economic preliminary research task

Labour Market: Stimulus/Research Task
What is meant by the term unemployment?
Unemployment refers to a situation where individua want to work but are unable to find a job, and as a result labour resources in an economy are not utilized.
Unemployment is often used as a measure of the health of the economy.
Different types of unemployment cyclical unemployment (involuntary unemployment due to fall in the demand for labour)
Caused by a contraction in economic activity or aggregated demand. (downturn in the business cycle, derived demand for labour)
When there is a downturn in the business cycle, demand fro goods and services falls, forcing firms to reduce production and reduce number of workers to maintain profit level. structural unemployment
Caused by the mismatch between the skill demanded and the skill possessed.
(Increased by restructuring of the economy and the introduction of new technology)
Workers unemployed from pre-restructure (old) companies, do not find the skills they possess not appropriate in the newer industries.
Causing the situation where the company requires labour, but still cannot employed that group of unemployed (因为他们的技能不符合新型公司的要求） long-term unemployment
Unemployed for a period of 12 months or more. the longer a person is out of work, the harder it becomes for them to get a job.
Long-term unemployment can start out originally as cyclical unemployment.
Eg. a downturn causes a person to lose his/her job. During the later recovery, the economy may not grow quickly enough ti eliminate for all cyclical unemployment. Resulting the person to find him/herself to be unemployed for more than 12 months (changing into long-term unemployment), this long-period of time may cause the person to lose their job-related skills, so employers will be more reluctant to hire someone who has been out of work for a long time. seasonal unemployment
Caused by the seasonal nature of some jobs (changes in the labour market which occur regularly each year, independent of the business cycle)
For example: tourist related jobs and jobs associated with holiday seasons such as plump older man working as shopping centre Santa Clauses at Christmas .
This unemployment rises during the December-March period of the year when school-leavers are seeking jobs and enter the labour force (year 12 graduates, or year 10) frictional unemployment
Occurs as people change jobs (from one job to another).
What is required to change jobs:
Time,
employment opportunity, attendance of job interviews administrative details.
因为有上面的诸多因素：there will always be a small level of frictional unemployment int the labour market, although improving the efficiency of job placement services can reduce the level of frictional unemployment.
Regional unemployment
Occurs when a major industry (steel, TCF or PMV) in a particular geographical region reduces its demand (for reasons of undergoing large scale structural change and adjustment) for labour causing widespread unemployment. hard-core unemployment unemployed because of personal characteristics, such as: metal or physical disability anti-social behavior drug abuse hidden unemployment
Refers to those individuals who are not counted in the official unemployment figures because they have given up actively seeking work or have gone back to school.
Rises during a prolonged economic downturn.
Slower growth in aggregated demand means that the prospects of finding a job are very low, and some individuals become discouraged from seeking work.
They are not officially employed as they are no longer actively seeking work, but they are still considered to be a part of the unemployment problem since they would work if labour market conditions were better.
A rise in hidden unemployment will be reflected in a fall in the labour force participation rate rather than as an increase in the official unemployment rate. underemployment (technically not unemployed)
Refering to the individuals who have part time or casual jons, but would like to work more hours per week are said to be underemployed.
They are a significant problem in the labour market, since they represent under-utilized labour resources. (As the worker are willing to work more hours, but the conditions of the labour market prevent them from doing so)
Estimates of Australia’s underemployment have risen dramatically in recent decades. as a increasing share of jobs have been creased on a part-time or casual basis.
Causes of Unemployment deficiency in aggregated demand (AD=C+I+G+X-M, major cause of cyclical unemployment) cyclical changes in the domestic and international economic activity may lead to changes in the demand for labour. Since the demand for labour is derived from the demand for final output, any decline in aggregated demand may lead to a rise in cyclical unemployment. structural changes in consumption and production (causes the level of structural unemployment to rise. role of wage expectations in pushing up the price of labour to capital (causes a rise in the voluntary unemployment or wage induced unemployment)
Rapid rises in real wage costs will reduce the demand for labour and provide employers with the incentive to substitute capital for labour. a lack of efficiency in the labour market in matching labour skills with the jobs available can influence the level of frictional unemployment
Rigidities in the labour market like government regulations (eg. super, taxation) can also reduce the hiring intensions (through higher ‘on costs’ of labour) of employers, causing unemployment.
High ‘on cost’ of labour and a lack of skills, education and training
If workers do not have access to education and training they will be less skilled and in lower demand by employers for the jobs available
How hidden unemployment and underemployment distort the official statistics
The hidden employment are when people given up looking fro work or receive income support from a spouse, partner or parent and and not eligible for Job Search Allowance, so it is not counted as a part of ABS unemployment statistics. Underemployment are people working part-time who want to work more hours or switch to full time employment, the ABS calculated the underemployment rate in 2012-13 as 7.2% and the labour utilization rate as 12.9%, showing separate statistics from the unemployment rate.
