1.Two types of unemployment discussed in the article in the context of Australia are-
2.Structural unemployment occurs when there is a structural change in an economy due to which a certain skill or a group of people are rendered workless e.g. decline in offline retail employment due to upcoming of ecommerce.
A quote from the article to suggest that there is structural unemployment in Australia:
“The fall in the entry level jobs in retail shops showed that consumers are getting more comfortable with “self-checkout” and the use of online banking in the finance industry.”
Hidden unemployment occurs when the definition of unemployment fails to capture those who are actually unemployed like those who are not seeking jobs actively even though they are jobless, jobseekers who are not registered with an employment service provider and those who are underemployed.
A quote from the article that supports the presence of hidden unemployment is: “Knight said the drop in the participation rate meant people were getting discouraged in the jobs market and falling out of the work force”.
3.The said quote by Alexandra Knight means that the number of people actively seeking employment has declined which is reflected in the participation rate. Due to that, the reflected number of unemployment rate is low, thereby showing a better picture than it actually is.
Consider an economy where 100 people are either working or willing to work. Let 75 people currently have jobs and 25 are actively seeking jobs. Of these 25, say 10 have dropped out of job seeking. Now, due to an economic shock, 25 more people lost jobs. In the current situation, actual number of unemployed people is 50 taking unemployment to 50%. But since the definition of unemployment does not consider those who are not seeking jobs, the total workforce is now 90 and those unemployed are 40. The new unemployment rate thus is 44.4% which is lower than the actual unemployment rate of 50%. This is called a decline in the participation rate which led to decline in the unemployment.
A similar situation occurred in Australia when due to continued disappointment, the prospective workers decided not to participate in interviews thereby declining the participation rate, and hence the unemployment rate.