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Poverty In Australia Since Financial Crisis

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Unemployment rate is the most important economic needle which determines the operating capacity of a country. It is one of the most significant and disturbing crisis which the whole world is facing. In the recent times, it is a catastrophic underutilization of human as well as economic resources. The following essay provides a critical evaluation of unemployment rate in Australia. The easy discusses the unemployment types, issues, and government policy of Australia along with unemployment in various states of Australia such as NSW, WA, Tasmania, Queensland and SA. A number of Australian researches reveal unemployment problem in the country supported by micro and macroeconomic perspectives. In Australia, due to unemployment, workers and their families lose their income, and the country loses the goods or services that could have been manufactured. Also, government face disappointment which builds spur for anti-government operations. As a result, purchasing ability of the workers is significantly reduced, which can minimize the rate of economic growth and economic development of Australia.In the beginning of 1993 and 1994, the unemployment rate of Australia exceeded to one million. It led to an unexpected decline in the nation’s Gross Domestic Product rate and ultimately, the economic growth also dropped. Moreover, the key factor of Australian poverty is unemployment. Although, the negative impacts of global recession were overcome by the country in an efficient way, yet there is a gradual increase in the unemployment in different regions of the country since 2008 (Campbell, 2016).  The essay further discusses the fiscal stimulus, tax cuts, and increased public expenditure of the country along with economic downturn which led to increased unemployment. The adjustments in working hours although minimized job losses, but this contributed to the growth of the disagreement in the workers. It observed a rapid increase in the youth idleness level.

Unemployment Rate

Unemployment signifies those people who are in the need of work, able and willing to work but do not find any work. Unemployment rate in Australia symbolizes the fraction of the entire workforce that is unemployed, but looking for employment and actively searching for work. Moreover, the unemployment rate is computed as a percentage by dividing the number of unemployed persons by the existing total number of workforce (Milner et al., 2013). In the times of downturn, there is a relatively high unemployment rate in Australia due to low market demand and cost cutting strategy by most of the companies. The unemployment rate is changed in the country with the fluctuation in demand of the market and economic growth of the companies in Australia. The change in unemployment rate in Australia from 2012 to 2017 is defined in the below graph:

The above diagram is presenting that the unemployment rate of Australia is not stable and changing in each year. The graph is presenting that the lowest unemployment rate of the country was 5% in 2012 and highest unemployment rate was in 2015. After 2015 the unemployment rate is continuously decreasing due to low market demand and cost cutting strategy.


The unemployment may be different types, which are defines as below:

There are five types of unemployment which are found in Australia. These are Structural, frictional, seasonal and cyclical unemployment and mature-aged unemployment, which are describes as below:
Occupational or Structural unemployment: Structural unemployment refers to an unemployment which occurs due to the structural problems within an economy and lack in the demand of the workers in the labour markets (Bidargaddi et al., 2015). In Australia, frequent changes in the technology and taste or preferences of the consumers are the main drivers behind the deficiency of the demand of workers in the labour markets of the country.

Frictional unemployment: It is caused by the individuals who spend their time in searching for an appropriate job. The idle time period between jobs is called frictional unemployment. In Australia, frictional unemployment is caused by these two factors:

Imperfect information– When an unemployed person is unable identify the location and status of all vacancies in his area, frictional unemployment is caused in Australia. This can be decreased by Australian government through creating job centres or similar state-funded operations aiming at increasing information available to jobseekers.

Disincentives– In Australia, there are be government disincentives to seek work, which seems to be a well-paid job in actually is  less attractive and suitable due to taxation and exclusion of benefits.

Seasonal unemployment: Seasonal unemployment occurs when there are changes in the season such as a lack of demand for department stores in certain months of a year (Considine et al., 2014). Seasonal unemployment is considered to be an element of structural unemployment in Australia because the economy of the country fluctuates from each month that influences the demand of labour markets of the nation.
Cyclical unemployment: Cyclical unemployment arises when there is inadequate total demand in the country economy to provide work for those who are willing to do. In Australia, opposite direction of the GDP growth rate or recession is the major factor of the cyclical unemployment. During recession or economic downturn in the country, demand for all kinds of goods declined and less production reduced the demand of labours in Australian the market.

