Economics_-_Unemployment

Unemployment In Australia we have a formula for measuring unemployment. The percentage of people who are unemployed can be worked out by dividing the total number of unemployed / the entire labour force then x 100%. The labour force consists of all people over the age of 15 years who are able and willing to work. This includes employed and unemployed. Employed people are people who work full time (35h), part time (1), self employed and had a job but are on holidays or sick leave. Unemployed people are those people that are actively looking for a job. There are many different type of unemployment. One type of unemployment is known as STRUCTURAL unemployment. This occurs when a producer changes the way they produce a good or service. For example a company that produces clothes decides to buy heaps of sowing machines instead of hand knitting their cloths. This causes the company to terminate employers. This is known as structural unemployment. This is one of the most common causes of unemployment. Another example of this is when companies move overseas or when new technologies occur and take peoples jobs. Cyclical unemployment occurs due to changes in aggregate demand. This means that if there is a lot of demand for jobs because AD is demanding a lot of goods and services, cyclical unemployment will drop. If AD drops cyclical unemployment will rise. Hidden unemployment is when people have given up trying to find a job. An example of this could be has applied for hundreds of jobs and hasn’t got any so has given up trying. Hardcore unemployment is those people who are incapable of working for various reasons. An example of this could be a quadriplegic that cannot move his legs or arms. Long-term unemployment refers too somebody who has been unemployed for longer than 12 months. This could be a mum who is looking after her kids for the first few years of there life. Frictional unemployment is when people are unemployed when finishing one job and starting another. This could occur when a chief leaves his restaurant then start his next job one week later. The week he is unemployed is known as frictional unemployment. This is most common in building trades. Seasonal unemployment occurs due to a change in season. An example of this would be a fruit picker who picks fruit that only need to be picked at some stages of the year. At the other stages of the year when the fruit can’t be picked it would be known as Seasonal unemployment. Companies run by the government should just be located in cities. They should also be situated in outer suburbs. For example; the government sets up a company in Ballarat instead of Melbourne. This makes it easier for people who live in rural areas and outer suburbs to get a job as there usually a shortage of jobs in these suburbs. The government can use a number of different policies to reduce unemployment. A policy that the government is currently doing to combat skill shortages is when people learn a trade they receive a 500$ bonus. This helps combat lack of basic skill shortage in Australia. Australian government put in the unfair dismissal law. This makes it harder for companies to get rid of employees. Make government businesses more effective through privatisation. This increase efficiency allowing business to expand and encourage employment. A lot of people struggle to speak correct good English; this makes it harder for people to get a job. This would increase unemployment. The government could try to reduce this problem by creating free speaking English classes or discounted classes. If aggregated demand drops cyclical unemployment will rise. This will usually be in times of a recession. The government can combat this by using expansionary policy. This involves increasing government spending to help stimulate the economy. The government can also decrease interest rates to increase AD. Another way to increase AD is to reduce interest rates. Creating more AD drops the level of cyclical demand. They can also increase the number of imports and reduce the number of exports. Lowering interest rates on saving accounts can also encourage people to spend more money by reducing leakages. The government can also make it harder to access welfare benefits. This encourages people to have a job. Increasing tariffs in Australia will help ensure Australians that their jobs won’t be lost to overseas competitors. However increasing them by too much will cause Australian companies to become in-efficient. Getting the correct tariff rate is crucial. The creation of jobs network company- companies that help people to find jobs. Keeping minimum wage cost down which allows firms to be more competitive against foreign competitors. The government can also increase employment by educating people, especially children. If people are educated they will usually put more effort towards getting a job. They can do this by raising the leaving age of school. Government can create laws against price fixing. This results in large companies becoming more efficient. Another policy that would help reduce unemployment is the Australian government signs up contracts with the new immigrants. The government tells the immigrants where to work for the 1st to years in Australia. This would help fill in vacant job spaces and allow the new immigrant a steady supply of income.