Analysis of Unemployment in the Australian Economy
To solve the issue of unemployment in Australia, there are two approaches that can be used to develop policies which will help to reduce unemployment. This includes; developing the demand side policies aimed at reducing demand-deficient unemployment and supply-side policies aimed at reducing structural unemployment (Mohanty, Tanton, Vidyattama, & Thurecht, 2016). One of the demand side policies to reduce unemployment is fiscal policy.
This policy can help to alleviate demand as well as the economic growth rate. This entails reducing taxes and increase government spending. Examples of economies that have benefited from the fiscal policy are the United States and Canada. These countries have benefited by attracting people to secure employment due to the lucrative wages offered leading to reduced rates of unemployment.
Monetary policy is another policy that Australia should implement in order to reduce unemployment. This policy focuses on lowering interest rates. Essentially, low interest rates minimize the cost of borrowing as well as motivate people to invest. This policy is very important especially in encouraging self-employment and investment. Since this policy focuses on cutting the cost of borrowing it will make it affordable for people to secure loans as capital for starting their own businesses, therefore, it will lead to reduced unemployment rates (Mohanty et al., 2016). For instance, France is one of the countries that have applied the monetary policy into their economy.
The French government has focused on reducing the rates of unemployment by trying to motivate and encourage its citizens to engage in businesses that will make them self-employed and also create more job opportunities for other people.
The most critical policy to minimize supply side unemployment which Australia needs is education and training policy. Everyone has to be educated and trained so as to obtain new skills that will enable them to secure job opportunities (Mohanty et al., 2016). Having knowledge and competence enables an individual to have a higher chance of securing a job. Almost all economies worldwide have implemented this policy.