Which groups in Australia are more likely to experience higher than average rates of unemployment and why.
The incidence of unemployment varies between demographic and skill groups in the labour force.
Groups accounted fro disproportionally high shares of unemployment:
Young and less educated labour force participants recent immigrants persons whose jon was in blue collar occupations
Highest rates of unemployment - teenagers (15-19) 23.2% for males and 29.6% for females
Teenagers experience difficulty in securing their first jobs because of lack of experience, education, training and skills.
Age
unemployment (%)
15-19
52.8
20-25
11.8
25-44
4.9
45-52 (long-term unemployment)
30
(all 2012-13 data)
There is great difficulty for older workers to find full-time or part-time work if they have been made redundant or retrenched due to industrial restructuring or reforms to industries such as car manufacturing.
Other groups: workers with low levels of education attainment experience higher rates of unemployment than those with higher educational qualifications unemployment rayes tend to be higher in industries affected by high rates of structural change like manufacturing , building and construction and trades (rates falling as demand rose during housing and resource booms in 2000s as more labour is demanded)
Aborigines and Torres Strait Islanders family status (sole parents, dependent students and non dependent children)
The economic and social effects of unemployment
Economic effect: opportunity cost of lost output and income (primary economic cost of unemployment) lower real GDP and reduced national income (thus reduced living standards) economical and social hardship for the unemployed and their families and dependents (falling level of consumption with their satisfaction of life) poverty traps because of welfare dependency increasing taxation burden erosion of tax due to unemployment and a rise in cyclical expenditure on social security payments (leading to a rise in budget deficit or fall in budget surplus) less equal distribution of income (unemployed will be reliant on income support from government welfare payments)
Social effects: loss of human capital, as the unemployed will not be contributing their skills and experience to the workforce and will need to undergo re-training loss of self esteem and dignity rising crime rates increased drug and alcohol dependency health problems fro the unemployed higher suicide rates breakdown of family relationships loss of self esteem and human dignity
Recent policies the government has used to help combat unemployment
Promoting Higher Sustainable Economic growth
In order to educe cyclical unemployment, monetary and fiscal policies can be used to offset cyclical downturns in the economy, increasing levels of unemployment that accompany periods of slower economic activity. 这两种政策缓解市场经济问题
Fiscal Stimulas and the easing of the monetary policy potentially can stimulate the aggregated demand or spending and increase the output of services in the economy.增加消费 Higher levels of output will require increased levels of employment, which in turn will lead to a lowering of the level of unemployment消费增加支出，支出（output，不大确定中文是什么）需要人力资源，所以这些政策可以降低失业率
Used in 2008-09 during the DFC and recession, to support aggregated demand and employment. However for the last few decades, monetary and fiscal policies are relatively ineffective in terms of reducing structural unemployment.
Labour market reforms
Designed to: make labour markets more flexible encourage more competitive work practices higher levels of labour productivity
Giving employers greater incentive to hire additional workers, leading to higher levels of employment.
It is a movement towards decentralized wage determination, where firms and employees are able to negotiate wage increases on the basis of improved levels of productivity.
Awards Modernisation that makes awards simpler instruments that do not impede workplace efficiency and employment growth is another key element of the government’s labour market reform agenda.奖励政策
Labour market legislations such as the Workplace Relations Act 1996 incorporated measures designed to curb union powers and weaken unfair dismissal laws, directly intervering with the labour market. In 2006, the workforce legislation was introduced extended this reform process by further reducing the reliance on rewards and placing more emphasis on individual workplace 增加收入不定性，以公司之间的待遇竞争来提高就业率和工资水平introducing changes that further deregulated the industrial relations system.
The government believes that the new reform would lead to further gains in employment and productivity, and a reduction in the unemployment rate because of greater flexibility in wage and employment setting procedures.
Policies that are being/ could be implemented to overcome skills shortages
Education and training
A major reason for unemployment is the lack of education, training and skills of some workers (especially teenagers). Key policies include
New Apprenticeship centres (promote skill formation of apprentices)
Expansion of school based apprenticeship systems
Funding for Vocational and school education (including National education framework for schools to raise literacy and numeracy standards)
Australian National Training Authority established (to improve skill development of workers through ongoing education, training and development)
Labour market assistance to job seekers:
Job Services Australia (contracted national network of private, community and government organisations to assist the unemployed find jobs)
Australian Job search (online job noticeboard, government run) time frame polices 2008-09
Rudd government established Education Investment Fund with initial allocation of $11b to be spend on higher education, vocational educatin and training facilities.
