Australian Labor Market: Unemployment and Underemployment Analysis

The assignment addresses unemployment and underemployment within the Australian labor market, highlighting various causes such as business cycles, skills mismatches, information asymmetry, and seasonal employment. The analysis includes methods for measuring unemployment through the Australian Bureau of Statistics' monthly labor force survey. Causes like slow economic growth, industry shutdowns, and increased immigration are discussed. Underemployment is identified in sectors like services where part-time work prevails. Variances across states due to development levels and population growth are noted. Proposed solutions include tax reductions for industries at risk, restrictions on immigration, and increased government spending to stimulate investor confidence.

Running Head: Australian Labor Market
Unemployment causes and Underemployment Issues
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Running Head: Australian Labor Market 2
Unemployment causes and Underemployment Issues
Introduction
Unemployment is present in the economy because there exist business cycles. Sometimes
businesses are performing well and sometimes are performing poorly. Poor performance leads to
loss of jobs through layoffs and the workers are considered cyclically unemployed. Also, the
acquisition of skills is a long process and workers cannot possess all the necessary skills. Thus,
sometimes a worker with skills is not able to match the available job vacancy because the skills
demanded are different; this skills mismatch makes some workers to remain structurally
unemployed. The information asymmetry in the labor markets causes workers to be frictionally
unemployed. This is where time is taken before a worker gets a job, also a case where a worker
leaves a job to look for another, and a case where the unemployed cannot engage in any job
available. Lastly, some operations are seasonal and only employs during certain periods; on other
periods, the workers are unemployed.
Measurement of Unemployment
A monthly labor Force Survey is conducted by the Australian Bureau of Statistics every
month to collect a sample of approximately 56,000 people who represent the whole economy;
there are determined whether they are unemployed based on the set conditions; aged 15 and
above, not working, actively seeking and available for any job (Abs.gov.au, 2014).
Australian unemployment causes
According to Sebastian (2015), unemployment in Australia is caused by slow economic
growth. Investment level is low and thus loss of many jobs. The Australian textile,
manufacturing and agricultural industries are shutting down accelerating unemployment. The
increased population growth also attributed by increased immigration is adding to the labor
force.
Underemployment in Australia
Underemployed persons are the employed who work for shorter hours than they would like to.
They are in constant search for a full-time job. An example in the service industry where they
rely more on part-time jobs (Heath, 2016).
Unemployment on the States and Territories
Some Australian states are developed whereas others are less developed. Some has high
population growth than others. This explains the differences in the unemployment rate.

Running Head: Australian Labor Market 3
Conclusion
The government can reduce tax rate to lower production costs for textile, manufacturing and
agricultural industries to prevent their closure. It can also put restriction to immigration. It can
increased its spending to boost investors’ confidence.

Running Head: Australian Labor Market 4
References
Abs.gov.au. (2014). 6105.0 - Australian Labour Market Statistics, July 2014. [Online] Available
at:
http://www.abs.gov.au/AUSSTATS/abs@.nsf/0/FBE517ECA9B07F63CA257D0E001AC7D4?
OpenDocument [Accessed 10 Oct. 2017].
Heath, M. (2016). Australia has an underemployment problem. [Online] The Sydney Morning
Herald. Available at: http://www.smh.com.au/business/the-economy/australia-is-becoming-a-
parttime-working-nation-20160831-gr5ygf.html [Accessed 10 Oct. 2017].
Sebastian (2015). Causes of unemployment - common causes in Australia. [Online] Adelaide-
southaustralia.com. Available at: http://www.adelaide-southaustralia.com/money/causes-of-
unemployment/ [Accessed 10 Oct. 2017].