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Unemployment Impact on Australia and the UK


The following assessment task describes the situation or impact of unemployment in two major economies of Australia and United Kingdom. After these economies were hit by financial crisis the report describes the ways they tackle to unemployment after that. The report first describes how unemployment started to came in large picture in Australia. As the report continues it describes the policies and measures taken by government and how effective these were. It clearly describes the consequences of unemployment in the country economy. It will enable us to understand the situation precisely and have a better clarity on the situation of unemployment.

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   Unemployment refers to a situation where people who are able and willing to do work are not getting work. In other words, it occurs when a person who is actively searching for employment is not able to get any job. However, unemployment is frequently used as a measure of gathering the health of the economy. It adversely affects the economy resulting in underutilization of resources, recession and increased government expenditure. It also leads to social unrest and wide gap between the different sections of the society.  Any graduate individual who has some experience in the corporate world will be clearly vocalizing that, in current scenario trying to beget and sustain a apposite financial status in the corporate sector is not an stress-free undertaking at all.

Attaining a job in itself is such a tough mission indeed, so many persons are obligated to stick with jobs they aren’t even happy doing. Of all the major issues which individuals in the commercial turf face, one of the principal issues is unemployment

The issue of unemployment is a very serious one indeed, which cannot be tackled easily. Therefore a need arises to discuss & comprehend  about the different unemployment causes and effects of all the many causes of unemployment which exist, the main causes of unemployment can be pointed to the universal economic & fiscal crisis which exists at the moment and has prevailed for a quite a time. This economic predicament has aggravated in a very adverse manner in the matter of the trade between countries. Nations which were formerly rather rich have not been able to withstand the monetary crunch. In order to evade any kinds of key losses, corporations too have begun to reduce the production of their merchandises, since not many individuals are willing to invest a lot of money in procuring things.

In Australia, the situation of unemployment came into large picture from 1929 when it arose sharply till 1950s and 1960s, which were the years of prosperity. After 1970s, unemployment rose again there and reached 10% in 1983 but declined in 1988 to 6%. However, when recession again strikes the economy it arises to 11.3% in 1992, then fell to 4.4% in 2007, rose to 5.3% n March 2011 till 5.9% in 2017.

In Britain, till 1914 economy was stable and unemployment was low but during 1920s there was mass unemployment between 10% and 12%. In 1930, the economy was struck by depression and by the start of 1933, unemployment among insured workers reached 22.8%. However, it substantially fell in the consecutive years and by January 1936 stood at 13.9% and 10% in 1938. Though in the years 1980-1982 Britain was gripped by depression and unemployment grew much worse. It reached a crowning in 1986 then it fell in 1990. Regrettably another recession began in 1990 and unemployment grew again. However unemployment began to fall again in 1993 and it constantly lowered till the end of the century. Inopportunely unemployment rose again with the recession of 2009. In September 2012 the unemployment rate in the UK was 7.9%. In March 2017 it lowered to 4.7%.


One of the major reasons for unemployment in Australia is shutdown of industries which majorly affected South Australia. When Holden closes, advance planning by the state and federal government to prepare the workforce for transition to other work has failed. Another reason for unemployment there is when the country opens the floodgate for the immigrants, there is less work opportunities for the local population which causes the feeling of resentment in them. Development of technology is also another reason for unemployment as the automatic machines cut the cost of hiring labour. All the traditional hand works are now done by machines which decrease the use of labour.

Recession is the cause of unemployment in both Australia and United Kingdom. It causes cyclical demand deficit unemployment. Recession is occurred when the real GDP of firm is falling which induces the firms to produce less which result in less demand for workers. The main types of unemployment observed in United Kingdom are structural unemployment, frictional unemployment and geographical unemployment. Automated & outsourcing is also one of the major reasons for unemployment in Australia and United Kingdom as it reduces the need of labour or workers at firms or companies. As the world is heading towards globalization day by day it proportionately decreases the need of actual human workforce.

