Industry Shutdowns

Discuss about the Reasons Why There Is Unemployment In Australia?

Unemployment refers to a situation whereby people are seeking for jobs and who have actively sought employment in the past one month and thus are there to commence job in the next few weeks, or those who are not in work and have agreed on an offer of a job and are just about to start working in a few weeks’ time (Nickell, 2013).

As at March 2018, the unemployment rate in Australia stood at 5.6%. It hit a record high of 11.20% as at 1992 and a record low of 4% as at in Feb 2008.

The following are the reasons why there is unemployment in Australia;

Industry shutdowns-this is one of the main causes of unemployment in Australia. It happens when the main employers and their support firms decide to close their operations. These leaves thousands of workers jobless considering a state like Australia where there is no diversity in industries to hire these laborers. Some of these industries are the agricultural industry, textile industry and manufacturing industries among others. We find that the state and the federal government has repeatedly failed to do advanced planning that would prepare its workforce in such a way that they are diverse in terms of skills and thus able to be absorbed into other work in case of such an unfortunate event as the industry shutdown (Bell & Nasaki, 2015)

Infrastructure-during the difficult economic times, both the private and public expenditures reduces. This makes mostly engineers and those with the know-how in this industry to move abroad and hence leave workers in the country jobless.  This gives rise to temporary shortage of these expertise when the expenditure eventually picks up. For example, the South Australian government resorted to using mostly Victorian workers in its major recent projects. The locals aired their grievances on social media, explaining that the reason they were not picking up the tasks was because so many interstate workers were being used (Burgess, 2014)

Offshoring-unemployment menace in Australia began skyrocketing some years ago when other countries decided to give tax incentives to western nations to relocate jobs and the entire firm there. This leaves the local workers with no option but to somehow try to adapt to the situation on that number of manufacturing and textile jobs having been moved offshore. This leaves Australian economy to be more of a service economy other than manufacturing commodities for export and create jobs. The country’s economy therefore loses its skilled manpower ranging from manufacturing for example, and thus has to find means of retaining its laborers for something different (Machin, 2014).

Infrastructure

Recession-recession is usually a very difficult time or period in the economy when production activities hit the bedrock. Companies often come up with ways of cutting on the cost of production so that to enable them stay afloat during such a difficult time. Most of them are left with no option other than laying off workers, hence leaving a good number in the economy unemployed. (Huay, 2014).

Immigration-sometimes the government gives a green light to mining firms to import labor, or sometimes the government itself brings in many international students, and sometimes it opens its floodgates to immigrants, leaving the natives in the country so disgruntled and full of resentment when they can’t be able to secure jobs.

Natural disasters-quite a number of jobs are usually lost for a while when a natural disaster strikes, for example in a region like Queensland which is often hit by cyclones. Farmers too have drought to worry about in their farming sector (Machin, 2014). For farmers, it has increased research into resistant crops to deal with the drought menace. Irrigation is also being intensified.

Technology and automation-while the growth and advancement in technology has positively impacted on economic growth and in increasing productivity, efficiency and output, it has ironically hampered employment opportunities in those specific sectors that it has been employed. It has left the median income and employment figures curtailing and hence creating greater inequality. This increases the gap between the haves and the have not as it leaves the wealthy with more prospects (Bell & Steve, 2014).

According to the Australian Bureau of Statistics, to be grouped as the unemployed, you have to meet the following criteria;

Not working more than an hour in the said week

Actively looking for employment in the past one month

Be available to begin working in the said week

Australian Bureau of Statistics measures unemployment by gathering data from a survey that is conducted monthly from almost 26000 households together with a selection of boarding schools, colleges, hotels, hospitals, indigenous communities throughout and prisons (Watts , 2016).

The entire data is sampled from a population of about 52,000 individuals who represents the entire Australian population. During the process of data collection, the respondents are not asked whether they are unemployed or not but instead there are a number of self-guided questionnaires online or the services of well-trained interviewers are employed to ask a number of questions to find out if a person is unemployed, based on the three aforementioned criteria (Burgess, 2013).

Offshoring

The Australian Bureau of Statistics thereafter scales up the individuals in the survey sample, using the latest population figures to provide a projection of the entire population.

Detailed information about the magnitude of the sampling error is provided by the Australian Bureau of Statistics to assists the users in comprehending the data reliability and accuracy (Bell & Steve, 2014).

