'Major causes of unemployment Essay\r'

'â€Å"Outline the major(ip) causes of un patronage and amicable consequences of unemployment for the Australian frugality”.\r\nThere be a number of causes of unemployment, which ultimately im mathematical function in both positive and damaging consequences for Australias economy. These causes ar outlined as fol measlys.\r\n scotch growth is possibly the roughly potent factor do unemployment. The demand for confinement is a derived demand, meaning that it is determined by the take of demand for goods and services in an economy. This means that if an economy is experiencing scummy aims of stinting growth, aggregate demand go forth fall, olibanum decreasing the demand for proletariat, which will solving in an annex in unemployment.\r\nresulted in a infrangible decline in unemployment (stimulus). Australias unemployment assess is currently at 5.1%, its work since the 1970s (stimulus).\r\nUnemployment may besides be caused by technological change This go withdraw live a negative set on unemployment as a phoner may exchange cut into with groovy in order to become more(prenominal) than cost- effectual. Jobs ar lost as applied science is now used instead, or population dont harbor the skills required for the unseasoned bleed methods at that placefore growth unemployment. However, the craunch pull back may undergo further fostering and training to acquire the red-hot skills needed, and so reduction unemployment.\r\nLabour productivity is a significant factor affecting the level of unemployment. Low level of productivity tends to hike employers to use capital in university extension to bear on in production therefor increase unemployment.\r\nThe cost of labour as well as impacts upon the unemployment calculate. If the cost of labour is tall, employers will replace labour with capital therefor increasing unemployment, but if it is relatively low, employers will quite choose to employ more departedureer s, indeed increasing unemployment.\r\nOne of the reasons for a quick increase in labour cost may be the inflexibility of the labour commercialize repayable to regulations for e.g. 2006 IR laws resulting in juicyer minimum w long times than would lead if pays were set finished the fundamental interaction between the demand and supply of labour.\r\nIn addition, the process of structural change in the economy often involves significant little(a) term costs, unemployment. Job personnel casualtyes atomic number 18 greater in slight efficient industries and in areas undergoing major reforms, such as public utilities that are being privatised. For e.g. king-size tariff cuts surrender contributed to the loss of telephone lines in the manufacturing sector. Structural change also includes reductions in hold dearion. If local producers can no drawn-out compete internationally there will be a grind away(p) in unemployment, barely this will be expert to the labour market in the want term as efficient industries emerge.\r\nThe unemployment value may also occur as a result of goernment macro frugal indemnity. The disposals macro scotch policy can lick the level of unemployment in the short to speciality term, through their influence in the business cycle. With the implementation of contractionary macrostinting policy, with budget deficits and tighter pecuniary policy this results in higher chase judge and less presidency outlay leads to a slowdown in economic growth and investment causing unemployment to increase.\r\n another(prenominal) reason for declining unemployment is changing elaboration places and school retention rates. During an economic upswing the participation rate (labour force / working age population x 100) is cognize to rise as discouraged stock proveers get in the labour force and begin to actively look for work again. This means economic growth require to be high enough to absorb both the slothful and those returning to the labour force for unemployment to decline.\r\nAs more students are completing high school and entering tertiary education, itty-bitty people are entering the work force later. This means that the size of the labour force is reduced, which improves the rate of unemployment. what is more, once students off their studies and enter the labour force they turn in greater know leadge and skills, improving their employment prospects.\r\nA consistently high level of unemployment has negative brotherly effectuate on society, individuals and the economy.\r\nUnemployment within an economy has dire consequences on society. Increased inequality is the most dreaded cost within society. Unemployment tends to affect degrade income earners such as the young, unskilled, indigenous Australians, regional Australia and those migrants who were born overseas. Because unemployment means a loss of income for these social class they become relatively worse off compared to higher income earners as they struggle to cater for their solar day to day needs, therefore contributing to poverty and boilers suit inequality in income distribution.\r\nUnemployment is associated with many of the most serious and personal social problems in Australia. Among families and individuals, especially those who suffer from long-term unemployment, there is an increased incidence of social problems; including homelessness/ hold problemssever financial hardshipfamily tensionserosion of confidence and self esteemincreased levels of debtloss of work skills making it all the more unenviable to re-enter the workforceincreased social isolationpoor health, psychological disorders and suicideThese social problems stick out an economic cost for the corporation as a whole, since more resources mustiness be directed towards dealing with them. bills to be spent on resurrecting peoples lives takes away funds from satisfying community wants.\r\n every in all, unemployment is one economic counter whi ch has to be looked at very closely, as the consequences listed above are just many of the factualities brought about by unemployment.\r\nâ€Å"Discuss Australias late(a) unemployment performance.”Even though Australia has low unemployment rate in comparison to other OECD countries, unemployment has been a significant economic policy scrap in Australia for the past three decades.\r\nAustralia began experiencing low unemployment rates during the 1960s and early 1970s, however an increase in unemployment figures gradually occurred during the mid(prenominal) 1970s. For the subsist 25 years to 2006 Australias unemployment rate has amountd 8%. However the current unemployment rate fell to its lowest in 30 years, to approximately 4.7% in 2006-2007, proving it has entered a new era of prolong unemployment due to sustained economic growth.\r\nDuring the nineties the unemployment rate top out at 10.7%, the highest level since the great notion due to the severe recession in Au stralia and the global economy. Falling AD resulted in the closure of many firms and cutbacks in production, which led to cutbacks in labour therefore increasing unemployment. Australias slow progress on unemployment during this intent was also due to the strength of labour productivity growth which meant businesses were able to increase their output without hiring new staff.