Mature aged unemployment: Australia’s work force engagement rate for old employees is smaller than many countries of OECD, which indicates that both voluntary early retirement and involuntary exit (Morrisroe et al., 2016). Discrimination of employees also acts as an important factor affecting older people’s ability to secure job. Poor education and skills are linked with reducing occupations in Australia, which reduces employment prospects for mature aged job seekers. 

Unemployment Issue

Long-term unemployment in Australia for a long time caused social and economic problems in the country. Unemployment rate in the country indicates that per capita income in the country is low that mean wealth distribution rate is also low in the society. It has significant impacts on the economic condition of the country. Low consumption rate of the people indicates their reduced ability to buy products and services which shows lower demand for the goods in the country (Curtis et al., 2016). Low demand and low consumption rate also affects the economic growth or economic position of the country in a negative way.

Further, government revenue from the tax collection has also reduced in Australia due to decreased family income and lower demand for goods. It indicates that Australian government does not have adequate funds to spend on social welfare and improved infrastructure. This type of condition creates social problem in the country.  Long-term unemployment has an impact on the living standard and life style of the people that increase the social and economic problem of the country (Irpan et al., 2016). Long-term unemployment in Australia has contributed to the weak physical and mental health of the people, which has resulted in social isolation and high poverty.


Government Policy of Australia for Unemployment

In order to reduce unemployment rate for maintaining its economic and social condition, Australia has also developed employment policies. Since 1929 to 1932, Australia has experienced a high rate of unemployment during the great depression as its unemployment rate was only 22% in mid 1930, and reached to of 32% in mid-1932. So, the policies made by the government for controlling the unemployment rate became more concerned about increasing unemployment.

Furthermore, every state and regions of Australia such as ACT, NSW, WA, Tasmania, Queensland or SA applied different strategies or policies to reduce unemployment. In this view, ACT, NSW, Western Australia and Northern Territory (approx $722) have adopted low minimum wages policies to provide employment opportunities. This policy made employers in Australia to recruit more employees which subsequently resulted in decline in unemployment rate (Morrisroe et al., 2016). Moreover, Victoria ($681), Queensland ($702), South Australia ($637) and Tasmania ($622) states have also put the minimum wages generally lower than the current minimum wage of $1,244.40 per fortnight. Australian states where unemployment rate is low are now providing the unemployment benefits to the people who are unemployed for more than 12 months and aged over 22. At the same time, new start Allowance was set to be $501.00 per fortnight for a single person. In addition to this, Youth Allowance is also provided by NSW, WA, ACT and the Northern Territory, Victoria, Queensland, SA and Tasmania in order to increase employment opportunities.

Since 1940s, the influence of Australian political parties on the nation’s economy has grown gradually, with the general acceptance of the Keynesian thesis that high level of production and employment can be possible only when government acts seriously to the issue of unemployment. In view of this, the prime minister of Australian Labour Party presented a white paper ‘Full employment in Australia’ in the parliament. Conditions of full employment lasted in Australia from 1941 to 1975 (Fromentin, 2013). With the introduction of neo-liberal policies in 1980s, Australian politicians have described unemployment as one of the dangerous economic diseases. As a result, many states like Queensland, Tasmania, and Western Australia designed new economic policies to increase their impacts on Australian regulating markets. Some of these states became able to make effective policies for exterminating unemployment easily. It has taken many decades for some states in attaining high level of employment.

All three main political parties of Australia adopted and executed their different employment policies and upgrade them from time-to-time so as to handle future challenges effectively. Britain’s Westminster model played a vital role in the development and success of Australia’s governance system and policy making. This model suggested that the sources of employment policies should be transparent. At present, Australian government has made significant progress in their general economic policies, labour and welfare schemes over recent years in order to reduce unemployment, in line with the directions of the OECD jobs and growth strategies.

