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This law benefits especially low skilled workers, who would have not otherwise earned more.
Define the “labour force participation rate.” What factors determine the labour force participation rate?
The labour force participation rate is more commonly used as a measurement of unemployment. The ‘labour force’ is the total number of people employed or actively seeking employment within the economy. Hence, the ‘labour force participation rate’ is then the labour force expressed as a percentage of the population aged 15 and over.
In the short-term, one of the main factors attributed to increases to labour force participation is the hidden unemployed. Nonetheless there are many diverse reasons for changes in the labour force participation rate on the long term, including the dramatic increases to women’s participation rate, increases to part-time employment and the levels of education attainment.
Hidden unemployment would play a large role in determining labour force participation rates. The hidden unemployed include those discouraged workers who no longer seek work but would be willing to return if a suitable job prospect arose. As they are no longer actively seeking employment they are not longer counted as part of the labour force. Thus, when the situation arises that they become employed again, as when the economy is in the stages of recovery or boom the labour force participation rate will increase, and in economic downturns it will decrease. Hence, hidden unemployment is often referred to as pro-cyclical, in that it follows the fluctuations of the business cycle. Furthermore, in the short term, would impact the labour force participation rate.
In the long term, women’s participation in the past three decades has substantially impacted upon participation rates. Part time employment has been on the increase generally for Australia, specifically manifesting itself in women’s employment. This would contribute to increases in Australia’s labour force participation rate. Reasons for this increase to part time employment could be a growing weight put on achieving work-life balances, family or study commitments, or be the transitional state to retirement from full time employment. However, although increases to part-time employment would increase the labour force participation rate, it does mask issues of underemployment.
Finally, the level of education attained has a strong correlation to the labour force participation rate with those achieving higher levels of education benefiting from higher rates of labour force participation. This is indicated by the comparison between the participation rates of men and women in 2003 between those with a university level education and those with less than upper secondary education. The participation rate for men and women with university level education were at 92% and 82% compared with less than upper secondary level education at 79% and 56%. Furthermore growing trends towards achieving higher education would lead to higher education retention levels would also impact upon the labour force participation rate.
Outline the recent trends in labour force participation of older workers in Australia.
The Labour force participation rate for older Australian workers has been on the increase in recent years and is currently standing at a record high of 58%. This has been a result of both the ongoing increase in older women’s participation rates combined with recent increases to older men’s participation rate after having been in decline for 25 years. A number of reasons have been proposed for this upswing in older men’s participation rate in the last 5 years including increases to part-time employment and government policies.
The labour force participation has increased for older people in both full-time and part-time employment. Part-time employment for women has roughly doubled in the past two decades. Nonetheless full-time employment has continued to grow steadily for older women. Furthermore, older men have witness most significantly a dramatic increase in full-time employment in the last 5 years as can be seen in the chart below.
Reasons for this increase in labour force participation by older workers have been largely attributed to government policies, including those regarding the Disability Support Pension, Taxation and superannuation. The proportion of older men of the Disability Support Pension had been falling since the late 1990’s. Furthermore, the Government has recently tightened access to the DSP which would promote labour force participation. Furthermore policy actions such as change to taxation including the provision for an annual tax rebate and increased access to their superannuation for persons aged 50 and over who choose to remain in the workforce would have an incentive effect on older workers, tending to increase labour force participation.
According to the ABS Underemployed Workers Survey, in 2005, 67% of men and 49% of women in Australia who were employed part-time, reported that they would prefer to work full-time (35 hours or more each week).
S. Kennedy, A. Da Costa “Older Men Bounce Back: the re emergence of older male workers”
