Cyclical Unemployment Changes Management

Question: Discuss about the Cyclical Unemployment Changes Management. Answer: Introduction: For a long time now, unemployment has been a major issue globally. Today, the continued loss of employment opportunities in the Australian economy has brought about a significant increase in unemployment in the country. Primarily, persons are considered unemployed if they fail to work for approximately one paid hour per week, yet they were actively looking for employment opportunities. Typically, joblessness in Australia is mainly due to lack of skilled labor. As such, a large proportion of the population comprises of young and older persons who lack the capacity and skills required by employers. For this reason, the government has identified lack of job opportunities as a propeller of unemployment and has put instigated structural reforms such as tax reductions, incentives for local firms to encourage expansion rather than closure, budgetary policies, and other reforms. Cyclical unemployment changes with respect to variations in economic conditions. Normally, it is dictated by aggregate demand in the economy. Therefore, less demand in the economy causes reduced production (Amadeo, 2016). In turn, this leads loss of jobs for many workers .During the recession, many people lose their jobs due to tough economic times. The most common case of cyclical unemployment was witnessed in 1922-33 during the great depression where Australias unemployment rate escalated to over 30 percent (Kent, 2014). During expansions in the business cycle, cyclical unemployment reduces significantly. Particularly, this is caused by the maximization of economic output in the Australian economy. This form of unemployment is hinged on demand. Less demand of a good or service means most workers will be laid off. Frictional Unemployment Normally, this form of unemployment arises when workers leave their current jobs with the hope of getting better opportunities in the job market. Additionally, this unemployment is fuelled by demographic changes owing to the fact that young and new employees in the labor force have higher turnover rates as they look for more suitable job opportunities. Unlike structural and cyclical forms of unemployment, frictional unemployment is voluntary on the part of the worker. During recessive periods in Australia, frictional unemployment tends to drop since workers are afraid of losing their jobs due to the slim chances of securing another job. It is imperative to note that structural unemployment is the most predominant form of unemployment in Australia today. Predominantly, it occurs where exists a disparity between the skills and expertise possessed by workers in the labor force and the skills that the employers demand. Therefore, the mismatch between the demand and supply in the economy causes the high levels of structural employment in the Australian economy (Pettinger, 2012). Consequently, a majority of the Australian population do not qualify for the available jobs in the country, thereby leading to the escalation of structural unemployment in the country (Kent, 2014). Generally, the extensiveness of this form of unemployment is attributed to various factors. First, the limited geographical mobility of the labor force to areas with great job opportunities has contributed to structural unemployment. In addition, the continuous automation of production processes has caused many industries to replace human labor with machines and robots (Kent, 2014). Consequently, this has led to high losses of jobs, thereby increasing the level of unemployment in the country. Besides, the persistent fall in consumer confidence and government legislations to reduce public sector jobs in Australia have contributed largely to this form of unemployment (Amadeo, 2016). It is worth noting that long term unemployment has become an unending issue in the Australian economy (Fowkes, 2011). In Australia, an individual is regarded as being long term unemployed if they remain jobless for more than 52 weeks. Today, this form of unemployment is exhilarating that the Australian government has created an income support program for the long term unemployed (Fowkes, 2011). Generally, individuals with minimal levels of formal education are more susceptible to long term unemployment than those with formal education. Today, this unemployment occurs among populations with poor physical and mental health (Wade, 2014). Workers who stay unemployed for long periods of time have no place in the current job market thereby causing long-term unemployment. Mainly, this is because their skills are considered to have lost value. What is more, many employers prefer to hire workers with recent work experiences. As at 2014, the number of people suffering from long-term unemployment was 170600, having increased from 12000 in 2013 (Wade, 2014). Limited Job Opportunities for Older Workers According to the ABS (2016), mature aged persons are unlikely to get employed due to their capacity to do less work. In Australia, labor force participation rates for older workers is very low. Discrimination of older workers when it comes to job opportunities is rampant. Poor education, outdated skills, or redundant skills due to the decline of some industries are some of the factors that lock out older workers when it comes to securing and maintaining job