There are a number of causes of unemployment, which ultimately result in both positive and negative consequences for Australias economy. These causes are outlined as follows.
Economic growth is possibly the most influential factor causing unemployment. The demand for labour is a derived demand, meaning that it is determined by the level of demand for goods and services in an economy. This means that if an economy is experiencing low levels of economic growth, aggregate demand will fall, thus decreasing the demand for labour, which will result in an increase in unemployment.
resulted in a strong decline in unemployment (stimulus). Australias unemployment rate is currently at 5.1%, its lowest since the 1970s (stimulus).
Unemployment may also be caused by technological change This can have a negative effect on unemployment as a company may replace labour with capital in order to become more efficient. Jobs are lost as technology is now used instead, or people dont have the skills required for the new production methods therefore …show more content…
During an economic upswing the participation rate (labour force / working age population x 100) is known to rise as discouraged job seekers re-enter the labour force and begin to actively look for work again. This means economic growth needs to be high enough to absorb both the unemployed and those returning to the labour force for unemployment to decline. As more students are completing high school and entering tertiary education, young people are entering the work force later. This means that the size of the labour force is reduced, which improves the rate of unemployment. Furthermore, once students finish their studies and enter the labour force they have greater knowledge and skills, improving their employment