In Australia, import prices have fallen in the past two years which stops the firms to ask for jobs to people and pay lesser amount to the ones who are employed. When cheap products are imported, effective cheap labour is also imported. This effective boost to the quantity of cheap labour lowers down import expenses and wages in Australia. A similar effect happens when businesses outsource products or services to another country. The most common primary motivation for global outsourcing cited by companies is cost cutting. Business roles that are typically outsourced are working on procurement and services such as information technology, legal, facilities management, finance and human resources.

To cut international competition, Australian government encouraged migrated labour. The effect of migration on wages depends whether it creates enough jobs to absorb the extra workers, but teasing this out is not straightforward.Net overseas migration has increased as a share of the population from 47% in 2000 to 54% in 2015. And the skilled migrant share of permanent migrants has increased from 55% in 2000 to 68% in 2015. Not only are migrants increasing as a share of the population but higher share of them are skilled. And their labour participation rates are high. In November 2016 the labour force participation rate for recent migrants and temporary residents together calculated was at 70%, which is greater than the whole partaking rate for Australia of 66%. The significance is to enhance the overall Australian labour contribution rate. Significantly, current migrants have greater skill levels than others in the labour force. Unless adequate extra jobs are created to captivate these extra workers, wages could verve down and more so in skilled wages section than the unskilled wages.

Yet this effect on job creation is tough to pin down and so research shows the effect on wages could go both ways.


Unemployment is a situation which can be seen in almost every country even in the developed countries, only the quantum of unemployment varies otherwise it’s a global issue. It not only affects an individual but also cripples the financial and economic development of the country.

If there is no source of income, one is forced to have to settle and go without it & ultimately turn towards wrong/unethical means to sustain. If a jobless individual has a family, it becomes more difficult to survive. In these cases government has to pay for the sustenance of foresaid individuals. Skilled educated individuals are forced to take up jobs which are not suited to them.

The major negative impact of unemployment is that it deteriorates the skills of the worker because when a person is ideal he/she is doing nothing to enhance specialize their skills. These skills are constantly used & enhanced at workplace by training and development programs. The index calculates the well-being cost of skills atrophy was $1.4 billion in the March quarter alone, 14 times greater than the average.

Monetary Policy

Central Banks have many possibilities available with application of monetary policy, and they have developed an effective strategy to provide support to the financial scheme with liberal liquidity. They must now contest any associated economic downturn as well. They have also partnered up with government to mediate in markets and provide job opportunities.

Supporting the Financial System

In an attempt to ease the global credit crunch, central banks unleashed the financial policy tools available to them. These measures can be fragmented down into three distinct categories. The first measure is to deliver extended opportunities for the banks to borrow from the central

bank. In Australia, the RBA significantly increased the Aggregate Exchange Settlement (ES) balances to a peak of $10billion, which usually runs at $1 billion. Since creditors were only willing to lend at short maturities, one can see the corresponding demand for RBA term deposits in the graph below.

As the economy arrives at the “Systematic Liquidity Stage”, financial establishments refuse to lend cash, so central banks have to play the role of lender of the last choice. For this, Central banks have relieved the collateral securities e.g., RBA now includes RMBS, ABCP and USD‐denominated RMBS and ABCP and extending the term of repos to 6months and 1 year. This helped banks with ample liquidity to support themselves in the phase of tough financial conditions.

The second measure was to extend finances to the individuals. In other words, it means, to supporting direct procurements to support certain markets. In Australia, the government directed the Australian Office of Financial Management to procure a maximum of $8 billion or residential mortgage – backed securities. Similarly, the RBA also spent $730mn, to kick‐start the MBS market. In United States, the $700 billion TRAP which was rushed through the senate, which attempted to use “complex auctions to buy back mortgage‐securities and provide short‐term solidity.

