What Are the Main Changes Occuring in the Australian Labour Market? What Are the Main Causes of These Trands? What Effect Are These Changes Having on the Nature of Employment in the Australian Economy?

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INTRODUCTION

This paper focuses on 3 current trends occurring in the Australian labour market, analysing their causes and effects. The chosen trends are structural unemployment, gender pay gap and skill shortage. The main causes of the first trend are increase demand for services and technological change, which have led us into a new era where highly skilled labour force is needed to operate more complex machineries and computer systems. The rapid technological change has caused structural unemployment, with workers willing to work but cannot because of their lack of required skills. The second trend, gender pay gap, illustrates how wide the pay gap between males and females is until today. The main causes of this current direction are the persisting stereotype of the male brad-winner, the feminisation of some particular industry and more importantly non-union collective agreement. The results of this general direction limit the potentials of the Australian national income and create a culture of discrimination. The third and last trend, skill shortage, is generated by cut in investment in skill development, difficulties in retaining the employees and variation of demand for labour. These phenomenons foster inefficiency and impossibility to produce at full employment of resources.

TREND 1: STRUCTURAL UNEMPLOYMENT

One of the major trends that can be noticed in the Australian labour market is the steady presence of structural unemployment. Most of the definitions found in the literature describes this phenomenon as strictly linked to technological change. The Essential Economics Encyclopedia (2004) defines structural unemployment as the hardest type of unemployment because it is caused by the structure changes in the economy rather than by changes in the business cycle (cyclical unemployment). The Australian economy has undergone an evolutionary process that brought significant changes to the core of its structure. In the 19th century, the Australian economy was mainly oriented towards primary production, with most of the labour force employed in agriculture and mining. The 20th century saw the progress of manufacturing but since the 1960’s the share of manufacturing industry in the economy has fallen. Service industry have grown strongly over the past 50 years, rising from around 60% of the total output in 1960 to around 80% recently. In affirming that service industries are generally more labour intense than manufacturing, mining and agriculture, the Australian labour market has significantly changed over the centuries (ABS, 2012). The main drivers of this evolutionary process have been technological changes. The development and application of new technologies, especially over the last 3 decades, have completely changed the skills required from the labour force. As described by Lewis et al. (2006), we have entered in the “New Knowledge” economy, in which progress in technology and the following knowledge intensity of economic actions, including information intense goods and services, need for highly qualified workers. An important evolution in the New Economy is the strengthening in the knowledge intensity of capital, labour, products and services, especially information-based tertiary sector. The prosper incorporation of new facts, information, and skills into the production procedures involve considerable alteration in the skill combination of employees. New scientific knowledge is inclined also to be interdependent to highly skilled workforce and a replacement for inferior skilled labour. Unfortunately, the Australian labour market does not respond quick enough to the new job’s prerequisites, creating a mis-match between the jobs available and the skill levels of the unemployed. Currently, structural unemployment continues to exists, despite strong employment growth. Another cause of this trend is the alarming increase in the period of time that unemployed remain unemployed. Although the long-term...
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