Jobless rate falls to 5.6%


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The unemployment rate has fallen from 5.7% in July to 5.6% according to the ABS. Overall, employment dropped by 3,900 jobs in comparison to the forecast for a 11,500 gain. The reduction in the unemployment rate was facilitated by the fall in the participation rate from 65.3% to 64.7%.

How does this relate to the HSC syllabus?

  • The unemployment rate is calculated as the number of people unemployed over the number of people in the labour force (Prelim Topic 4 – Labour Markets; HSC Topic 3 – Economic Issues).
    • Unemployment refers to a situation where one does not have a job but is actively seeking one.
    • The labour force refers to the total number of unemployed and employed persons in an economy.
    • A decrease in the unemployment rate from 5.7% to 5.6% suggests that the number of people unemployed has decreased, or the number of people employed has increased. This stands in direct contrast to the fall in jobs by 3,900.
  • The simultaneous decrease in the unemployment rate and jobs in the economy can be explained by the increase in the participation rate. The participation rate is the number of people in the labour force over the working age population (HSC Topic 3 – Economic Issues). A decrease in the participation rate indicates that people are leaving the labour force. This may be due to the fact that unemployed people are discouraged about the prospects of employment in the current market and are contributing to the number of people classified in the ‘hidden unemployment’ category.
    • An individual falls into the hidden unemployment category if they leave the labour force to provide services at home such as caring for a child or elderly person. These people are not, according to the economic definition, unemployed as they are not actively seeking work.
    • Some economists suggest that the aging population has also contributed to the reduction in the participation rate as employees go into retirement. However, the working age population excludes those over the retirement age which casts doubt on this explanation.
  • There is also evidence that there is excess capacity in the economy as underemployment continues to be an issue. The excess human capital in the market may be a reason for slow wage growth (in conjunction with low productivity) as the excess supply gives employers bargaining power to give lower wages.

Morrison announces 5 yearly audit of nation’s productivity


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As well as the macroeconomic tools, productivity is a major indicator for growth which does not receive as much attention. Scott Morrison has introduced investigations into the economy’s productivity every 5 years, with the first report due in 12 months. The report will evaluate productivity in market and non-market sectors of the economy and provide recommendations for improvement. Productivity Commissioner hopes that the regular inquiry will inspire productivity reforms in the same way that the intergeneration report raised awareness of the issues with the aging population.

How does this relate to the HSC syllabus?

  • Productivity generally refers the level of output produced in an economy per unit of input.
    • Productivity is vital to the economy as an increase in productivity increases the aggregate supply in the economy. An increase in aggregate supply increases economic growth while lowering inflationary pressure in the long run (HSC Topic 3 – Economic Issues). Productivity growth in Australia has been low recently at 1.9%. which has contributed to Australia’s slow economic growth and slow wage growth.
  • Productivity is significantly influenced by microeconomic reform which aims to increase efficiency and productivity in the market. The last significant microeconomic reforms were in the 1980’s – 1990’s, indicating that Australia is overdue for another. The new productivity report may contribute significantly to these reforms as the analysis of the economy will pinpoint which sectors of the economy are suffering from low productivity and provide recommendations for improvement.
    • Recall that although microeconomic reform is generally opposed to initially as it has adverse effects on the economy in the short term. Opposition from the economy and political desire to retain support typically impedes the implementation of microeconomic reform (Prelim Topic 6 – Government and the Economy; HSC Topic 4 – Economic Policies and Management).

Theresa Dang THERESA DANG

Theresa Dang is an economics mentor at Keystone Education. She attended Sydney Girls High and achieved an ATAR of 99.70 in 2012. She is now studying Commerce and Law at the University of Sydney. She has experience in a global technology firm and a mutual fund.

Gary Liang GARY LIANG

Gary Liang is the founder and director of Keystone Education. He attended Sydney Boys High and achieved an ATAR of 99.95 in 2012. He achieved 5 state ranks in Mathematics, Mathematics Ext 1, Mathematics Ext 2, Chemistry and Economics. He is now studying Economics and Science (Advanced Mathematics) at the UNSW Australia, where he is the recipient of four scholarships.

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