opportunities. It is presumed that older workers are less likely to respond and blend well with vocational training or different approaches to training. Such assumptions make old workers less likely to be hired by prospective employers who go for the youthful labor force. In Australia, unemployment can persists even in times of labor and skills shortage. Persons with disabilities are also less likely to be employed in the Australian economy due to their physical and mental incapacities. Similarly for old workers who suffer age-rel ated shortcomings such as health conditions and injuries. Old workers and persons with disabilities are less likely to get employed even in good economic times due to their incapacity to work round the clock due to their physical and mental incapacities (ABS 2011). The government ought to mitigate the effects of long term unemployment. The government should introduce policies that protect older workers and persons with disabilities from any form of economic discrimination by prospective employers. Unemployment of old persons takes a toll of the government due to maintenance costs and lack of taxation .The government usually derives part of its revenue from taxation of income earning persons .in this case, older workers, cannot be taxed since they lack meaningful employment opportunities. Good working conditions for the old workers is another motivation for them to seek employment opportunities unlike the existence of the contrary. Reports indicate that the rate of youth joblessness in Australia increased from 13.57% to 12.55% percent between October and November of 2016 (Youth Unemployment 2016). Currently, youth unemployment is a major challenge for affecting the Australian economy. The government allocated 330 million in its federal budget under the youth employment strategy as a move to reduce high unemployment rates among the youth in Australia. Youth unemployment is mainly is attributed to the fact that the youth lack requisite skills for the jobs available in the economy. In addition, they are disadvantaged in the job market since they lack years of experience, something that most employees are looking for in their employees (Youth Unemployment 2017). Although young people are likely to suffer from high unemployment levels, they are less susceptible to long term unemployment. Youth unemployment can be eradicated through the introduction and implementation of non-discriminative economic laws and creation of job opportunities. Affordable education and training can help prepare the youth for the existing job market thereby rendering their skills currency in value (Youth Unemployment 2016). The implementation of paid internships, earlier career guidance, works experience opportunities are some of the policies to eradicate youth unemployment. An active partnership between education institutions and employers on curriculum and job opportunities will help shape the students for the job market later on in their lives (Hermant, 2014). Lack of job opportunities in the Australian economy is also a cause of the unemployment spells in the economy (ABS 2016). The existence of job opportunities creates the demand for workers. Lack of this opportunities is what leads to unemployment. Thus, there ought to exist job opportunities for workers with respective requisite skills to apply and put their skills to economic use (Smerdon, 2015). Loss of job opportunities can be caused by a decline in industries, change in demand patterns in an economy, poor government policies that discourage the growth of businesses thereby leading to their closure among other reasons. Government Policies on Unemployment Having recognized that unemployment is a significant issue in the Australian economy, the government has instigated a number of measures to curb the rising rates of unemployment among its people. Essentially, the government has implemented demand and supply management policies to increase macroeconomic efficiency and reforms within the economy. Some time back, the Reserve Bank of Australia used expansionary monetary policy to stimulate the economy and in turn increase unemployment. Particularly, it lowered interest rates to stimulate investments in the country. In turn, this led to increased employment opportunities in the country. In addition, it introduced tax cuts and breaks in the country (Jericho, 2016). Aggregate supply policies introduced by the Australian government to curb unemployment include tax reforms. Usually, the government acts by lowering of company taxes thereby creating incentives for more companies to come into existence. Furthermore, the deregulation of the labor market has enhanced competition and led to reduced wage costs for firms. In turn, this has allowed firms to employ more workers to increase their productivity (The contribution 2005). Additionally, the government has invested in education and training to equip workers with the required skills and expertise. In turn, this has improved efficiency levels of the companies and enhance competitiveness in local firms trough increased skills and increased employability. It has also brought about major decreases in the level of structural unemployment in the country (Kent, 2014). Welfare access has also been tightened to reduce welfare traps and increase working incentives for the employed workers. In addition, the Australian government has