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The Australian economy is currently operating below its potential. One key indicator is that the unemployment rate is high due to a large number of workers that are willing to work but does not participate in the production aspect. However, even when the economy is producing at its potential other causes that may affect the employment rate is that it could be when the economy endures a structural, technological or location of job vicissitudes, the industrial structure of activity shifts or evolve accordingly. Which could then cause a lasting mismatch between unemployed workers and available jobs, reducing the effectiveness with which they are matched and increasing unemployment. The steadiness of the Australian unemployment rate producing near its potential will be that associated with a stable rate of inflation. So when unemployment deviates from this level, it suggests that the economy is progressing or dwindling (RBA, 2018).
Since 2013 three Prime Ministers came into power which caused disarray within the Australian economy. The lack of focus the government showed towards policy indicated that the government was incapable of responding to significant economic, social and environmental challenges. With the upcoming 2019 federal election the government seems likely to lose power, but it is not just the normal of the coming and going of electoral politics that predicts an uncertain and dynamic political moment but that deeper changes of which the smaller parties are grinding away at the base of the conventional major parties over inequality and diminished economic opportunity, as well as the disconnection from the government for expressing discontent and effecting change.
Australia always tries to seek out interventionalist policies. In the 1970’s wages were believed to be too high and unions were too powerful. These beliefs motivated the labour market to change the industrial relations policy in the 1980’s which improved the growth of income equality in Australia, followed by efforts to reduce labour costs by demanding change in worker’s wage through the Price and Income Accords agreement. The Accords expanded social benefits like Medicare and superannuation causing a restraint on wage growth which declined for several years. Profits in GDP also returned to normal. The ‘Your Rights @ Work’ agreement was regulated in the 1990’s allowing for individual firms and industries more flexibility in wage setting. Modern Awards downgraded industries to aid as a safety net of minimum standards, which could be more influential in the long run because union membership and power began deteriorating. (ABS, 2018)
Industries were downgraded to serve as a safety net of minimum standards which coincides with the Modern Awards. Union membership and power began declining rapidly after this change. After 1996, industrial relations laws and labour standards were made employer-friendly by the Coalition governments. Initiatives that were implemented were in the context of other business-friendly economic and social policies, including liberalisation of international trade, taxes and government programme spending reduced, deregulation of the banking and financial industries and financial flows, exchange rates and retrenchment of income security policies.
However, much popular commentary blames the unsubstantiated acceleration of technological change, especially labour-saving innovations such as robotics, artificial intelligence and machine learning for the underutilisation of labour, declining of wage growth and declining job quality leading to a decline in business capital spending since the peak of the resource expansion in 2012, with no sign of recovery yet. The economic drizzled down due to a booming property sector alongside an increase in consumer spending. (ABS, 2018)
Over the past year employment has grown by 2½ per cent (Graph 1). This is above the growth in the working-age population and at the high end of past outcomes. For the past 2 years full time work occupied over two-thirds of the increase in employment. Despite this, part-time employment remains close to historical highs at around one-third of employment as a share of total employment (RBA, 2018). While ABS statistics show that casual employment has been stable in Australia for the past 20 years at about 20% of the workforce. (ABS, 2018)
Graph 1: Employment Growth
At the same time employment growth has been above-average, as well as the participation rate increasing and is now close to its record high. Participation rate’s movements have been highly correlated with employment growth for some time and if the participation rate hadn’t increased, the unemployment rate would weaken. These movements allows for the increase in labour utilisation and reduction in the amount of spare capacity in the labour market. Women and older workers make up the majority of the labour market leading to a rise in the participation rate and has increased notably in recent years. (RBA, 2018)
Watts (2003) conducted an analyse on the occupational gender segregation regarding woman which shows that women in the labour force made some gains in the Professional/Para-Professional group. A more in-depth perception into Watts (2003) research indicates that integration is not a positive story for women but is based partly on the movement of men into part-time work and declining full-time job opportunities in some areas to change into roles that are deemed more satisfying for themselves. It also indicates some areas of increasing feminisation and upright segregation at the more disaggregated level. The procedural approach extends beyond the notion of ‘segregation’ as an economy-wide symmetrical index (Blackburn et al, 2001: 512) to the attentiveness specific occupational groups where women work in and enables us to find unnoticeable trends and some (limited) aspects of vertical segregation not visible in aggregate indices.