Classification of underemployment in Australia

According to the International Labor Organization, the underemployed comprises;

Those actively seeking to over time

Those who are there to work over time within the stated later period

Those working less than a verge in relation to working time

The definition of underemployment used in Australia is in harmony with the ILO definition. The Australian Bureau of Statistics has set an inception of 35 hours in relation to the orientation week in order to draw a line amid full-time and part time jobs (Windschuttle, 2015)

We can elaborate on the above classifications in relation to Australian market as follows:

1. Those working less than a threshold in relation to working time/time-related underemployment-the Australian Bureau of Statistics set the threshold at 35 hours in the reference week. Those doing work in 35 hours or less in the orientation week comprise part-time employees together with some full-time employees working part-time hours in the reference week for no economic reasons (Bell & Nasaki, 2015). Nevertheless, only full-time workers who worked part-time in the reference for economic reasons are grouped as underemployed in the Australian Bureau of Statistics.
2. Those available to work additional hours within the specified subsequent period- according to the framework provided by the Australian Bureau of Statistics, availability to work additional hours is categorized both in terms of instant availability i.e. availability in the said week and availability within the next one month (Burgess, 2014).

• Those currently trying to work extra hours-in reference to the Australian Bureau of Statistics, an enthusiasm to work more hours are uncovered by influencing an enquiry from the part-to time laborers in the event that they need to work additional hours. Nevertheless, extra information on whether an individual have actively searched for additional hours of labor can also be collected using the same active job search method used in identifying unemployment. Such information is used to distinguish the individuals who have actively sought additional working hours from the ones who haven’t (Huay, 2014).

The statistical local areas-unemployment ranges greatly across the statistical local areas in Australia. This is because many of these statistical local areas do have small populations, where most people are self-employed mainly in the agricultural sector and also there exist an above average labor force participation rate. Emigration of some unemployed individuals has also contributed to the low unemployment statistics in these areas as compared to other areas (Nickell, 2013).

Remoteness of a place-unemployment in Australia do vary with the remoteness of an area.it reduces with increasing remoteness of an area. The unemployment rate is higher in inner regional areas, which stands at 8.5%, then a bit down to 7.9% in the outer regional areas.it further reduces to 4.5% in very remote areas (Borland, 2015).

English language proficiency -In Australia, level of skill in understanding and articulating ideas in the English language do have a say in a person’s chances of landing and retaining a job. The ability to communicate in English is likely to be more important for some types of professions than others.

Policies That the Government of Australia Can Implement To Reduce Unemployment

Reduction in work-related immovability-occupational immovability is a major of cause of structural redundancy. Strategies should be put in place, such as the apprenticeship schemes, with an aim of providing those individuals who are unemployed with new skills needed in seeking fresh jobs (Machin, 2014)

Reduction in geographical immobility of labor- this kind of immobility is instigated by aspects like increased house prices and accommodation rents, social and family ties and also regional disparities in the cost of living which hinder the change of location in such of new employment (Bell & Nasaki, 2015).

Benefits and tax reforms policy-most economists argue that policies that aim at reducing the real value of wellbeing gains do upsurge the incentive for the jobless to take up a job. Measures to recover workers’ incentives should encompass linking welfare benefits to work participation experience programs or also we can lower the marginal tax rates for those earning low incomes (Burgess, 2013).

Boosting aggregate demand- the government could do this by increasing state investment expenditure or reducing taxes to increase employee’s disposable incomes. This is called fiscal policy. An increase in expenditure in roads, infrastructure and housing will lead to a positive multiplier effect on gross output, incomes and employments (Smyth, 2016).Boosting human capital-this is majorly done through education and training of the labor force. This is aimed at making the labor force more employable and also improving the level of labor productivity.

Conclusion

If the above measures and policies are inputted by the government to its people, the unemployment problem in Australia will reduce greatly. This will also work if people in the country are willing to adhere to the measures put up by the government and act on them in time.

References

Bell, M., & Steve, M. (2014). Unemployment crisis in Australia. cambridge university press.

Bell, S., & Nasaki, k. (2015). The unemployment Crisis in Australia. Cambridge University Press.

Borland, J. (2015). Unemployment in Austarlia. Australian Economic Review, 390-400.

Burgess, J. (2013). Unemployment,human rights and full employment policy in Australai. Australian Journal of Human Rights, 76-98.

Burgess, J. (2014). Declining job quality in Australia.

Huay, O. S. (2014). The causes of unemployment in Australia. Australian Economic Papers, 70-98.

Machin, S. (2014). The causes and consequences of longterm unemployment in Europe. Handbook of Laborr Economics, 3085-5989.

Nickell, S. J. (2013). The rise in unemployment.

Smyth, R. (2016). Unemployment Hysteresis in Australian states and territories. Austarlian Economic Review, 180-198.

Trivedi, P. K. (2013). Equilibrium unemployment in Australia. Economic Record, 620-750.

Watts , M. J. (2016). The cost of unemployment in Australia.

Windschuttle, K. (2015). A social and political analysis of the economic crisis in Australia. Penguin Books.