Full Employment

1
Full Employment

• Definition Full employment means a situation in
  which all of the people who are willing and able
  to work are able to find employment.

2
Measurement and Goal

• The data is collected every month. The ABS
  collects the information by performing a random
  survey of 0.7 of all Australian households.
• The data that they show is the percentage of
  people who are in the labour force and unable to
  find employment.
  
  
  
  

3
Performance

• Despite our improvement, Australia has a higher
  unemployment rate than most of our South East
  Asian neighbours. Most OECD countries, as shown
  in International Comparison have higher
  unemployment rates than Australia.

4
Recent Performance

• Australias unemployment rate fell steadily
  between mid 2001 and the end of 2005. Strong
  domestic economic growth, low interest rates and
  high levels of government expenditure have been
  the main reasons for the decline.

5
International Comparison

• Singapore 3.4
• South Korea 3.7
• New Zealand 3.7
• Taiwan 4.1
• Japan 4.2
• United Kingdom 4.6
• United States 5.0
• Australia 5.1
• Hong Kong 5.7
• Canada 6.6
• EU Average 7.7

6
International Comparison cntd.

• International comparisons still show Australias
  unemployment conditions as middle of the road.
  The debate in 2006 is on how the recent declines
  in our unemployment levels can be sustained and
  further reduced to levels below 5. Recent major
  industrial relations reforms have been suggested
  by some commentators as being likely to assist in
  this process.

7
Limitations of Official Statistics

1. Many unemployment benefit recipients have been
   shifted into disability pensions or the youth
   allowance. This removes people from the official
   unemployment statistics.
2. Some People simply lie deliberately mislead the
   survey takers

8
Further Measurement limitations

• Others are employed but seek extra work. These
  people are known as the disguised unemployed.
• There are those that come under the heading of
  the hidden unemployed. These people do not have a
  job, but they have given up actively seeking
  employment. They have lost confidence in
  themselves.

9
Underemployed

• A tighter work test and a weakened means test
  for unemployment benefit recipients has
  encouraged people to seek a few hours work here
  and there while staying on benefits. Because the
  ABS does not count as unemployed people doing one
  hour paid work per week or more, these people are
  not aprt of official unemployment statistics.
  However they are clearly unemployed.

10
Real Unemployment Rate

• It has been estimated that if these figured are
  included, the real unemployment rate would be
  around 10, compared to the current rate of 5.1
• Another Limitation
• 2. Discouraged workers who withdraw from the job
  market are not registering as unemployed workers.

11
Maintaining Low Unemployment

• Governments need to meet those Economic Objectives

12
Low Inflation

1. Maintenance of a low inflation enviroment which
   will generate sustainable economic growth is an
   important ingredient in limiting growth in
   unemployment levels.

13
Low Inflation Federal Govt.

• The Federal government also aims to prevent
  major economic imbalances, such as rising
  inflation.
• In early 2005 this potential imbalance led to a
  tightening of monetary policy, truncating
  excessive economics growth and limiting the
  process of furthur reduction in unemployment.

14

• In early 2006 accelerating inflation due to
  rising oil prices, strong wage demands and a
  waning of the positive effects on inflation from
  our recent A appreciation may require further
  RBA intervention to prevent the imbalances of an
  inflation outbreak reemerging.

15
Labour Market Reform

• Labour market reform involves individual
  contracts and enterprise bargaining, lower entry
  level training and wages, reduced trade union
  influence and targeted training which promotes a
  better synergy between labour market supply and
  demand.

16
Excessive Wage Growth

• Excessive wage increases and structural
  impediments in the labour market will lead to
  higher unemployment. Labour market deregulation
  can promote greater competition and flexibility
  and prevent the excessive wage growth.

17
Improved Productivity

• Reduction in the real unit cost of labour will
  also provide an incentive for increased
  employment of a well-trained labour force. The
  likelihood of excessive wages growth is reduced.

18
Improve Training

• Improved training and on the job skills for the
  long-term unemployed, work-for-the-dole scheme,
  are designed to increase job skills for the
  long-term unemployed and allow them to respond to
  higher labour demand.

19
Job Networks

• Job Network has introduced 300 community and
  private sector employment placement agencies into
  competition to find suitable work for the
  unemployed.

20
Tax and Welfare Reform

• The taxation package introduced in July 2000
  aimed in part to reduce business costs by the
  scrapping of the wholesale sales tax. Removal of
  distortions in the taxation system will lead to
  more efficient resource allocation and an
  improvin business climate, and job creation.

21
Welfare Reform

• The combination of a loss of welfare benefits
  and marginal income tax rates on income earned
  acts as a disincentive to unemployed persons
  wishing to re-enter the labour force.

22
2003/2004 Budget

• In the 2003/04 budget, increasied family tax
  benefits and higher income tax thresholds were
  announced. In the 2004/05 and 2005/06 budgets, a
  further round of measures to reduced welfare
  traps and improve incentives to work were
  introduced.

23
Welfare to Work

• The Welfare to Work reforms include lower
  marginal tax rates for low income earners,
  requiring recipients of the parenting Payment to
  seek work when children reach a certain age, and
  provision of assistance to employers wishing to
  engage long-term unemployed.