implemented welfare reforms to increase the workers participation in the labor force and work. Reduced corporate taxes have been used to increase businesses after-tax profits. In turn, this has led to great competitiveness among local firms, something that has promotes the expansion of opportunities for local businesses. It is recommendable that the Australian government has introduced an income support system for the unemployed to reduce their dependency on the employed. By and large, this acts as a public welfare safety net to support individuals (Pettinger, 2014). Predominantly, the scheme is noncontributory and selective. Mainly, it aims at assisting persons with categorized needs on a presumed need basis. Basically, it comprises of child endowment and family allowances. The system works on a determined condition that the beneficiary exhibits incapacity to work. It mainly deals with persons with disabilities. There are also other forms of income guarantee proposals initiated by the Australian government. These proposals comprise of, guaranteed minimum income (GMI), basic income and Negative income tax. Largely, GMI and NIT are selective models whereas basic income model is universal. A basic income system is too expensive to implement in the country as compared to the other two models. For this reason, a non-conditional guaranteed minimal income and negative income tax will ensure that every citizen has an income thereby providing a safety net for workers facing unemployment. Also, the introduction of the national work experience program aims to reduce unemployment rates. Particularly, the program seeks to allow persons looking for jobs to work temporarily without pay to gain work experience and reduce long term unemployment. With such programs, unemployment will fall eventually. Also, it is worth highlighting the fact that labor tribunals have been introduced in Australia to deal with cases of unlawful work dismissal (The Contribution 2005). Such tribunals hear and determine labor-related disputes between employees and their employers. In cases of unjust dismissal, workers are compensated or reinstated. Remarkably, the labor tribunals have lowered unemployment rates in cases of employed workers. Any worker aggrieved by the working conditions provided by the employer has the right to petition the tribunal for safe working conditions. In cases of low or substandard wages, an aggrieved worker as the right to move the tribunal to intervene. To discourage unemployment, the government has put in place education and training institutions (Common Wealth 2015). Unemployment Conditions in 2016 As a country, Australia is divided into several states, among them Queensland, West Australia, Victoria, Tasmania, and New South Wales among others. As a whole, the individual performance of individual states combines to determine the overall performance of the Australian community. Over the past few years, the unemployment rates in Wales. The unemployment has fallen to 5.1% for the months of January to march 2016 (Unemployment 2016). In addition, the number of employed persons in Wales has increased to 76,000 higher than in the year 2015.The number of the unemployed people and those unable to work is 26000 lower than the preceding year. Wales has been the only region in Australia with increased employment rates (Unemployment 2016). Mainly, these rates have increased due to investments having been put in place rebalancing the economy. Welfare reforms have been improved to improving the living standards of the people. By and large, employment levels have improved due to the government initiated job opportunities and private sector investments in the creation of job opportunities leading to many unemployed persons gaining meaningful employment .Employed persons experience better living standards unlike unemployed persons in all regions of Australia. Comment on Unemployment in Various States of Australia. In most Australian states, high unemployment arises due to lack of job opportunities and the inability of some people to take up the job opportunities owing to incapacities such as old age, physical and mental inabilities. Mostly, such factors render individuals unfit to partake in employment opportunities. Last year, the level of unemployment in New South Wales was reported at 5.8% percent (ABS 2016). On the other hand, South Australia had an unemployment figure of 5.5%. In Victoria and Queensland, unemployment levels were reported at 5.4% and 5.9% percent respectively (Scutt, 2015). It is worth noting that the Tasmania state has always had high unemployment rates, as high as 6.5% as at November 2016.Currently, a large proportion of the youth population in Tasmania remains unemployed (Scutt, 2015). According to the Australian Bureau of Statistics (2016), South Australia has the second largest youth unemployment rate at 15.4 percent, with the unemployment level in west Adelaide and Barossa region contributing 12.7 and 19.2 percent respectively. In 2008, youth unemployment in Victoria was reported as 9 .4 percent in 2008. Later, it rose to 14.9 percent in 2015 (Scutt, 2015). The Geelong and Hume regions have the biggest unemployment rates above 18 percent (Scutt, 2015). On the other hand, Queensland was the fourth region with high youthful unemployment rates at 13.9 percent in 2015. 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