Employment growth while rising unmployment...

[costargh]

Can someone please explain to me how we can have rising levels of unemployment while also have growth in employment?

Is it because more people are actively seeking work (perhaps due to inflation making their welfare payments less and less in real terms) which means that they go seeking work but they can't find work (increasing unemployment). However some of those people are getting jobs which results in employment growth?

It's because of what I discovered when looking at the budget and some estimates.
                            07-08   08-09
Unemployment            4.25%   4.5%

Growth in employment     2.5%   1.25%

See how employment is growing while unemployment rises also?


Also, how do we know when there is no cyclical unemployment and what is 6-7% natural unemployment?

[costargh]

Anyone?

[Collin Li]

Can someone please explain to me how we can have rising levels of unemployment while also have growth in employment?

I think growth in employment is in absolute terms (number of people in workforce), while unemployment is a proportion (percentage of job-seekers employed), which makes this apparent contradiction possible.

Also, how do we know when there is no cyclical unemployment and what is 6-7% natural unemployment?

Natural unemployment is a theoretical "long-run" level of employment that should be achieved. In the short-run, cyclical effects cause unemployment to deviate around this number, and the gap is called cyclical unemployment.

[costargh]

I think growth in employment is in absolute terms (number of people in workforce), while unemployment is a proportion (percentage of job-seekers employed), which makes this apparent contradiction possible.

Oooh Thanks. That makes heaps of sense.

Just one more question.

How does this look (this is just like a note form/dot point/brief answer to this question).

"Evaluate the impact of the underlying cash balance for the current year’s budget on domestic economic stability "


It is expected that the underlying cash balance of $21.7 billion for 2008-09 will decrease eco growth
from 3.5% in 07-08 to 2.75% in 08-09. This will move away from the government’s average of 4% growth over the economic cycle, but the large surplus is necessary in an attempt to achieve another economic objective; an annual rate of inflation between 2-3%. The large budget surplus will have a contractionary effect on the economy which will help slow the rising income levels of individuals, profits of businesses and help keep the general prices of goods and services rising at a rate between 2-3%. It is expected that the governments underlying cash balance will push the current inflation rate of 4% down to 3.25% in 08-09.
The government’s use of contractionary budgetary policy in an attempt to slow AD is expected to result in an increase in the unemployment level from it’s current rate of 4.25% to 4.5% in 08-09. However, it is expected that growth in employment will continue to rise in 08-09 by 1.25%.


What else should I say? :S

[kitty]

What about definitions?
and you need to state more clearly why exactly a surplus would decrease inflation? ie. through what part of the aggregate demand formula or aggregate supply factors.