The OECD identified some factors critical to attain low unemployment, which are stability, well-managed policies, and equality in wealth distribution, well-operating competitive markets, innovation, and atmosphere of entrepreneurship (Golebiowska et al., 2016). Since 1970s various have been designed to advance the competition level in Australian economy on both local and global level. Also, intensive competition and depth in the product and financial markets of the country have been promoted via tools such as National Competition Policy, and an agenda signed by both central and state government of the country. Restructurings have also been formulated in the communication, energy and transport zones of the country. Commercializing and privatisation in government companies have also benefitted the country by eliminating anti-competitive rules and widening the scope for healthy competition. Likewise, the lessening of barriers to business and trade and restrictions on export activities has moved the Australian economy towards global competition, diverse markets, and cultures.

Since 1996 Australian fiscal policy was also formulated by the government into a medium-term structure. This medium-term framework for monetary and fiscal policies proved to excellent for steady and sustainable economic development (Saunders et al., 2016). The government of the country also realized that the microeconomic foundations of the Australian economy are essential to promote lower unemployment. It also identified that macroeconomic management contributes greatly in reducing unemployment in Australia. The policy also helped to reduce the ruined effects of macroeconomic policies that were an indicator of Australia’s past economic performance. The first section of the Statement on the Conduct of Monetary Policy of Australia revealed that the unemployment rate in Australia has averaged 7.5% since 1970s (Campbell, 2016). It was considered by the government that lower unemployment was an essential element of a better Australia, which led to the designing of those labour policies which have encouraged output, participation, and lower unemployment.

Employment arrangements, wages and conditions

The organizational relations in Australia have emerged to reflect contemporary economic and social causes of unemployment. In the first half of 20th century, a complicated system of awards was built in the country through industrial courts in order to provide equity and justice in wages and other employment conditions. However, after some years these inflexible institutional arrangements slowed down employment outcomes. Again in 1996, important reforms were accomplished with the introduction of Workplace Relations Act. The objective of the Act was to explore matters that largely impact the relationship between employers and employees in an organization (Plummer, and Tonts, 2013). The Act also specified the rights and responsibilities for employers and employees in order to create impartial and just agreement-making and to support freedom of association. It involved the establishment of Australian Workplace Agreements and personal agreements between the employer and employee, which would be statutorily bounded by the Australian Industrial Relations Commission.

These reforms were brought to redefine the award giving structure with increased rates of pay. It was done to increase the consistency with the intention that awards act as a safety net of minimum standards. As a consequence, a large fraction of employees who were dependent on arbitrated awards for pay increment, reduced from 67% in 1990 to 21% in 2002. Now, more than 30% of employees have collective agreements with their employers, while remaining depends on individual agreements made between an employer and employee. The main focus of these reforms was to foster productivity and to create a direct relationship between employers and employees (Furuoka, 2014). These caused a major impact on the incentives for employers to hire workers and to increase output which reduced unemployment. For instance, the Productivity Commission of Australia has improved Australia’s output in 1990 for better management and work practices

Australian Government focused on long-term unemployment (LTU) and very long-term unemployment (VLTU) in the country. In the beginning of 1980 and 1990, both LTU and VLTU doubled due to recessions and between the recovery periods of 1984-1990, both decreased gradually. The matter of increasing LTU and VLTU was more focussed on the grounds of equity and fairness. These two indicated a significant waste of human resources and thereby reduction in overall GDP rate of Australia. It also substantially increased the level of unemployment due o which the concept of LTU and VLTU became irrelevant in the usual operations of the country (Markovi? et al., 2016). The political parties of Australia commented on the policy responses to the problem of unemployment. They concluded that rapid economic growth is not sufficient for decreasing LTU and VLTU. To achieve this reduction, continued wage restraint is important and labour market deregulation would be helpful in generating employment opportunities in NSW, WA, Tasmania, Queensland and SA. The government also identified that there should be a system for inflationary wages outcomes for undermining efforts in the creation of jobs. Labour on-cost was found to be essential for determining employment patterns. Australia required an unemployment insurance scheme in which the fear of removing income support encouraged the efforts by the unemployed to get back to the job.


