Australian Unemployment, Inflation, and Economic Growth
The Australian government faces a number of formidable issues and challenges in achieving strong, sustainable economic growth. These issues have influenced the Australian economy significantly over time and include unemployment, inflation and external stability which all have had a direct impact to the economic growth and prosperity of Australia. Fortunately there has been a number of policy responses which include macro and micro economic policies and implementations over time to combat and provide a solution to these problems.
Traditionally economic growth has been regarded as the most important objective for economic management. Economic growth can be defined as an increase in a country
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Unemployment refers to a situation to which where individuals are unable to find a job but are actively seeking employment. Unemployment is a major cost to an economy, because it results in the opportunity cost of lost production, as well as increased social welfare payments and a loss of taxation revenue. It also restricts domestic output and growth and has many detrimental social costs which include a loss of skills and family household tensions. In recent years sustained economic growth has been the best way to achieve a lasting fall in unemployment. When economic growth is strong, there is usually an increase in aggregate demand (AD) which means there are more employment opportunities and more resources will be needed to cope with the demand. The annual Federal Budget for 2010-11 just recently forecasted economic growth of 2% this financial year showing that Australia has well truly escaped the GFC. Consequently, unemployment is also expected to fall to 4.75% in 2011-12 from a current figure of 5.3% for the March quarter this year. Australia has been able to keep unemployment at a relatively low rate of 5-6% which is significantly lower than the OECD 's average. The RBA is also predicting growth rates between 3.25% and 3.5% in both 2010 and 2011. According to Okun 's law, unemployment will fall if the economic growth rate is greater than increases in population of the labor force and productivity growth (Trading
The trends in unemployment affect three important macroeconomics variables: 1) gross domestic product (GDP), 2) unemployment rate, and 3) the inflation rate.
Changes in unemployment in Australia is a key issue in this news article. In the last twelve months, unemployment in Australia has dropped from 5.6 per cent to 5.1 per cent which is described as ‘a puzzle’ in the news article. Looking closer, there are some possible explanations for this change in statistics. Previously, unemployment in Australia increased in the time of the recent global economic downturn, although didn’t suffer as poorly as other countries according to data from the Organisation for Economic Co-Operation and Development. However, while unemployment rose, so too did the number of people in other forms of underemployment such as part-time and casual work (OECD, 2010). According to Sappey et. al., the status of employment requires workers to only work one hour per week and so therefore many underemployed workers receive the same employed status in this data as full-time workers (Sappey et. al., 2010, p. 111). According to the OECD, under-employment increased significantly during the downturn, rather than unemployment. Unemployment has dropped in the last twelve months but that does not mean that those who have obtained work have gained full-time employment. In fact, according to the Australia labour market trends of the last twelve months, it is more than likely that those who have become an ‘employed’ statistic rather than ‘unemployed’ have not gained full-time work. This news article quotes figures fro...
Australia has had one of the most outstanding economies of the world in recent years - competitive, open and vibrant. The nation’s high economic performance stems from effective economic management and ongoing structural reform. Australia has a competitive and dynamic private sector and a skilled, flexible workforce. It also has a comprehensive economic policy framework in place. The economy is globally competitive and remains an attractive destination for investment. Australia has a sound, stable and modern institutional structure that provides certainty to businesses. For long time, Australia is a stable democratic country with strong growth, low inflation and low interest rate.(Ning)
Australia experienced an average of 3.5% economic growth over the past 21 years. The countries growing economy features a very low unemployment rate of just 5% and a low debt of $1.397 trillion American Dollars. About 75% of jobs are in the services sector, making it the largest part of Australia’s economy. The open market in Australia has little restriction on imports of goods and services. Australia’s open market has stimulated its economies productivity over the past 21 years as well.
Unemployment is a macroeconomic factor that is pertinent to an extensive economy at a regional level. Therefore it affects a large population rather than a few select individuals. Unemployment does not only have social costs, but economic costs too. The ILO, International Labour organization, defines unemployment as, ''People of working age, who are without work, but available for work and actively seeking employment.'' Therefore implying that it is a state of an individual looking for a job but not having one. Unemployment is one of the key indicators in determining the economic stability of a country; hence governments, businesses and consumers closely monitor it. There are numerous aspects that might lead to unemployment such as labour market conflicts and recessions in the economy. There are two main types of unemployment, which can be focused on, seasonal and cyclical unemployment. Seasonal unemployment occurs when a person is unemployed or their profession is not in demand during a particular season. On the contrary, cyclical unemployment occurs when there is less demand for goods and services in the market so consequently supply needs to be decreased.
