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A person is classified as employed when he or she has paid work for more than one hour per week. The exception occurs in the case of family members working without pay in the family business. Full employment occurs when cyclical unemployment associated with weak expenditure and recession is avoided, and where a fairly low level of natural unemployment is tolerated. The acceptable target for the unemployment rate is currently around 6 - 7 %. (Morris: 2000, P 272) Australia did well during the 1980 s in creating employment opportunities. Unemployment declined steadily to reach only 6. 2 % for 1989 - 90. A severe recession started in mid- 1990, causing the unemployment to rise to 11 % in 1992 - 93.
At this time, the level of cyclical unemployment was high. However, strong economic activity in 1993 - 1996 cause unemployment to fall 8. 5 % for 1995 - 96 and the unemployment rate continue to rise in the year 1997. Australias economic growth was strong between 1997 - 98 and in the ending June of 1999, unemployment fall down to average of only 7. 6 %. During the mid to late 1980 s employment increased faster in Australia than in any other OCED country. This record, however, was not enough to ensure that all people who wanted to work could do so. The unemployment problem makes it very difficult to achieve the objectives of full employment.
Almost 1. 6 million new jobs were created between 1983 and 1990, but the number of unemployed people fell by only 100, 000. The unemployment level is even worse nowadays by referring to the table behind provided by the Australia Bureau Statistic. Unemployment had become a persistent problem because while the number of jobs has grown, the number of people wanting work has grown even faster. Technological and structural change, fewer workers are needed in the traditional employment areas of primary and secondary industry, and in the routine clerical areas of service sector.
The most striking technological development has been the rise of the personal computers. Job losses in manufacturing have centred either on technological change or on competition from imports. All these structural change has contributed to this higher rate of natural unemployment. The brunt of the burden of unemployment, at least as measured by ABS surveys, appears to fall on men, who make up two-third of the unemployed.
Unemployment is also particularly high among the young, especially 20 - 24 year olds. Almost half of all unemployed people are under age of 30. Young people, especially those with a limited education are finding it increasingly hard to obtain a full-time job. More generally, it is the better educated members of the workforce who have been getting available full time jobs. There is now concern that people with higher education are increasing faster than the demand for their qualifications and that they are taking jobs traditionally held by the less skilled.
Those from non-English speaking background, who have a disability or are not well educated, also suffer. Aboriginal and Torres Strait Islander peoples are particularly badly affected. Of particular concern is that over the last 15 years or so, the number of people unemployed for more than a year, that is, long-term unemployed has risen with each subsequent downturn. Today, around 718. 2000 people are in this category almost 7. 6 % of unemployment rate. People aged 20 to 24 years form the largest group of long-term unemployed. However, I would like to stress that the economic objective of full employment has a compatible relationship with the economic objective of economic growth.
The full employment of labour and other resource is important for maximising national productive capacity. The rate of economic growth over the long-term basically depends on the rate of increase of capital, labour and productivity. If the labour force grow slowly then, everything else being equal, economic growth will be lower. We should consider the implication of unemployment. By promoting economic growth, unemployment might be reduced. Economic growth involves capital spending by business on plant and equipment including buildings, labour.
This expenditure will not only help raise our national productive capacity and make possible the production of other goods and services, but it should improve the efficiency of labour and natural resources. One of the biggest losses by unemployment is forgone output. Jobless workers do not produce goods and services. (Morris, 2000, P 84) The improved achievement of full employment tends to conflict with price stability. Full employment will increase the household disposable income, so that more money is available for spending by individuals. This strong demand side factor will cause a strong or even excessive rise in aggregate demand. However if this peak occurs, the economy is stretched to its full productive capacity, and a dangerous inflationary boom may happen.
When there is an increased demand, the price will rise due to the competition between consumers, resulting in inflation, where average prices are rising. In this situation, there may be a redistribution of income, and adverse external effect on overseas reserves, unemployment and the erosion of business confidence. Perhaps the biggest issue that has been raised for prioritising the full employment objectives is the family issue. Although mothers have flocked into the labour market, what happens or should happen to children when both of their parents work? Even with the excellent available child-care facilities, there is concern that working parents and their children need more time to spend with each other.
This usually requires women to take up part-time jobs. This may impede the development of equality between the sexes and this is not compatible with the goal of equality between the sexes in the labour market, in the home and the society. The advantage of prioritising the full employment objective is the effect of the various changes on living standards of individual workers. As would be expected, higher productivity leads to higher wages and faster growth in living standards.
The increase in the living standards of the community in general is much greater as a greater proportion of the population is in work. And it also means that the tax burden is lessened and more resources can be directed into necessary community projects that lift the community material and non material welfare, such as public school and public hospital. The possible change in policy required to achieve the chosen objectives is to maximise sustainable economic growth and take specific action to reduce the numbers of long- term unemployed people. Growth will create employment opportunities and reduce the need for assistance measures. Bringing long-term unemployed people back into the mainstream will expand our effective labour supply and create the means for us to increase our economic activity. However, a return to a high inflation economy must be avoided.
While there has perhaps been too much attention devoted to rates of pay, we do need to improve cooperation at the workplace to improve productivity. Reforms to the industrial relations framework to encourage new workplace agreements will help, but even more important is the attitudes of the parties themselves and their willingness to think creatively about possible improvement in the organisation of their work. MORRIS RICHARD, 2000, ECONOMICS DOWNUNDER, JOHN & WILEY SON LTD, AUSTRALIA
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