Other Measures taken by Australian government

Australian Government tries to keep balance of resources over the route of economic cycle of the country. It considers the national saving adequacy, fiscal risks, the economic impacts of policy assessments in future generations and stability of the tax system for achieving sustainable economic growth which will increase employment rate (Madito, and Khumalo, 2014). The policies are designed by the government which cover workforce participation, welfare to job package, and increased incentives. Reductions in personal income tax rates and increased thresholds have also contributed to the enhanced returns to work. In order to remove the structural unemployment in the country, Australian government has introduced measures like superannuation and labour market reforms (Page et al., 2013). In addition to this, employee training programmes and reduction in mature age employee tax rates have increased the work inducements for the aged people. Various macroeconomic reforms have also been adopted by the Australian government to redistribute resources and wealth equally in the society for maximizing the production level. It resulted in the improvement in the efficiency and productivity of the workers by bringing industry reforms and taxation reforms.

Following is the trend figures in March, 2010 associated with the joblessness in Australia:

  • Increase in the employment level to 10,991,900
  • Decline in the idleness rate  to 611,000
  • The idleness level was over 5%
  • The workforce participation rate is maintained at 65.2%
  •  There is a rise in the total monthly hours operated raised to 1,540.5 million hours
  • The female employment level is 5.3% and male unemployment level is 5.4%

It has been observed that over 80 percent of employees like to do challenging and satisfying job, while 60% people emphasize on having effective career advancement and efficient control and supervision. It indicates that only a small fraction of people in Australia gives importance to increased wages and salary. The steady reduction in the joblessness level has led to economic development and rise in the total demand for goods and services in the country (Ball et al., 2015). It brought major changes in the unemployment.



In conclusion, it can be said that unemployment is considered as the major economic and social issue for the government of Australia. Australia’s labour market programs mainly address employability instead of offering full employment. It has been reflected that only a small percentage of people are fully employed even after getting labour market support. For increasing employment, the government should act as employer of last resort in order to mitigate the impacts of continuing unemployment. It is also concluded that individuals in Australia are struck by mere concern of economists over the issue of unemployment. Also, there is also contract that reduced real wages and sound economic development should be vital elements of any solution to the unemployment issue. Although the current difficulties that the labour market of Australia is facing can be found in other OECD countries also yet, it should not be considered as a justification for inaction on the labour market front.

Moreover, unemployment rates have increased dramatically over many years, strengthened by a significant increase in male unemployment rates. However, like any other developed economies, Australia also has very little percentage of unemployment if observed from naked eyes. A number of causes like ineffective education system, part time job, rigid policies of job, and high employee turnover rate can hamper the economic development of Australia in corporate world. Analysis of above discussions also shows that unemployment problem in Australia can be eliminated with the integrated efforts of international institutions and the government so that youths can get better opportunities to advance their career, making the Australian economy highly capable and fully-fledged. A continuation of general microeconomic reform and sound macroeconomic policy settings can also relevant for assisting labour and welfare policies in the country to achieve high levels of employment.;



Australian Bureau of Statistics (2017) Labour Force, Australia. [Online]. Available at: (Accessed: 29 September 2017).

Ball, L., Jalles, J.T. and Loungani, P., (2015) ‘Do forecasters believe in Okun’s Law? An assessment of unemployment and output forecasts’, International Journal of Forecasting, 31(1), pp.176-184.

Bidargaddi, N., Bastiampillai, T., Schrader, G., Adams, R., Piantadosi, C., Strobel, J., Tucker, G. and Allison, S., (2015) ‘Changes in monthly unemployment rates may predict changes in the number of psychiatric presentations to emergency services in South Australia’, BMC emergency medicine, 15(1), p.16.     

