Question

1. The RBA has said that it will keep the cash rate low until it is confident that the economy is back on track to recovery.

Using ABS data, you have computed that, prior to the Australian economy being negatively impacted by the COVID-19 pandemic, the unemployment rate was 5.22% in March 2020. This figure provides a benchmark metric for us to aim for as we strive to restore the economy back to its pre-pandemic levels.

Using the ABS data in the following table, and focusing on the August 2020 figures (the most recent month of data available), calculate how many percentage points does the official unemployment rate still need to fall, in order for the economy to return to the March unemployment rate?

According to the data in the table, in which month of 2020 did the labour force participation rate drop to its lowest rate, and what was this rate?

To support your calculations, include all your working and the formulas you applied to compute the unemployment rate. Round off your answers to 2 decimal points.

When you obtain your answers, write a clear sentence that addresses the specific questions that have been asked.

Labour market statistic	March 2020	April 2020	May 2020	June 2020	July 2020	August 2020
Employment (000s)	12,997.0	12,389.6	12,125.4	12,353.2	12,472.4	12,583.4
Unemployment (000s)	715.8	841.3	922.3	993.0	1008.3	921.8
Labour force (000s)	13,712.8	13,230.9	13,047.7	13,346.2	13,480.7	13,505.2
Civilian population aged 15 years and older (000s)	20,806.5	20,816.1	20,825.6	20,835.2	20,844.0	20,852.8

Answer 1

1. August month unemployment rate :

Unemployment rate = no. Of people unemployed/ labour force ×100

Unemployment rate = (921.8 / 13,505.2) ×100 = 6.82

the unemployment rate needs to fall ( 6.82 - 5.22 )

1.6 % to reach at previous level.

2. Labour force participation rate = (labour force /work eligible population ) ×100

Rates for each months :

  March :

13,712.8 / 20,806.5 × 100 = 65.90 %

​​​​​​April :

13,230.9/ 20,816.1 ×100 = 63.56 %

may :

13,047.7 / 20,825.6 × 100 = 62.65 %

june :

13,346.2 / 20,835.2 × 100 = 64.05 %

july :

13,480.7 / 20,844.0 × 100 = 64.67 %

august :

13,505.2 / 20,852.8 × 100 = 64.76 %

The labour force participation rate fell maximum in May ( 62.65 %).

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