Unemployment is a major issue that is affecting economic development of various countries. A country that is facing low levels of unemployment faces the problem of poverty. Before looking at causes and effects of low unemployment levels in Australia, it is very important to define what low unemployment means. Basically the term refers to decline in the number of people looking for employment. Either those who are looking for jobs have given up due to the fact that there are few opportunities for them or the employers have been defeated to find the qualified workers to be employed.
In Australia one major cause of low unemployment levels is the technological changes brought by the introduction of the new information technology system. The new technology requires workers to have some relevant skills especially the computer skills. Most of men in Australia do not posses these skills therefore end up loosing jobs. Their levels of education are low such that they cannot cope up with the current technological requirement. Production of goods and services nowadays is done using the new technology but since the formal education is still low then jobs will be lost. Loss of jobs in the production of goods has seriously led to a major decline in job opportunities for these men who have low level of education. This is one of the reasons why those who are not employed are many in Australia. These people withdraw from the work force simply because they do not have the skills required of them.
Another cause of low level of unemployment in Australia is the way unemployment is being done. Most of the people employed in the country only work for wages. Australia has developed a system where people are contacted over the phone whether they want work or not. It is true that most employers prefer employing part time workers in order to reduce inflation and save costs involved in production. But on the other hand this may lead to a big problem because most people will languish in poverty most of the time. Majority of companies and employment sectors in Australia emphasize on causal workers, part-time and contract employments where an individual can work for as little as three hours a week. This may have a problem of job insecurity- since an employee can be hired and fired any time without any benefit being given to him.
The distribution or the pattern of employment is also unique in Australia. Single people are at risk as compared to married people. Majority of those who are unemployed are married people. Single people therefore have high rate of unemployment in the country. This is because single people do not have a lot of pressure to earn a wage in order to support their families as compared to married people who have got families. These single people at time tend to stay long before getting employed because they feel that they can tolerate the spells of unemployment. In addition to single people there are also people who just want to remain unemployment.
Those who join labor force for the first time many take some long time in order to stay into a steady pattern of employment. In Australia many people normally like testing or trying different jobs according to pay or hardness in relation to their abilities or ambitions. They probably look for job that satisfies their interests. Should they fail to get such jobs then it will force them to continue looking for a suitable one. During the hunting process some of these people may get tired on the way and choose to close the deal. To others the search may be unsuccessful whereby they end up spending long period of time moving between low paid jobs to insecure jobs and even end up remaining unemployed. This is a cause of low unemployment level in the country (Dixon and Lim, 2004).
In Australia those who are absorbed in the labor force are mainly youths or young people who can combine education and employment. This has benefited the youths and teenagers but on the other hand, old people are disadvantaged since they are not being considered for employment making the countrymen to be poor.
Another reason for low unemployment level in Australia is the government policies on employment. The Australian government for long has embarked on tight controls over production, imports and exports. These reforms have seriously contributed for the low unemployment level in the country. Currently the country is facing high rate of inflation as a result of the policies. Inflation in an economic perspective is measured as the growth of the money supply in an economy, without a general increase in the supply of goods and services.
In Australia the number of those looking for jobs are few therefore employers are forced to increase or raise the salaries of those employed in order to attract more people. Increase in wages will lead to increase in the prices of goods sold in the market. This will cause what is called the demand-pull inflation and cost-push inflation. The Demand-pull inflation is caused by an increase in aggregate demand for goods and services due to increased spending in the private and public sector. The cost-push inflation on the other hand is caused by reduction in aggregate supply due to increase prices of inputs. The increase in salary by the employer both from the private and public sector by the employers in Australia may lead to the increase in prices of the goods produced or sold.
Normally when inflation is high in a particular country and the same country maintains fixed exchange rates with other countries, it means that its exports will be relatively expensive such that these countries will not be able to purchase them. In the long run this will create a deficit on the country’s current account since most of its exports will not be accepted. People on fixed income are also disadvantaged because of inflation since their purchasing power will be low. This automatically will lead to low gross domestic product of the country suffering from inflation.
Another effect of low unemployment level in Australia is loss of job opportunities by people brought by the technological skills and employment policies established by the government. This will lead to unemployment, which in turn will lead to poverty. One effects of poverty in society is crime. Young people may start involving in criminal activities that are very dangerous.
The Australian government therefore needs to look for suitable ways of controlling the rate of unemployment. With the low unemployment levels, chances of inflation being experienced is very much possible. Dangers of inflation to a country are well known to economists since an economy will never grow if the rate of inflation is high. High inflation rate means low economic growth brought by low gross domestic product.
Dixon, R and Lim, G.L. (2004). “The Incidence of long term unemployment in Australia, 178-2003,”Australian Journal of labor Economics, 7:4.