The Federal Government would undoubtedly be pleased with a new report by the Organisation for Economic Co-operation and Development, which outlines that the Government’s stimulus spending definitely saved Australia from higher unemployment levels.
According to the OECD Employment Outlook 2009 report, unemployment has risen steadily since early 2008 from 3.9 per cent in February 2008 to 5.8 per cent in July 2009. This represents an increase of around 40 per cent and the highest rate in almost six years.
But this result is still well below the OECD average of 8.3 per cent and this has been reasoned towards the effects of the Government’s stimulus packages.
The report outlined that if no fiscal stimulus measures were taken, employment in Australia would be between 1.4 per cent and 1.9 per cent worse off, or around 150,000 – 200,000 less jobs by the end of 2010.
It has had such a dramatic effect on the Australian unemployment rate because it was comparatively large in size to other countries (third largest after Korea and the United States among OECD countries) and the degree to which employment responds to fiscal stimuli is typically higher in countries like Australia, where a relatively large proportion of domestic demand is met by local production.
Another important aspect of the report was the fact that adjustments to working hours may have prevented wide spread job losses, but has created some discontent among workers.
According to the findings, aggregate hours have fallen by 2.6 per cent since peaking in July 2008, and in contrast employment has only declined 0.2 per cent over this time.
But whilst these shorter hours may have saved jobs, dissatisfaction among part-time workers has increased. According to the figures, there are 885,000 underemployed workers in Australia, a 23 per cent increase from the same time two years ago.