The third measure was the usage of guarantees to stabilize markets, support banks in raising debt and to avoid a run on the banking system.  After the bankruptcy of Lehman Brothers, losses on Lehman debt in the money market totaled $700million. Due to the short‐term nature of these liabilities and the uncertainty of who held these toxic assets, investors could easily withdraw their funds, which turned into a bank‐like run on $3 trillion industry, which would heavily affect the corporate commercial paper market. To avert this crisis, the Treasury and Federal Reserve gave deposit insurance for these money market funds. Deposit Insurance was also given in various countries to re‐assure the public and avoid any bank runs. There was no form of insurance during the great depression, which lead to numerous bank runs and ultimately the failure of the banking system. In Australia, the bank guarantees were pushed up to $1 million dollars, with a fee taken for amounts above that. Further support for authorized deposit‐taking institutions, was the ability to use the Federal Government’s AAA credit rating to elevate debt cheaply.


The resulting effect of monetary crisis on economy is reduced credit flows to consumers and business which when combined with noteworthy declines in major share indexes and house prices. The subsequent net loss of wealth reduces the desire of consumers and business to consume and invest.  This can be seen in drop of in consumer and business confidence in the world’s major markets. Further, a run‐down of inventories was evident as businesses struggled to anticipate the consumer demand.

Being the link between financial crisis and possible economic downturn became more apparent, central banks cut the rates very quickly. At an emergency level in Australia, cash rates cut 425 points of 3%. The ability to modify amounts at any time provides the central bank with flexibility to stimulate in a downturn and prevent overheating in prosperous times. Thus in the current scenario, a decrease in the interest rates reduces the cost of borrowing, growing planned aggregate expenditure and thereby raise the short‐run equilibrium output. It also increases a household’s discretionary income and results in increased expenditure. A big driver of discretionary spending is not the interest rate set by the central bank but as specified in home loan contact.


The intensifying rate of Australian unemployment and the occupation slowdown poses a challenge for the new Australian government. The incidence of youth unemployment will be a particular challenge, as the rate of full-time jobseekers in the 15 to 19 year-old age group rose to 25.5 percent in early July. The adult joblessness rate in 2013 was at just over 5.6 percent. The problem of youth unemployment is a direct consequence of the marked reduction in the number of entry-level jobs in the labor market sector in the past few decades. With an elderly workforce and an even more swiftly aging population, the problem is set to convert into even more serious one. There is little doubt that a great rate of unemployment among the youth will have an antagonistic effect on the future productivity and retirement of the labor force of present.

Another policy taken by the government of both the countries is to privatize the public companies. This on the one hand loses government control and monopoly but on the other hand it creates job opportunities at large level because private firms tend to expand their businesses globally all over the world. Sometimes, they open new branches at different states and create employment opportunities there.

Globalization has amplified international competition through imports of both goods and labour. Import of the good tends to depress wage growth in Australia. The outcome of labour imports through migration on wage growth depends on whether the boost to the workforce dominates any increase to employment creation and that’s uncertain in theory and evidence. Globalization has also unbolted the door to the welfare of better Foreign Direct Investment. Foreign Direct Investment provides our industry improved access to the cutting-edge technologies and supports to strengthen company profitability and employments. It improves exports, giving Australian companies improved access to distribution channels and networks in intercontinental markets. For every dollar produced from Foreign Direct Investment in Australia, 96 cents is reserved in Australia – 50 cents of that in earnings.


Annual Average
Country 2014 2015 2016 2017
Australia 6.1 6.1 5.7 5.6
United Kingdom 6.1 5.3 4.8 4.4



The rising rate of Australian unemployment and the employment slowdown poses a challenge for the new Australian administration. The prevalence of youth unemployment will be a particular challenge, as the rate of full-time jobseekers in the 15 to 19 year-old age group rose to 25.5 percent in early July. The adult unemployment rate in 2013 was at just over 5.6 percent. The problem of youth unemployment is a direct result of the marked reduction in the number of entry-level jobs in the labor market in the past few decades. With an ageing workforce and an even more rapidly aging population, the problem is set to become even more serious. There is little doubt that a high rate of unemployment among the youth will have an adverse effect on the future productivity and retirement of the workforce of today.

