AUSTRALIA'S jobs market roared back to life in February,

generating almost 50,000 new jobs, more than enough to offset

announced high-profile losses at Qantas, Alcoa, Holden and
Toyota.
An increase in the number of people looking for work helped keep the
national unemployment rate unchanged at 6 per cent for the second
month in a row - the participation rate rose from a near eight-year low
of 64.6 per cent to 64.8 per cent.
While part-time work retreated since January the number of full-time
jobs surged by 80,000 to 8.05 million, bringing the total number of
Australians in work for more than one hour a week to 11.53 million, a
record high thanks also to a continually rising population.
The Australian dollar surged by more than three quarters of a US cent
to US90.70c when the ABS released the figures at 11.30am (AEDT),
as investors discounted the likelihood of further interest rate cuts from
the Reserve Bank.
Meanwhile the benchmark S&P/ASX 200 share index was trading up
33.2 points higher in morning trade at 5417.
Economists had been expecting a jobs rebound in February following a
few months of very weak or negative job creation that saw the
unemployment rise to 6 per cent, the highest level in more than a
decade. Last year was the worst for job creation in more than 20 years.
News of faster jobs growth last month will reassure Australian
households increasingly worried about job security and a federal
government hoping for signs of an economic revival to make the case
for a tough budget in May.
The number of unemployed people rose by almost 10,000 to 742,200
between January and February, with more than 70 per cent of these
people looking for full-time work.
Across the states the unemployment rates in Victoria and New South
Wales remained constant, but rose in the resources states of Western
Australia and Queensland to 5.9 per cent and 6.2 per cent, respectively.
The total number of hours worked fell a little between from January to
February, which could mean jobs generation in the short term won't be
as strong.

The Reserve Bank of Australia and Treasury are still anticipating the
unemployment rate will keep rising this year to a maximum of 6.5 per
cent as the construction phase of the resource boom peters out
This will have implications on our economy as more unemployment means more
unproductive and inefficient employment of resources and less spending
because less income and less economic growth
Persistently high unemployment create huge costs for individuals and for the economy as a
whole. Some of these costs are difficult to value and measure, especially the longertermsocial costs.
Implications: structural change

3.Loss of national output: Unemployment involves a loss of potential national

output (i.e. GDP operating well below potential) and is a waste of scarce resources.
If some people choose to leave the labour market permanently because they have
lost the motivation to search for work, this can have a negative effect on long run
aggregate supply and thereby damage the economys growth potential. Some
economists call this the hysteresis effect. When unemployment is high there will be
an increase in spare capacity - in other words the output gap will become negative
and this can have deflationary forces on prices, profits and output.
4.Fiscal costs: The government loses out because of a fall in tax revenues and
higher spending on welfare payments for families with people out of work. The result
can be an increase in the budget deficit which then increases the risk that the
government will have to raise taxation or scale back plans for public spending on
public and merit goods. The problems facing the UK government at the moment are
closely linked to the surge in unemployment.
5.Social costs: Rising unemployment is linked to social deprivation. For example,
there is a relationship with crime and social dislocation including increased divorce
rates, worsening health and lower life expectancy. Regions that suffer from
persistently high long-term unemployment see falling real incomes and a widening of
inequality of income and wealth. The recent figures on poverty in the UK are
testimony to the social damage that high unemployment can have.

Evaluation points:
Exam questions quite often ask students to discuss some of the effects of a
sustained rise in unemployment. Good answers will include AD-AS analysis on the
economic impact and also make a distinction between economic and social
consequences. Evaluation might also include the following:
*The impact of high unemployment on human capital / labour productivity
*Structural problems caused by occupational and geographical immobility of labour
*Effects on wage inflation e.g. the possibility of wage freezes or wage cuts
*The effects of people leaving the labour market because they have given up the
search for work - this is known as a hysteresis effect
*Mention of some positive effects - e.g. it increases the pool of available labour for
businesses wanting to expand and take on more workers
*Experience of unemployment might prompt some people to become self employed
and start their own businesses.