Unemployment wastes valuable human resources and ruins lives. One of its most insidious effects is on the children of the unemployed, who disproportionately become addicted to drugs and various forms of antisocial behaviour. A serious attack on unemployment, far more serious than we have seen for the past thirty years, would be one of the best contributions to the welfare of all Australians that the government could make.
The government, with good luck as well as good management, has done much to reduce unemployment from the catastrophic levels created by the severe recessions in the last third of the twentieth century.
There are, however, major issues for the labour market still to be tackled. The evidence is that Australia’s labour market participation is well behind that of other countries and that the effective rate of unemployment is well above the rate as officially measured. In particular, when one allows for people who have retired prematurely, those who are working many less hours each week than they would prefer, women who are forced to stay at home by the high cost of professional childcare and people on disability pensions who would still be working in other circumstances, the effective rate of unemployment is nearer 15% rather than the 5% suggested by official statistics. This is a judgment provided to me by Professor John Freebairn, Director of the Melbourne Institute, but one the team at HenryThornton.com endorses.
Part of the reason for our internationally low labour market participation lies with major unresolved issues with Australia’s tax and welfare system. Closely related is the question of the sustainable rate of growth. Some say this is as low as 3% per annum, others say 4%. Sustainable growth at 5% should be Australia’s aim but continued economic reform will be required if this is to be achieved.
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Henry’s editor, Peter Jonson, enters the fray by distilling the arguments of Australia’s leading economists, while recognising that implementation would need to be phased in carefully over several years to avoid overheating the economy.
Read on at Henry Thornton…