The unemployment rate in Australia is a severe issue of concern. Long term unemployment – especially the young population of jobless people – will result in the loss of productivity in Australia and lay more pressure on the health, prosperity schemes and other public services in the future. Unemployment certainly leads to poor living standards and poverty, which is why it is becoming an issue of concern for the government.


This piece of data displays the estimated unemployment rate in the United Kingdom (UK) from 2016 to 2021. The rate is likely to experience a net increase during this period, with little instability between the years 2016 and 2022. The total reduction over this period is anticipated to be 0.3 percent, with the major annual decrease occurring between 2015 and 2016, falling by 0.5 percent. By 2017 and 2018 the unemployment rate is expected to reduce to 5 percent before increasing incrementally in the consecutive years. Yet despite this minor increase to the rate of UK unemployment the number of people in idleness has been declining annually since 2011.

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What governments and societies need to do is to advance the policies required to cope with alteration to globalization’s changes in a fair and effective manner. If doors close for some, other doors must be opened for them. They need to ensure that all Australians have the opportunity to share the benefits that globalization can undoubtedly bring.

Australia is a great innovator of new technology and Australians have an insatiable appetite for new technology.

The IMF has ranked Australia second in the world in the new economy stakes, and Australia is a major player in the new economy. By continuing to pursue the opening of new markets, Australia will be able to capitalize on our unique position, and move from strength to strength in the new Century.

The Global Financial Crisis has severely verified the very institutions that were setup to prevent such events from occurring. Monetary policy and three other policy measures offered targeted and effective support for the monetary system. The resultant economic downturn is addressed through various monetary and fiscal policies. Fiscal policy has assisted endure short‐term demand but a more targeted incentive could be provided. To ride out the global financial crisis, there is a need to endure the efforts in supporting the financial system, but also to authorize the private sector to safeguard that maximum efficiency is achieved.

Also unemployment has both positive and negative impacts but the negative impacts are more visible as it affects the majority of the economy. Firms and government both have to work together to decrease unemployment rates and decrease inflation.

The report clearly examines firstly the various reasons of unemployment in Australia and United Kingdom, then the adverse effects on both the countries. In consecutive headings, the report shows the history of how it arises and became a serious concern in both the countries and then the policies taken by the government to tackle to this situation. It ends with the future of unemployment in Australia and United Kingdom through flow charts.


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     crisis, A. and Kennedy, D. (2018). Australia’s response to the global financial crisis. [online]

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 (2018). A History of Unemployment McCormick, B. (2018). Regional unemployment and labour mobility in the UK.

     Job Interview & Career Guide. (2018). The Effects of Unemployment on Society and the Economy. [online] Available at: //

     Wise Step. (2018). What  is Unemployment? Its Main Cause, Effects and Solutions – Wise Step. [online] Available at: //

     Money | tips: frugal living, saving money, credit card | Money AU. (2018). Causes of unemployment – common causes in Australia.

 (2018). SA’s jobless rate the worst in Australia

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     2022*, A. (2018). Australia – Unemployment rate 2022 | Statistic

     2022*, F. (2018). Forecasted unemployment rate UK 2016-2022 | Forecast

     : Anon, (2018). how-globalisation-is-shaping-how-much-you-get-paid-in-australia-2017-18

 (2018). The Practical Benefits of Globalization and the New Economy.

     Richardson, S., et al, 2004, The changing labour force experience of new migrants, Department of Immigration, Multicultural and Indigenous Affairs, Canberra.

     Wynn, J, 2005, “Youth, risk and education” in S Richardson and M Prior (eds), No Time to Lose: the wellbeing of Australia’s children, Melbourne University Publishing, Melbourne

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