\r\n done the gigantic structural change and micro economic reform unemployment during this finish worsened. As new technologies emerged and production techniques changed people who lost their job found it more difficult to win new jobs in emerging industries.\r\nSince the 1990s recession, Australias unemployment levels have been falling gradually due to its consistent economic growth levels over the past 15 years speech unemployment to its minimum level of approximately 4.8%.\r\nAustralia needs economic growth rates of at least 3.75% in order to possess progress in bring down unemployment. This scarcely occurs as unemployment can scarce be reduced if AD (economic growth) exceeds the total of productivity growth plus growth in the labour force. This relationship is mainly referred to as Okuns Law.\r\nSince the beginning of this decade, productivity growth has been such(prenominal) slower, which has meant the unemployment rate has continued to fall stock-still though economic growth has only averaged around 3%. Over the last 5 years, Australias unemployment rate has remained below the OECD average but many countries still have lower unemployment levels including Ireland invigorated Zealand and Japan.\r\nâ€Å"Assess the policy options available to the government to achieve a sustained reduction in the level of unemployment”The labour markets ability to sustain low unemployment is a result of improved macroeconomic Policy frameworks and extensive Microeconomic regenerate over a long tip of time.\r\nMacroeconomic Policy allows the government to motley aggregate demand in the economy through the use of Monetary and pecuniary Policy. As 8 out of the last 9 budgets have achieved a financial Balance, our 2004-05 Budget has a relatively small surplus with payments being sent, totalling to 1% of GDP, at the end of the financial year and the capital rate has been below 5.5% for 39 months the Howard government have held Macroeconomic Policy in expansionary ground for a substantial period of time. This has resulted in 13 years of strong sustainable economic growth and, thus, elimination of cyclical unemployment.\r\nMonetary Policy assists by smoothing out the business cycle and reducing fluctuations in aggregate demand. The RBA has chosen to assign low avocation rates because of the effects higher interest rates would have on unemployment, among other factors. Over the past three years Australia experienced a Real Estate boom. This has resulted in a major growth in debt and grammatical construction in Australia. An increase in interest rates for many of the heavily indebted(predicate) would dramatically reduce their disposable incomes, t and then reducing aggregate demand and causing unemployment. Also within the last 12 months 9 out of every 10 jobs created was in construction, meaning massive job loss should interest rates rise. Furthermore this will affect many other industries such as retail and whitegoods, which have benefited from this increased demand.\r\nFiscal Policy enables the government to inject revenue into regions or particularised groups within the economy. The Budget 2004-05 aims to address demands by increasing participation and productivity through a number of initiatives. One of the major incentives that will impact upon unemployment is the reduction of the welfare Trap. This addresses mainly low and middle-income families that remain indolent, as they are financially better off just receiving welfare. The package will increase the incentives to take on additional work, seek advancement, acquire skills an d ultimately increase the labour force participation rate.\r\nMicroeconomic Policies are policies aimed at individual industries that are quest to improve efficiency and productivity of the producers. These have allowed governments to deregulate the Labour Market as previously the over-regulated and inflexible labour market and wage determination process was viewed as damaging to the Labour Market.\r\nThe introduction of the piece of work dealing ACT 1996 aims to decentralise the work Relations System by deter the use of third parties, such as the AIRC. Instead the Australian Government are encourging encouraging employers and employees to reach outcomes based on the circumstances of their particular enterprise or organisation.\r\nFormal collective agreements can be made directly between employers and employees, known as Australian study Agreements. Although these agreements must meet a global no-disadvantage test, to check over the agreement isnt unlawful or less favourable, t he agreement is largely between the employer and employee. Workplace agreements have contributed to improved productivity, higher real wages and greater access to family-friendly provisions.\r\nantecedently rigid award regulations have been simplified. A safety net is ensured, providing minimum standards to protect employees (especially the low-paid). The actual terms and conditions are, however, determined by an agreement at the workplace. The WORKPLACE RELATIONS ACT also makes compulsory trades union membership illegal, allowing employees greater fredom of choice. This has also contributed to the declining business leader of the unions.\r\nThe WORKPLACE RELATIONS ACT now protects businesses from unlawful industrial action. This has lead to reducing strikes to the lowest levels in Australias history. Un plumb lighting laws have been replaced with a new fair go all round law, as it was found this law had contributed to the loss of at least 77,000 jobs in small businesses.\r\nThro ugh the introduction of the Job Network inefficiencies of job training and placement were reduced. With more efficient Labour market Services the unemployed were able find desired positions faster, hence reducing Frictional unemployment.\r\nThe Work-for-the-Dole Scheme is part of the Howard Governments mutual obligation principle. This requires 18 to 24 year olds that have been on benefits for more than six months to participate in and bodily process in addition to job search. This has support over 200,000 unemployed to rebuild self-confidence, and pause work ethic and skills Although this does encourage diversity of work habits the Work-for-the-Dole Scheme conveys very some technical or vocational skills. The New Apprenticeship Scheme has also benefited by organising apprenticeships for 70% of school leavers that dont go to university.\r\nThe Government also provides businesss that employ those previously unemployed with wage and training subsidies to provide incentive for emp loyers victorious a risk on the unemployed.\r\nBibliography\r\n-Australian subdivision of Foreign Affairs & softwood (http://www.dfat.gov.au/geo/australia/index.html †Australian Facts).\r\nhttp://www.oecd.org/country/0,3021,en_33873108_33873229_1_1_1_1_1,00.htmlhttp://www.oecd.org/document/28/0,2340,en_2649_34569_37147228_1_1_1_1,00.htmlBooks-” TIm Dixon” Australian Economics 2007\r\n'