How Is Unemployment Measured?

824 WordsSep 18, 20154 Pages
How is Unemployment Measured? The method used by the Australian Bureau of Statistics (ABS) for determination of unemployment is closely based from the guidelines of the International Labour Organization. Monthly, the ABS conducts the Labour Force Survey from a sample of appropriately 0.33 per cent of the population aged 15 years and over. A person is considered unemployed if he is looking for a job, on a temporary layoff, or is waiting to start a new job. This excludes institutionalised people, overseas residents, members of permanent defence forces and certain diplomatic personnel. (ABS, Labour Statistics: Concepts, Sources and Methods, 2013) Generally, the unemployment rate is a good indicator of labour market conditions. When unemployment is dropping, often this is the result of more spending and faster economic growth. (Morris, 2012) Causes of Unemployment There are two main types of factors affecting the level of unemployment in Australia. When the national expenditure (aggregate demand) and production (gross domestic product) levels are frail as occurs during recessions or depressions, weak aggregate demand-side conditions happens causing cyclical unemployment. It vanishes when the economy is strong. Due to cyclical plummet in total spending on Australian production, sales of goods and services are depressed causing the level of unsold business stocks to rise. Eventually, firms decides to cut output levels to prevent surplus/overproduction. As a result, demand
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