Australian Economics: Labour Market, Policies, and Business Cycle

Ageing population

when there is a rise in the proportion of people nearing retirement age, reducing a nation's supply of labour and potentially contributing to labour shortages.

Aggregate demand policies

includes budgetary and monetary measures designed to regulate spending, GDP, employment, unemployment, and labour shortages, employed in a counter-cyclical way.

Aggregate supply policies

aim to make conditions more favourable for producers by cutting production costs, improving efficiency, and strengthening profits.

Contractionary aggregate demand policies

aim to slow spending and economic activity through higher taxes and decreased government spending.

Cyclical unemployment

occurs when individuals lose their jobs due to weak spending and a slowdown or recession.

Deregulate the labour market

means the government reduces its control over setting wages and working conditions.

Employed person

those aged 15 and over who have a paid job and work for more than 1 hour per week.

Expansionary aggregate demand policies

boost spending through lower taxes and increased government spending.

Fair Work Commission

manages industrial relations, monitors enterprise agreements, and sets the annual minimum legal award wage.

Goal of full employment?

to achieve the lowest unemployment rate, around 4.0 to 4.5%, without causing inflation to accelerate.

Immigration

involves the entry of people with wanted skills to help ease labour shortages in Australia.

Infrastructure

includes capital resources like roads and hospitals that enable businesses to produce goods and services, affecting costs and employment.

Interest rates

affect borrowing costs, spending, saving, aggregate demand, GDP, and employment levels.

Job Vacancies

are advertised job offers that reflect the demand for labour and respond to the business cycle.

Labour force

people over 15 years old who are able and willing to work, either employed or unemployed.

Labour productivity

reflects the value of GDP produced per hour worked, impacting production costs and inflation.

Labour shortages

when demand for labour exceeds supply, often happening during economic booms.

Material living standards

per capita income levels and the consumption of goods and services.

Monetary policy

involves the RBA using interest rate changes to stabilize total spending, GDP, and the labour market.

Natural unemployment

the lowest rate of unemployment that does not cause inflation to accelerate, typically around 4.0-4.5%.

Net migration

the excess of overseas arrivals over departures, affecting the labour force size and skills.

Non-material living standards

relate to wellbeing elements like freedom, happiness, and quality of life, rather than just goods and services.

Participation rates

represent the proportion of people aged 15 and over who are members of the labour force.

Recession

defined as two or more negative quarters of GDP growth, associated with high cyclical unemployment.

Stronger labour market conditions

when demand for labour rises relative to supply, often during economic booms.

Structural unemployment

occurs when firms change production methods or there is a mismatch between worker skills and job requirements.

Underemployment

exists when individuals have jobs but want to work more hours and are unable to do so.

Underutilisation rate

measures the extent to which available labour is not working at capacity, combining unemployment and underemployment rates.

Unemployed persons

Are those aged 15 and over who are actively looking for work but cannot find a job.

Unionisation of the labour force

indicates the extent to which workers in a profession belong to a trade union or industrial organisation.

Weaker labour market conditions

develop when demand for labour falls relative to supply, often during economic slowdowns.