Patterns of Production and Structural Unemployment

Discuss about the Foundation of Economics for Reasons for Unemployment in Australia.

Noteworthy, the Australian economy is struggling with high levels of unemployment. There are various reasons for rising unemployment rates in the country such as changing patterns of production (Economy watch 2010).The change in patterns of production led to massive loss of employment opportunities. The change in production techniques might be due to technological advancements thus causing structural forms of unemployment. With the modern ways of doing things, there are changes taking place at the workplace which might displace employees who are not adequately skilled or equipped to deal with the changing patterns of production. In addition, the decline in the demand for labour due to cyclical business cycles has also contributed the growing unemployment index for the Australian population (Reserve bank of Australia 2013).Despite the growth in employment opportunities in the Australian economy, there is a lowly cyclical labour demand thus employment grows slower than the supply of labour .This cyclical low demand is responsible for the high unemployment rate in the Australian economy. Also, lack or required skillset for the available employment opportunities has contributed to the unemployment figures .Moreover, the low wage growth bracket is one of the reasons why most Australian’s are not seeking employment opportunities (Sloan 2018).Partly, underemployment is responsible for the low wage growth levels in the Australian economy.

Noteworthy, the Australian economy measurement of unemployment is based on the global accepted view of uunemployment.For a person to be considered unemployed in the Australian context, the person  is has not taken part in paid work for an hour in the preceding week despite being actively looking for work and would have been willing to accept the work in the event that it were possible (Economy watch 2010).For persons to be considered unemployed, they must fulfil the three conditions stipulated above .Predominantly, for most economies, unemployment implies the state of willingness and ability to find paid  employment opportunities but none is forthcoming. Through the measure of unemployment, governments are able to assess labour force participation thus the importance of measuring unemployment .According to the Australian context, calculation of unemployment includes the assessment of how many hours a person’s needs to take part in employment for them to be considered employed and counting the number of people who are either employed or unemployed (Reserve bank of Australia 2013).It is the mandate of the Australian bureau of statistics to measure the labour force participation. Predominantly, the Bureau considers persons over the age of fifteen years to be eligible for employment and unemployment. The measure of unemployment is important because it enables governments to be able to plan for welfare and unemployment benefits and also to calculate its labour participation ratesOverall, the measure of unemployment is key for economic development planning.

Cyclical Business Cycles and Low Labour Demand

Notably, there are various s underlying reasons for the current unemployment rates in the Australian economy such as lack of the required skills for the current job market (Burgess 2017).Particularly, there is a high figure for youth unemployment in Australia. Specifically, 12.5 % of youth are unemployed despite their willingness and availability to work for youths under the age of 10 years. For youths aged 15-24 years of age, there is a 5.6% of unemployed youth according to the Australian Bureau statistics(Burgess 2018).Majorly, Australian youths are unemployed due to the fact that they lack the skillset requires for the current Australian job markets thus rendering them unemployed for longer periods of time. It is vital that the Australian educational curriculum be in sync with the current labour market requirements so as to prepare the youthful population while in school for the labour market .In addition, the preference for migrant labour over native labour forces has created the high unemployment rates (Koukoulas, 2017).The preference for migrant labour might be due to the cheaper wages to the migrant labourers from exploitative employers. The fact that more migrant labour is incorporated into the production sector makes qualified Australian to be unemployed thus the high unemployment rates. It is important that there be a balanced employment between Australian natives and migrants when it comes to employment opportunities.

 Basically, underemployment implies the underutilization of a workers skillset, education of presence at work through lesser working hours than the norm (Amadeo 2018).Predominantly, there are two forms of underemployment, visible underemployment and invisible underemployment (Amadeo 2018).Essentially, under visible forms of underemployment, workers work part-time. Recently, the Australian male labour participation rate has been marred with visible underemployment. Particularly, the average monthly working hours for the male Australian workforce has been reduced to 155 monthly averagely as illustrated in the graph below (Murphy 2018).Weekly, men work an average of thirty-six hours only which is considered the lowest in the forty years of Australian workforce history. Regarding invisible underemployment in Australia

Undoubtedly, there is an unemployment variance between the different Australian states. According to the March Australian Bureau of Statistics, the unemployment rates in Western Australia were the highest among the other states (Cassells & Coelli 2017).Particularly, the unemployment levels in Western Australia stood at 6.5 percent whereas the figures for South Australia stood at 6.4 percent according to seasonal adjusted statistics as shown in the graph below. There are various reasons for the disparities in the unemployment gaps among the Australian states. During the mining boom, the rate of unemployment in Western Australia fell by 2.7 percent which goes to show that the mining boom created more employment opportunities for the Western Australian economy as compared to other Australian states (Cassels & Coelli 2017).Specifically, the higher unemployment rates in Western Australia has been due to the effects of the global economic crisis. Its effect of the state was more severe than the other states.

Lack of Required Skillset and Underemployment

Typically, effectively implemented policies have the potential to reduce the high unemployment rates in Australia and elsewhere in the world. For the Australian context, as a means of eradicating youth unemployment and underemployment, there should be vocational education programs during school sessions and outside school vocational programs for school leavers to boost their skill and experience in readiness for the labor market(Smith 2017).In addition, there should be job placement agencies across the Australian states to help skilled and unskilled workers get employment opportunities faster so as to reduce frictional forms of unemployment. The practicality of this placement jobs will save time for workers to get jobs as compared to the non-existence of job placement centres .In addition, there should be mandatory vocational training for employed workers to sharpen their working skills over time .This will help avoid structural forms of unemployment on their part hence reducing the overall unemployment gap in Australia .In the United Kingdom, the implementation of a work program which led to vocation training of youths and early retirement due to the establishment of the pensioners funding has contributed to the low unemployment rates in the country(Dolado 2015).

