Unemployment refers to the situation whereby individuals want to work however are unable to secure employment, therefore resulting in the underutilization of an economy’s labour supplies.
Unemployment is measured monthly and is calculated by:
Labour force participation rate refers to the percentage of the population aged 15 and over in the labour force that is employed or unemployed and is calculated by:
Current statistics and Trends
Australia began experiencing high rates of unemployment in the 1970’s due to stagflation, causing the rate to increase from the 2% levels in the 1960’s to over 6% by the end of the 70’s. Shortly after the recession of the early 90’s the rate reached a peak of around 11% due …show more content…
Cyclical changes in economic activity may lead to changes in this demand for labour, any drop in consumption, investment or export demand may add to cyclical unemployment. Unemployment generally starts to rise when growth is below 3%, with growth currently slowing “we continue to expect 2015 growth to be below consensus, and unemployment to edge higher to 6.5%” (The Guardian). Structural Change in consumption and production can cause structural unemployment to increase. Uncompetitive industries such as TCF and the car industry and manufacturing have been subjected to heavy job losses as resources have been reallocated towards the mining sector in the last decade. Substitution of labour for capital in primary industries as a result of improved technology has created a rise in short-term unemployment. Yet economists argue that in the long-term, technology creates more jobs as workers can be reemployed once they have been retrained. In times of strong growth, the hidden unemployed re enter the labour force, causing the participation and unemployment rate to rise. Any change in wages will have a significant impact on an employer’s choice to add or shed jobs. If there’s an increase in the minimum wage, demand for labour will contract as seen in the