Economic Analysis: Unemployment Rate in the Australian Economy

This report examines unemployment in Australia, exploring its causes within a developed economy and methods of measurement. It highlights the gap in unemployment measurements and delves into the factors contributing to unemployment in the Australian context, including globalization and education levels. The report analyzes the relationship between inflation and unemployment using the Philips curve, providing an overview of the unemployment issues in Queensland and Victoria. It concludes by recommending government policies, such as apprenticeship schemes, aimed at decreasing the unemployment rate. Desklib is a platform where students can find similar assignments and study resources.

Economics

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Table of Contents
Introduction................................................................................................................................2
Why there is unemployment exist in the developed economy?.............................................2
Measurement of Unemployment............................................................................................3
The gap in the Measurement of the Unemployment..........................................................6
Causes of Unemployment in the Australian Economy..........................................................7
Relationship between Inflation and Unemployment..............................................................7
The Philips Curve...............................................................................................................8
Regions of Australia with different in Unemployment issues...............................................9
Queensland.........................................................................................................................9
Victoria...............................................................................................................................9
Policies that can be implemented by the Australian Government to Decrease the rate of
Unemployment.....................................................................................................................11
Conclusion................................................................................................................................13
References................................................................................................................................14

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Introduction
The aim of this report is to discuss unemployment in one of the developed economies
that is Australia. The paper is being presented in order to highlight the reasons for
unemployment in the country and the causes of unemployment. The paper has also elaborated
the relationship between inflation and unemployment and its analysis in the context of
Australia. In addition to this, the paper is conducting the analysis of the two regions of
Australia that is Queensland and Victoria with different unemployment issues and their
analysis. In the end, the paper is provided the recommendation related to the type of policies
the government of Australia can implement for decreasing unemployment. Unemployment in
the economy takes place when an individual is actively searching for the job or work and is
unable to get it. Unemployment term is mostly used as the measurement of the economy’s
health. The frequent unemployment measure is the rate of unemployment, which is calculated
by the number of people employed, divided by the number of the labor force. Unemployment
is considered as one of the key economic indicators as it provides the signal related to the
capability or inability of the workforce to willingly get the profitable work to add to the
economy’s productive output. Increased unemployed people reflect less overall economic
productivity of the country (Boland & Griffin, 2015).
Why there is unemployment exist in the developed economy?
Unemployment is said to be one of the measures of the way the workforce is working
at any time and is broadly utilized and deliberated by media, government, and economists to
evaluate the spare labor capacity level in the economy. All the economic players take a low
level of unemployment desirable (Keynes, 2018). The existence of unemployment in the
developed economy is due to the participation of the labor force because it contributes to the
productivity of the economy. According to the analysis, at the end of the great recession

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period, the women workforce started leaving jobs in the developing nations. There was a
decrease in the participation of the female labor force in the United States has since 2009 and
according to the report of April 2015, the participation of the female labor force has again
decreased to 1988 levels of 56.6% (Ospina & Tzvetkova, 2017).
Measurement of Unemployment
Unemployment takes place in the economy when a person is willing as well as
capable to work but do not get the job. The rate of unemployment is unemployed people
percentage in the labor force. Accordingly, evaluating the rate of unemployment is needed to
identify who is involved in the labor force. The labor force comprises those people who are
either unemployed or employed. Identifying who is unemployed or employed comprises
making applied judgments, like how much work that is paid is required by someone in order
to be included in the list of individuals with a job (Reserve Bank of India, 2019).
Source [(Reserve Bank of India, 2019)]

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In the developed economy like Australia, the ABS that is the Australian Bureau of
Statistics is accountable for gathering the data of the labor market. The ABS design a survey
is monthly known as Labour Force Survey, which is conducted on over 50,000 people in the
context of their involvement in the labor market. This survey is comprised of people from the
age group of 15 years and over and has been divided into three main groups:
Employed – This includes those individuals that are involved in the paid job for one
hour and more weekly.
Unemployed – This includes those people who are not involved in any type of paid
jobs but are willing to work (Reserve Bank of India, 2019).
Not in the labor force – This group is comprised of people who are not involved in the
paid jobs and even are not willing to work. This people that could be included in this slab are
students, family members retired on a voluntary basis, family member taking care of children
or people who are enduringly incapable to work.
When the total people in all the group has been projected, the following indicators of
the labor market could be computed:
Labour force – It is the sum total of unemployed and employed people (Reserve Bank
of India, 2019).
Rate of Unemployment – It is the percentage of labor force people that are
unemployed.
Rate of Participation –This is the working-age people percentage that is included in
the labor force.