Inflation and unemployment are two key elements when evaluating a whole economy and it is also easy to get those figures from National Bureau of Statistics when you want to evaluate it. However, the relationship between them is a controversial topic, which has been debated by economists for decades. From some famous economists such as Paul Samuelson, Milton Freidman etc to some infamous economists, this topic received a lot of attention. However, it is this debate that makes the thinking about it evolve. In this essay, the controversial topic will be discussed by viewing different economists’ opinions on that according to time sequencing. But before started, it is worthy getting a better understanding of the terms, inflation and unemployment.
The largest cause of unemployment can be attributed to recession. The term recession refers to the backward movement of the economy for a long period. People spend only when they have to. (Nagle 2009). With people spending less there would be less money in circulation therefore, enterprises would suffer financially and people would suffer too. This is so because recession reduces the fiscal bases of enterprises, forcing these enterprises to reduce their workforce through layoffs. These enterprises lay off their workers in order to cut the costs they incur in terms of wage and salary payments.
Economic growth defined as increasing the capacity of an economy. It used to produce goods and service which compared from one period of time to another. Also, it measures the change of real national output in short period. Whereas, long term growth shown to increase the potential Gross Domestic Product (GDP). Thus, economic growth plays an important role in the entire nation. This is to see whether the country is well developed or vice versa. On the other hand, economic growth creates high tax revenues to cut down government’s expenses. Therefore, it will reduce government borrowing and debt to GDP ratios. Indirectly, high increase make better standard of living. Besides that, more selection of goods and services are there for consumers. Again, more investment will be available cause of good economy growth. Last but not least, a good economic in a country improving public services. For example, government spends more on education and development areas. This is to ensure that good infrastructures are there.
Economic growth is an increase in capacity of an economy to produce goods and services, compared to from one period of time to another. The Gross Domestic Product (GDP) found within in an economy is formally used as a measuring point for how an economy is growing or performing within its framework of economic components. Gross domestic product itself is the total market value of all final goods and services produced in an economy over a period of time.
Economic growth focuses on encouraging firms to invest or encouraging people to save, which in turn creates funds for firms to invest. It runs hand-in-hand with the goal of high employment because in order for firms to be comfortable investing in assets such as plants and equipment, unemployment must be low. Hereby, the people and resources will be available to spur economic growth.
It is difficult for government to achieve all the macroeconomics objectives at the same time. Conflicts between macroeconomics objectives means a policy irritating aggregate demand may reduce unemployment in the short term but launch a period of higher inflation and exacerbate the current account of the balance of payments which can also dividend into main objectives and additional objectives (N. T. Macdonald,
Economic development is fundamentally about enhancing the factors of productive capacity, such as land, labor, capital, and technology, of a national, state, or local economy, as stated by the U.S. Economic Development Administration. Economic development influences growth and restructuring of an economy to enhance economic well-being. We experience economic growth when our standard of living is rising. Rather than being a simplistic process, economic development typically is a range of influences aimed at achieving objectives like creating jobs and wealth and improving the quality of life. It incorporates coordinated initiatives targeted at expanding infrastructure and increasing the volume and/or quality of goods and services produced by a community. A common measure of economic development is a country’s gross national ...
However, the GDP of country growth too rapidly also will negatively affect such as inequality of income increases to a significant level. This problem frequently facing due to economic development. This will let the rich people are getting more richer and poor are becoming poorer. Next, the economic develop rapidly also will increase of pollution rate. This is because the country is producing the maximum output for fulfilling the demand of the consumer. This will let the country has negative consequences for the environment and health of citizens is
In order for any country to survive in comparison to another developed country they must be able to grow and sustain a healthy and flourishing economy. This paper is designed to give a detailed insight of economic growth and the sectors that influence economic growth. Economic growth in a country is essential to the reduction of poverty, without such reduction; poverty would continue to increase therefore economic growth is inevitable. Through economic growth, it is also an aid in the reduction of the unemployment rate and it also helps to reduce the budget deficit of the government. Economic growth can also encourage better living standards for all it is citizens because with economic growth there are improvements in the public sectors, educational and healthcare facilities. Through economic growth social spending can also be increased without an increase of taxes.
Economic growth is one of the most important fields in economics. In current generation economic is developing well. Economic growth is really important to country and for the world as well. Economic are one of the identity for country because it shows a country development and attraction for other countries (F, Peter. 2014). For example well economic develop such as Singapore, Dubai, New York, and Japan. These countries are well develop and maintaining their economic growths. Economic growths are really important because higher average incomes enables consumers to enjoy more goods and services. Then, lower unemployment with higher output and positive economic growth firms tend to utilize more workers creating more employment. Enhanced public