Chapter 5 Blog

Link: http://queanbeyan.yourguide.com.au/news/national/national/general/fulltime-jobs-grow-but-trend-is-grim/1432843.aspx?storypage=1

Summary


The current recession has once again taken its toll on another nation; this time in the form of an increase in unemployment levels. Unemployment in Australia has worsen from 4.5 per cent to 4.8 per cent, reaching its highest mark in two years. The approximate numbers of unemployed jobseekers are 540,000, 84000 more than in January last year. The deputy of prime minister, Julia Gillard made claims that the situation would be worse without the $42 Billion spending plan which was rejected by her opposition. The main reason for this increase in unemployment is the loss of jobs in the manufacturing, retail, finance and mining sectors. This recession has influenced male employment more than women's with and increase to 4.9 percent from 3.7 percent in male unemployment. Though there has been a rise in unemployment levels, the recession has not damaged the Australian economy as much as it has for the UK and US economies. The participation rate increased last month due in large to the decline in retirement savings, enticing older workers to stay in the workforce. A notable concern would be the fact that the rate of job growth is not fast enough to keep up with the increase in skilled migrants,graduates and school leavers.


Relation to Chapter 5



There are several types of unemployment discussed in this chapter that could be applied to explain the increase in unemployment. Demand deficient unemployment is probably the main cause of this problem. A cause and effect analysis must be used to clearly explain this. The global recession has resulted in either a decrease in income or an uncertainty of future incomes for much of the population. This uncertainty shifts the demand curves of many products to the left and so employers are having difficulty in selling their products. If they do not sell as much then they will not need to hire as many workers hence the rise of the unemployment takes place. Frictional unemployment is probably not applicable considering that it is usually common only when economic conditions are good as employees are willing to leave one job to pursue a higher paying one. Seasonal unemployment could be a possible reason for the unemployment. Demand for tourism has probably gone down and Australia is a popular destination for vacationing which could also explain the rise in unemployment. Structural unemployment could also be in effect but probably not as influential to the Australian economy as demand deficient and seasonal. Insurance induced unemployment is probably not a key factor in this situation because according to the article it is due the lack of retirement savings that has kept participation rate high. People are uncertain of their retirement savings therefore they choose to stay in the workforce longer which results in an increasing participation rate.





Reflection

This particular situation in Australia exposes the volatility of economies all over the world. There can still be job growth but as the article shows, it must be at a rate that can keep up with the pace that people are entering the workforce. I think the government should stimulate the economy by spending more to create jobs. What I also find concerning is the fact that more and more university graduates are having a hard time finding a job which just comes to show how troubling economic conditions are all over the world. Overall, I agree with Julia Gillard, that a spending plan is necessary to solve the rise in unemployment levels. The government expects that the unemployment rate will increase to 7 percent by the middle of next year, proving that the economic problem will be a downward spiral if nothing is down to thwart it. Canada has also recently felt the effects of this recession as economic conditions all over the world remain uncertain.