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Source [(Reserve Bank of India, 2019)]

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Source [(Reserve Bank of India, 2019)]
The gap in the Measurement of the Unemployment
The unemployment measure is not considered as the absolute calculation. This is
because it does not consider those people who are not searching for a job like college
students. This also includes self-employed individuals, people who are forced to take the

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retirement, people with disability pensions, and people working part-time and searching for
full-time employment are not considered in the calculation of the unemployment rate (Lumen
Learning, 2019).
Causes of Unemployment in the Australian Economy
The key cause of unemployment is the shrinking job market. Shrinking job market is
said to be the consequence of globalization where unemployment is considered as the result
of outsourcing, getting third-party work from other nations and practices of liberal trade.
Part-time job and part-time education such as IT training, technical flaws, vocational courses,
hardware repairs, software development, etc. have decreased the threat of no education or
under education. The part-time education of the youth is said to be the general portent which
must be solved since it is the danger to the reliability of the educated crowd of the nation
(Parliament of Australia, 2019).
Another cause of unemployment in Australia is that the youth employees’ turnover is
higher in comparison to the adult workforce. Youth is majorly involved in changing their job
which results in increasing the unemployment rate or temporary unemployment.
Education is also considered as the key cause that influences the ratio of employment.
Education can be part-time, vocational, or student drop education for earning money which
gets limited at some point and results in unemployment of the student for a long time duration
(Amadeo, 2019).
Relationship between Inflation and Unemployment
It is obvious that both Inflation and Unemployment are the major indicators of the
country’s economic performance. Inflation is determined as the rise in the level of price in a
specific economy. Whereas, unemployment could be determined as the percentage of people
involved in the searching job for livelihood but are incapable to get it. The individuals who

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are searching for the job but could not get the opportunity are considered as unemployed
people.
The Philips Curve
The Philips curve highlight the relationship between unemployment and inflation is
inverse, because when there is a decrease in the unemployment it results in increasing
inflation. This curve is involved in relating the rate of inflation with the unemployment rate.
The curve contends that unemployment and inflation both are inversely connected because
when there is a decrease in unemployment, there is an increase in the rate of inflation (Forder,
2014). However, the relationship is not linear. Clearly, in a short time, the curve traces an L-
shape the time rate of unemployment is placed on the x-axis and the rate of inflation on the y-
axis.

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Source [(Ball & Mazumder, 2015)]
In April 2019, there is an increase in unemployment to around 5.2%, which is being
considered as the highest level after August 2018. Full-time employment fell modestly while
part-time employment surged. Over the year, the opposite trends were seen (Scutt, D, 2019).
The overall employment jumped by over 322,900 in the last 12 months, or 2.58%,
which is being considered as the fastest increase (Scutt, D, 2019).
The increasing unemployment in the country highlights that the participant in the
labor market increased to a higher level according to the records.
On the other side, the increase in the rate of unemployment and the rate of
underutilization is concerning the Reserve Bank of Australia and resulting in the underlying
the inflationary pressures in Australia has decreased.
Regions of Australia with different in Unemployment issues
Queensland
Queensland is the second largest state of Australia. It covers around 23% of the entire
continent and shares borders with South Australia, Northern Territory, and New South Wales.
People of Queensland live an outdoor lifestyle. It is known among people for its pristine
beaches (QL Holiday, 2019).
Victoria
Victoria is the South-eastern state of Australia. The state is the smallest continental
and second most populated state, which makes its the densely populated state. The Victoria is
majorly occupied by the Aboriginal people groups, comprising Boon wurrung,
Djadjawurrung, Yorta Yorta, etc.

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According to the report of Scutt (2019), unemployment has increased all over the
Australian region except for Queensland, where there is a decrease in the unemployment rate
from 6.1% to 5.9% in seasonally adjusted basis. Whereas, in the North South Wales and
Victoria, which are considered to be the highly populous states of Australia, there is an
increase in the rate of unemployment to around 4.5% and 4.9% respectively, up from 4.3%
and 4.6% in the month of March (Scutt, D, 2019).
Unemployment Rates as per Territories and States
Source [(Scutt, D, 2019)]
The fall in the Unemployment rate in Queensland is because of the efficient role
performed by the businesses and government for the development of the nation. The
government of Queensland is majorly involved in bringing more job opportunities for the
people (Letts, 2019). The government is majorly involved in collaborating with different
firms and countries to invite for expanding business in the place to increase the number of
jobs.
Furthermore, the businesses are searching for the skilled workforce for operating the
activities; however, in Queensland, the businesses are providing effective training to the
people such that they can enhance their skills and get a job. In addition to this, the

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government provides different scholarship programs for the students such that they can get
trained and get the best job.
In addition to this, there is an increase in the number of jobs of around 5,600 which
resulted in increasing the full-time employment and declined the rate of unemployment.
On the other hand, Victoria is one of the most populated states of Australia as well as
it is the smallest state of Australia, which results in decreased opportunities for job. Another
major reason for the increasing unemployment rate in Victoria is the existence of Aboriginal
group people who are less educated and trained to work (The Conversation, 2015). Besides
this, the reason for the increasing unemployment rate in the Victoria is lifting participation of
the labor force. This is being done due to the promises done by the politicians to bring more
jobs in the state. The increasing participation of the labor force is a positive sign but it has
resulted in increasing the total number of the unemployed workforce by 12500 by 683,100
(Scutt, D, 2018).
Policies that can be implemented by the Australian Government to Decrease the rate of
Unemployment
Apprenticeship Scheme - The Australian government can work on decreasing the
occupational immobility which is caused by structural unemployment. The scheme such as
apprenticeship can be adopted by the government of Australia, which is aimed to offer new
skills to the employed people, for this, the government has to search of people who are in
search of fresh employment and to enhance the incentives to search work. This strategy was
adopted by the government of the United Kingdom in the year 2013 and the scheme was
adopted by around 500,000 people (Economics, 2019).
Government Subsidies – The government of Australia can adopt this strategy and can
provide subsidies to the businesses that take on the long-term unemployed. For instance, the