Labour markets/Workforce planning

Unemployment – understanding the terms

UNEMPLOYMENT

Def.

Where some people are willing and able to work, but are unable to find paid employment

Fraser et al p320

REPORTING UNEMPLOYMENT

• ABS

Utilises regular household surveys

• Centrelink

Counts those registered for unemployment benefits

Fraser et al p320

CRITERIA FOR UNEMPLOYMENT

• Aged 15+• Not employed during survey week• Actively looked for f/t or p/t work

Plus must fit into one of:• Available for work• Waiting to start a new job within 4 weeks• Waiting to be called back from stand down

Fraser et al p320

TYPES OF UNEMPLOYMENT (1/5)

• Cyclical Unemployment

(Demand-deficient unemployment) – caused by a deficiency in the level of aggregate demand

Fraser et al p323-4

TYPES OF UNEMPLOYMENT (2/5)

• Non-cyclical UnemploymentNot related to any phase in the business cycle

– Frictional UnemploymentResults from lags, or frictions in the price mechanism, which is a slow down adjustment in the labour market

Fraser et al p323-4

TYPES OF UNEMPLOYMENT (3/5)

– Structural Unemployment

Caused by adjustment in the industrial structure of the economy

– Seasonal Unemployment

Seasonal nature of production in some commodities, particularly primary production such as sheep & fruit picking

Fraser et al p323-4

TYPES OF UNEMPLOYMENT (4/5)

• Long-term (Hard-core) Unemployment

Unemployment of 12 months or more

Some members of society are essentially unemployable because of lack of education, poor physical or mental abilities, or negative attitude to work, or even age

Fraser et al p323-4

TYPES OF UNEMPLOYMENT (5/5)

• UnderemploymentWhen people who have p/t jobs would prefer to work more hours, or full time.

– Hidden UnemploymentOfficial figures tend to exclude large numbers of people willing to work but are not actively seeking employment

Fraser et al p323-4

MEASURING UNEMPLOYMENT (1/2)

• Direct Measure – Unemployment rateU=LF-J

UR=(U/LF)x100

Where U = no. unemployed

UR = unemployment rate

LF = size of labour force

J = no. of people in jobs (employed persons)

MEASURING UNEMPLOYMENT (2/2)

• Indirect Measure

Labour Force Participation RateLFPR = (J+PLW)/CV15+

Where LFPR = labour force participation rate

J = No. people in jobs (employed)

PLW = No. looking for p/t & f/t work

CV15+ = civilian pop. aged over 15

CAUSES OF UNEMPLOYMENT (1/2)

• Structural Unemployment

Due to fundamental changes in the structure of labour demand – specifically the kind of jobs that an economy offers. Most new industries are more capital-intensive and require sophisticated technological skills.

Fraser et al p329/30

Cyclical unemployment

• Caused by downturns in the economic activity in the economy

• Reduction in overseas spending

• Increase in interest rates

• Increased inflation rates

• Reduced government spending

CAUSES OF UNEMPLOYMENT

• Social Welfare Programs??!!!

Erosion of incentives to find new jobs quickly – assistance with health, housing and food make the newly-unemployed less enthusiastic in looking for a job.

• Tax rates

Fraser et al p329/30

Government schemes which support creating jobs or increasing skills

      fiscal (company tax changes, investment incentives, child care, privatisation, export policies, case mgt )NB the Jobs compact was an attempt at active employment rather than passive approach to pay dole, parenting allowance to spouses who keep low paid jobs, incomes test to be modified to allow for p/t work, regional development

      monetary policy( interest rates)       incomes and restructuring ( labour market

reform, enterprise bargaining, skills, promoting small business and export industries) Single parent payments

      education and retraining policies ( job search, HSC changes giving more skills etc award changes-competencies, TAFE and private providers-modules, youth training etc

How do you address Cyclical unemployment?

How do you address Structural unemployment?

Unemployment in disadvantaged groups

Long term unemployed

We’ve gone from unemployment to skills shortage

• Why?

Unemployment in the local market is extraordinarily high for youth

• Why?

• What can be done about it?

The government is offering overseas visas for fruit pickers

• Comment…

Discuss the effects of the changing level and incidence of employment and unemployment.

What is the effect of…

• economic growth

• business cycle

• world trade and growth

• technology