent unemployment over the last five years, with the types, nature and
magnitude of unemployment varying across age, gender, type of population and also sectoral
changes. This in turn can be seen to have considerably negative implications on the economy
of the country as a whole, in terms of overall economic productivity, demand and economic
wellbeing of the population of the country. The government of the country has however
initiated to respond to these crises by implementing various employment programmes,
generating employment, providing skill development facilities to the workers and also by
efficiently allocating jobs to the unemployed population in the country in the contemporary
period of time.

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