According to the Labour Force Survey construction, manufacturing and health industries have contributed the most to employment growth over the past 2 years. This is because the aging of the population reflects the longer term trends in health related jobs as well as the rollout of the National Disability Insurance scheme, large amount of activity in residential and infrastructure construction along with high demands to export high-quality products and demand for manufactured ore from mining as well as the high levels of residential and infrastructure construction. Professional, technical and scientific services employment has also risen over the past year, driven by management consulting and computer system design. (RBA, 2018)
Since the Fair Work Act 2013 was introduced weekly earnings has declined due to average weekly wages dropping below average consumer inflation. Weekly wages have grown more slowly than the hourly WPI because of shifts in the composition of jobs, especially towards lower wage positions and average weekly hours of work reducing due to the growing share of part-time jobs. Labour compensation including wages, superannuation contributions and salaries per employed Australian has risen at an average rate of just 1.3% per year since 2012. (RBA, 2018). McManus (2018) pointed out that inequality now stands at a 70 plus year high. The wealthiest 1% of Australians owns more wealth than the bottom 70% of all other Australians combined. In the relative power of employers over employees power needs to be re-balanced. (McManus, 2018)
Chairman of the Productivity Commission in 2013 commented that the commission suggested: that income growth in the upcoming 10 years would fall by about half, if productivity performance this decade was as poor as it had been in the previous decade. This leads to almost half of Australia feeling of dissatisfied which the Committee for the Economic Development of Australia and found that Australians do not feel they have gained at all from nearly three decades of uninterrupted growth.” (Harris, 2018, p. 1).
Australia’s current industrial labour and relations policy regime are in need off a multidimensional and fundamental change. 40 years of the neo-liberal experimentation has shown to have a detrimental effect to the economy. The government has denied the Australian people of their working rights and the suppression of unions that commenced under John Howard. For almost 50 years workers’ share of GDP diminished due to these policies. This has led to a rise in insecure work and declining record wage growth, an erosion of services, a proliferation of rent-seekers, and elite group of big business owners, the lack of quality of life available to the rest of us. The country wasnts a fairer share of wealth created, better job security along with a fairer tax system. (McManus, 2019)
- Australian Bureau of Statistics. (2018). 6333.0 – Characteristics of Employment, Australia, August 2018: Key Findings. Retrieved from http://www.abs.gov.au/ausstats/[email protected]/mf/6333.0
- Australian Council of Union Trades. (2018). Sally McManus Speech to AIRAANZ, Retrieved from https://www.actu.org.au/actu-media/speeches-and-opinion/sally-mcmanus-speech-to-airaanz-february-2018
- Australian Council of Union Trades. (2019). Sally McManus – Speech to the Melbourne Press Club. 8 February, 2019. Retrieved from https://www.actu.org.au/actu-media/speeches-and-opinion/sally-mcmanus-speech-to-the-melbourne-press-club-080219
- Ballantyne, A., De Voss, D and Jacobs. D. (2014). Unemployment and spare Capacity in the Labour market. Retrieved from https://www.rba.gov.au/publications/bulletin/2014/sep/pdf/bu-0914-2.pdf
- Employment Growth Graph 1 adapted from “The State of Labour Market Speech”, by RBA, 2018, https://www.rba.gov.au/speeches/2018/sp-dg-2018-10-17.html
- Harris, P., (2018August 28), Seven Stories from ‘Rising inequality? A stocktake of the evidence, Retrieved from: https://www.pc.gov.au/news-media/speeches/rising-inequality
- Preston, A., Whitehouse, G. (2004). Gender Differences in in Occupation of Employment within Australia, Retrieved from https://espace.curtin.edu.au/bitstream/handle/20.500.11937/40191/20895_downloaded_stream_351.pdf?sequence=2&isAllowed=y
- Reserve Bank of Australia. (2018). Speeches, Retrieved from, https://www.rba.gov.au/speeches/
- Reserve Bank of Australia. (2018). Speeches: The State of the Labour Market, Retrieved from https://www.rba.gov.au/speeches/2018/sp-dg-2018-10-17.html
- Reserve Bank of Australia. (2018). Speeches: The State of the Labour Market, Retrieved from https://www.rba.gov.au/speeches/2018/sp-so-2018-10-05.html
- Watts, M. (2003). ‘The Evolution of Occupational Gender Segregation in Australia: Measurement and Interpretation”, Australian Journal of Labour Economics, Vol. 6(4) (Special Issue on Women and Work), pp.631-655.
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