Campbell, A., (2016) ‘Employment services: Tackling the issue of unemployment’, Parity, 29(10), p.52.

Campbell, A., (2016) ‘Employment services: Tackling the issue of unemployment’, Parity, 29(10), p.52.

Considine, M., O'Sullivan, S. and Nguyen, P., (2014) ‘New public management and welfare-to-work in Australia: Comparing the reform agendas of the ALP and the Coalition’, Australian Journal of Political Science, 49(3), pp.469-485.  

Curtis, E., Gibbon, P. and Katsikitis, M., (2016) ‘Group Identity and Readiness to Change Unemployment Status’, Journal of Employment Counseling, 53(2), pp.50-59.

Fromentin, V., (2013) ‘The relationship between immigration and unemployment: The case of France’, Economic Analysis and Policy, 43(1), pp.51-66.

Furuoka, F., (2014) ‘Are unemployment rates stationary in Asia-Pacific countries? New findings from Fourier ADF test’, Ekonomska istraživanja, 27(1), pp.34-45.

Golebiowska, K., Elnasri, A. and Withers, G., (2016) ‘Responding to Negative Public Attitudes towards Immigration through Analysis and Policy: regional and unemployment dimensions’, Australian Geographer, 47(4), pp.435-453.

Irpan, H.M., Saad, R.M. and Ibrahim, N., (2016) ‘Investigating Relationship between Unemployment Rate and GDP Growth in Malaysia’, International Information Institute (Tokyo). Information, 19(9B), p.4057.

Madito, O. and Khumalo, J., (2014) ‘Economic Growth-Unemployment Nexus in South Africa: VECM Approach’, Mediterranean Journal of Social Sciences, 5(20), p.79.

Markovi?, M., Zdravkovi?, S., Mitrovi?, M. and Radoji?i?, A., (2016) ‘An iterative multivariate post hoc I-distance approach in evaluating OECD Better Life Index’, Social Indicators Research, 126(1), pp.1-19.

Milner, A., Page, A. and LaMontagne, A.D., (2013) ‘Duration of unemployment and suicide in Australia over the period 1985–2006: an ecological investigation by sex and age during rising versus declining national unemployment rates’, Journal of epidemiology and community health, 67(3), pp.237-244.    

Morrisroe, K., Huq, M., Stevens, W., Rabusa, C., Proudman, S. and Nikpour, M., (2016) ‘AB0607 Determinants of Unemployment amongst Australian Systemic Sclerosis PReferencesatients’, Annals of the Rheumatic Diseases, 75(Suppl 2), pp.1112-1112.  

Morrisroe, K., Huq, M., Stevens, W., Rabusa, C., Proudman, S.M. and Nikpour, M., (2016) ‘Determinants of unemployment amongst Australian systemic sclerosis patients: results from a multicentre cohort study’, Clinical and experimental rheumatology, 34(5), p.79.     

Page, A., Milner, A., Morrell, S. and Taylor, R., (2013) ‘The role of under-employment and unemployment in recent birth cohort effects in Australian suicide’, Social science & medicine, 93, pp.155-162.

Plummer, P. and Tonts, M., (2013) ‘Do history and geography matter? Regional unemployment dynamics in a resource-dependent economy: evidence from Western Australia, 1984–2011’, Environment and Planning A, 45(12), pp.2919-2938.

Saunders, P., Wong, M. and Bradbury, B., (2016) ‘Poverty in Australia since the financial crisis: the role of housing costs, income growth and unemployment’, Journal of Poverty and Social Justice, 24(2), pp.97-112.

Trading Economics (2017) Australia Minimum Weekly Wage. [Online]. Available at: (Accessed: 29 September 2017).

Trading Economics (2017) Australia Unemployment Rate. [Online]. Available at: (Accessed: 29 September 2017).


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