New programme called the Education Revolution, involving long-term reform plans to boot the quality of Australian education and training by : improving access to high quality early childhood education and care providing greater flexibility for schools to improve the education outcomes of students (computers for year 9-12)
Trade training centres in schools a flexible and competitive national vocational training system
2009-10
Jobs and Training compact introduced in response to the rise in the unemployment rate caused by the impact of the Global Financial crisis (including a Training Supplement Scheme to help eligible job seekers, person under 25, unemployed workers and regional and communities directly affected by the global recession)
2011-12 and 2012-13
Building Australia’s Future Workforce package included funding for: apprenticeships reform of the VET system boost the workforce participation of disadvantage groups
2013-14
Alternate Pathways program to adress skills shortages
Tax and welfare reforms
Aiming to strengthen the incentives and obligations of welfare recipients to seek paid casuals, part time or full time work: time frame policies 2001
Australians Working together package - reforms to help people out of work to return to the labour force though a system of working and training credits. (targeting parents, mature aged people, indigenous people and people with disabilities)
2004-05 (budget)
More Help for Families package - tax cuts and incentives fro saving fro retirement, targeting the elimination of poverty traps. (EMTRs can reduce the incentive fro welfare recipients to seek paid work and therefore lower their labour force participation)
2006-07
(budget)
$60.02m to provide an additional 25,000 child care places to encourage parents to seek paid work鼓励家长挣钱，托儿所提供时间

federal government reduced margins of income tax and increased income tax thresholds for low income earners in successive budgets to reduce the incident of poverty traps增高了最低税收线，也就是减税
2008-09
(budget) cuts in personal income tax, to provide incentives for individuals (including part-time workers)to participate in the workforce
2011-12
(budget) part of Building Australia’s Future Workforce package - measures to encourage participation and incentives in paid work (eg. Low Income Tax Offset) for disadvantaged people such as: young people single parents people with disability long-term unemployed people in disadvantaged locations
2012-13
(budget)
Building Australia’s Future Workforce skills package - funding for 50,000 new training places under the National Workforce Develop Fund.
National Partnership Agreement on Skills Reform signed with the states to strengthen the VET system.
Funding for mature age workers to up-skill and re-skill.
Funding for childcare assistance to increase parent’s workforce participation.
2013-14
(budget)
Support in the transition to work for job seekers (increase in the income free area fro Newstart Allowance and funding for childcare)
The skills shortage
The skill shortage in Australia is largely a reflection of shortages in the supply of labour in certain occupations and industries in relation to the demand for these labour skills.
Shortage aroused in 2006, Australia was not producing enough skilled workers to meet the demand fro many skilled jobs.
2005, ABS reported 149,500 job vacancies (mainly in the mining boom areas of Western Australia and Queensland). There is a geographic imbalance betweenjob availability and the supply of labour.
Between 2001 and 2009, Australia increased skilled migration.
Policies used by the government to address the skills shortage:
1. Building Australia’ Future Workforce addressed the policy of increasing labour force participation by retaining older workers with specific skills (later retirement age) and encouraging other groups such as younger workers and females to acquire higher levels of education and training.
2. Increasing skill labour through skill stream immigrants in specific occupations and industries. (immigrants also increase aggregated demand)
Programmes to Develop Labour skills: government increased funding of vocational education and training skills creation in the VET sector
COAG agreement for a national approach to apprenticeships, training and recognition
Realizing Our Potential package 2007 increased funding for universities, vocational and school education (this is vital for increasing labour force skills, productivity and participation)
Skills for Sustainable Growth Programme (2010-11 Budget)
Building Australia’s Future Workforce package (2011-12 and 2012-13 Budget), included funding for new skills measures such as apprenticeships, reform of VET system and measures to boost the workforce participation of disadvantage people.
Funding (2009-10 budget) to assist workers whose job prospects was adversely affected by the global recession
Jobs and Training Compact to support young Australians, retrenched workers and local communities to secure future employment, add to their skills or learn new skills required to obtain jobs as the labour market recovers in 2009-10. These include: temporary Training Supplement Scheme
Compact with Young Australians
Compact with Retrench Workers
Compact with local communities
Recent Trend in Unemployment according to Joe Hockey's policy preference for the first budget. The Reserve Bank believe federal and state fiscal policy will push unemployment higher.
According to the Reserve Bank, the economy is growing at better than 3 per cent, which will be slowed by the new policies to 2.5 per cent this year.
Referring to the Okun's Law, which suggests: For a government to reduce unemployment, the rate of economic growth need to exceed the growth in labour productivity plus the growth in the labour force through new entrants. We can see that if the labour productivity remains the same (possible decrease with aging population) and the growth through labour force through new entrant (possible decrease as well with limitations to immigration) and a decreasing economic growth, the unemployment rate will rise.
So the slowing economy, there should be increase in the number of the unemployed, with an expected rise in the rate of unemployment form 5.8 per cent to 6.25 per cent and will remain at that that percentage.