Growing our way to full employment

Abstract

At the end of 1993, nearly one million Australians were unemployed and actively looking for work. Another million were available to start work within four weeks, although they had not actively searched in the previous week. As Professor Fred Gruen (1993) has observed ‘There can be little disagreement that the relative unemployment performance of the Australian economy…over the last quarter of a century can only be described as appalling.’ Yet, on the strength of minor upward revisions to current growth rates and some optimistic projections for the future, the prevailing mood in government circles has become one of complacency.

It is widely assumed that a continuation of existing policies will lead, in due course, to the restoration of full employment. In particular, it has been claimed that the microeconomic reforms of the eighties have laid the groundwork for a sustained expansion in output and employment.

Is this complacency justified? To answer this question it is necessary to consider the prospects for growth, the relationship between growth and employment and the likely impact of microeconomic reform.

In this paper, it is argued that current policies will not yield a return to full employment, and that a policy program for full employment must include both a commitment to active labour market policies and an expansion of the community services sector.