It is imperative that the Australian government introduces early pension and vocation training for its youthful population. In addition, flexible labour market regulation and improved bureaucracy effectiveness have been responsible for the reduced unemployment levels in most OECD nations. If the same were applied in Australia, the unemployment rates will definitely 

Conclusion: How can the government decrease unemployment in your country of birth

Majorly, economic growth rate is likely to effectively reduce massive unemployment rates (Borland 2017).In addition there should be target programs for the unemployed to make them employment ready. Such programs should be targeted towards the young population so as to prepare them for the job market at a very young age. The programs are aimed at boosting the employment opportunities for the unemployed youth. Also, through job placements the chances of employment opportunities will increase. The constant growth of economic activity in Australia can create more employment opportunities due to increased private and public expenditure and increased level of investment both foreign and domestic which is possible in a growing economy. It is imperative that the Australian government implement investment friendly policies, better infrastructure, and favourable macroeconomic environment for growth for the economy. Notably, part of the indigenous Australian population are highly unemployed thus constituting a huge part of the unemployment levels. There is need to address the indigenous population high unemployment rate. This can be done through equal educational opportunities for the indigenous Australian population as as they can qualify for jobs alongside other Australians on an equal footing (Biddle et.al 2016).

Also, various instances of discrimination has been meted against the indigenous Australians politically, socially and economy thus making them less competitive in all economic, political and social matters thereby contributing to low economic growth rate of the Australian economy. It is vital that the indigenous population be given training, education and favourable workplace policies to boost the low employment rates for the indigenous Australian population. 

References

Amadeo, K. (2018).Underemployment with its causes, effects and rate. The balance. [Online].Available at https://www.thebalance.com/underemployment-definition-causes-effects-rate-3305519[Accessed 27 May 2018] 

Biddle, N.,Hunter,B. ,Yap, M & Gray, M.(2016).”Eight ways we can improve indigenous employment”. The conversation.[Online].June 5.Availale at https://theconversation.com/eight-ways-we-can-improve-indigenous-employment-60377[Accessed 28 May 2018]

Borland, J. (2014).”Unemployment is hitting youth hard: this is what we should do.” The conversation. [Online].Available at https://theconversat,ion.com/unemployment-is-hitting-youth-hard-this-is-what-we-should-do-27590[Accessed 27 May 2018]

Burgess, M. (2017).”Too much education, not enough skills causes unemployment”. News .Com .Au. [Online].Available at https://www.news.com.au/finance/work/too-much-education-not-enough-skills-causing-youth-unemployment/news-story/1de627be83c2f4bb369b619f44f3d900[Accessed 28 May 2018]

Cassells, R & Coelli, M. (2017).”Fact check: Does Western Australia have the highest unemployment in the country? “.The Conversation. [Online].March 9.Available at https://theconversation.com/factcheck-does-western-australia-have-the-highest-unemployment-in-the-country-74064[Accessed 27 May 2018]

Dolado, J. (2015).How can Europe reduce youth unemployment?.Weforum .[Online].Available at https://www.weforum.org/agenda/2015/02/can-europe-reduce-youth-unemployment/[Accessed 28 May 2018]

Economy watch. (2010).Australia Unemployment. Economy watch. [Online].Available at https://www.economywatch.com/unemployment/countries/australia.html[Accessed 27 May 2018]

Koukoulas, S. (2017).”Australia has given up on solving unemployment”. News daily. [Online].Available at https://thenewdaily.com.au/money/finance-news/2017/08/16/stephen-koukoulas-unemployment/[Accessed28 May 2018]

Murphy. J. (2018).”Australia’s male employment rates are falling.”News.Com. Au. [Online].April 18.Available at https://www.news.com.au/finance/work/at-work/australias-male-employment-rates-are-falling/news-story/1433d1bdccf49d1e2b13a89dd1f199c5 [Accessed 28 May 2018]  

Rafi, R. (2017).The Impact of labour market regulation on the unemployment rate: Evidence from OECD economies. Department of industry innovation and science.[Online].Available at https://industry.gov.au/Office-of-the-Chief-Economist/Research-Papers/Documents/2017-Research-paper-3-The-impact-of-labour-market-regulation-on-the-unemployment-rate-Evidence-from-OECD-economies.pdf[Accessed 28 May 2018]

Reserve Bank of Australia. (2013).The increase in unemployment rate .Reserve bank of Australia. [Online].Available at https://www.rba.gov.au/publications/smp/2013/nov/box-.html [Accessed 27 May 2018]

Sloan, J.(2018).”Low wage growth based on solid economic reasons”. The Australian.[Online].February 9.Available athttps://www.theaustralian.com.au/news/inquirer/low-wage-growth-based-on-solid-economic-reasons/news-story/93c4d6c52267af16e1386e9df4cbeed9[Accessed 28 May 2018]

Smith. (2017).Unemployment policy in Australia.Percapita.Org. [Online].Available at https://percapita.org.au/wp-content/uploads/2017/05/Unemployment-Report_Final-1.pdf[Accessed 28 May 2018]