Essay, Pages 6 (1321 words)
Australian business centers, stock markets, economic revenues and different economic sectors from the latter centuries have always been striving to improving the economy channeling as well the improvements of society’s standards of living; however, with the current progression of such trends, standards of living have gone so far ahead from the average people coping up to the demands of the prevailing society. Consequently, imbalance, strain and economic disproportion occur as the primary results of the high standards of living and the coping average public.
Australia: Economic Overview.
Due to the great transition of United States, Canadian and Australian economies from the agricultural-based setup of 19th and 20th centuries to an economy based on industries in the current 21st century, living standards have indeed increased. Consequently, the shift of living standards have greatly affected crucial economic and societal elements, such as (a) laborers, (b) supply-demand chains, © purchasing power of the market, (d) social class and standards of living, and (e) general economy equilibrium.
High labor costs, high taxation fees, crowded population, strict-regulatory boards on business establishments and small domestic market have consequently become the adverse effects of Australia’s high standards of living. Last 2004, Australian standards of living was ranked third place by the United Nations surveillance report. Currently, Australian economy, according to the Reserve Bank of Australia (RBA), is experiencing GDP growth of 2. 7% quarterly as of 2008, GDP rate of approximately $1 trillion Australian dollar and GDP per capita of $33,000 as of 2006 statistics.
Markedly, economic growth of Australia is slowly beginning its decline due to various economic components (e.
g. high wage employment versus high standards of living, expensive supply versus average-earning market, etc. ). Economic advancements may well influence the standards of living positively; however, high standards of living may negatively result to social tensions in areas of income balances. Australian economy is now experiencing a series of imbalances, especially in the relationships of market and suppliers, income generation and employment brought by high living standards.
Discussion a. Living Standards of Australian Economy.
Australians have always enjoyed the benefits of their country’s growing economy and high standard of living; however, continuous increase in the area of living stands may threaten the stability of their economy. Gross Domestic Product (GDP) rate obtained by a given economy commonly evaluates the country’s economic performance and growth.
GDP assesses the level of supply-demand conditions, economic output capacity and welfare growth. GDP, together with household surveys on income — expenses, consumption-production and other associated components, measures the condition of economic welfare, which is viewed as an important indicator of standards of living. Currently, Australian GDP according to the Internal Monetary Fund has reached from the 2007 estimate of U. S. $ 718. 4 billion to U. S$ 1. 04 trillion nominally this year. In addition, annual GDP growth has always been maintained from 0.
4% to 1. 3% according to Australian Bureau of Statistics (ABS); although, nominal records this year show a huge drop on GDP growth from 1. 2% in 2006 down to 0. 5%, which can still progress downward (max: approximately 0. 25% GDP growth) due to seasonal variations. On the other hand, according to ABS, employment statistics have increased dramatically from 10. 5 million in 2007 to 10. 73 million employed in 2008, while decreasing as well the unemployment rate from 4. 3% in 2007 to 4. 2% this year.
Economic trends of Australia are in no question boosting and improving more evidently compared to the United States. These statistics relevantly show the increasing economic welfare of the country, which eventually may further increase in the standards of living. In the study of Gregory (2007), following the increase of living standards in the 1970s evidenced by the approximate 30% increase in Australia’s employment wages is the latter drop (approximately 25%) on employment earnings and rapid rise of employment offering low compensations.
Evidently, the similar impact is slowly but progressively occurring based on the statistical input of Australian employment, inflation and household surveys under ABC statistical surveillance. Based from statistics, full-time employment earnings have dropped from 2003 to 2005 record of 1. 8% to 0. 9% only last May, while private sector earning trend has changed from 2% in 2005 down to 1% this year and public sector declines from 1. 5% last 2005 to 0. 5% for this year. Nonetheless, employment-earning trends are currently recovering from its great downfall last May 2006 to early 2007.
On the other hand, salary sacrifices of Australian surveyed households have also increased from U. S $580 weekly in 2005 to U. S. $644 weekly last 2006 due to increased taxes, increased in Consumer Price Index and most factors attributed to high standards of living (e. g. costs of supplies, increase costs of services, etc. ). With the increasing level of living standards, initial employment decline in response to high level of living standards is motivated by higher compensations.
Continuing employment with higher compensation results to increase in employment rates, which consequently reduces level of average earnings of these employed. Meanwhile, as the rise of living standards continues, another important consideration is effect of inflation rates towards the purchasing power of the people living in the high standard Australian environment. According to the general inflation rate of Australian economy, rate has indeed increased from 0. 7 to 0. 8% in 2005 to 1. 5% last June 2008, which consequently results to an average of 4.
5% price increase on all groups of products and services. Based on ABS inflation breakdowns, products and services most commonly affected by high living standards are also affected by the high inflation rates, such the increase of deposit and loan facilities to 9. 5%, rise of rents to 2. 2%, increase in health care costs of 4%, house purchases by 3. 1% and one of Australian delicacies, spirits, which increased to 6. 1%. High standards of living implicated by economic growth and expansion of economic welfare do not always provide significant benefits for majority of the economy’s recipients.
With this analysis, the most affected individuals are the average employees striving hard to cope-up with the increasing prices of commodities brought by the rise of living standards b. Impacts of High Standards of Living Considering the high living standards of the Australian economy, an average household earning an income increasing only to 0. 9% per quarterly may not be able to accommodate the inflation increased commodities and supplies, which, if applied to the general average population, dramatically implies huge reduction of purchasing power among the average members of society.
Following the rise of society’s standards of living is the extensive rise of financial expenses among households due to the market value increases brought by increased standards of available supplies offered (e. g. education fees, food expenses, etc.). The impact of price variations and economic adjustments are assumingly experienced more prominently by the average people living the high standard society. As the basic commodities and services increase due to inflation rise, average people employed with an average job may commonly find their earnings sufficient for their daily requirements.
However, if economic welfare continuously grows and expand, as shown by the increasing trends of GDP from International Monetary Fund statistics, these average-working groups, despite of their high compensations, may find their income insufficient to supply their needs and cope up with the increasing requirements of their society. Relationships between employment — working members of society — and the actual high standard society are more direct compared to other economic elements; since, these average people are the general population acting as the prime recipients of the economic change.
As supported by the survey study of Gaston (2002), employment levels have progressed downward during the early 21st century; hence, economic growth has surged to cope up leading the restoration of employment level. However, the advent of employment surge brings forth increase in manpower supply enabling reduction in levels of manpower, while increasing manufacturing levels. In the end, economic growth shall continue to progress leaving the average working people coping with the increasing living standards of the Australian society c. Implications and Potential Problems Associated.
If the economic trends on Australian employment continue in relation to the high living standards of the society, average working groups may fail to cope up reducing the markets purchasing power; thereby, affecting chains of economic elements, such as inflation rates, consumer price index, etc. If these economic elements change, imbalance in the economic growth might occur unless wage increase is implemented to cope with the increasing living standards. Economic investments and purchasing power of the available market are considered at-risked if these trends continue.
Since reduction on the living standards is not a considerable option, the best resolution is to keep track on all the changes in these elements and implement balanced raise and reduction depending on the economic variations and adjustments III. Conclusion Economic trends in a high standard living society must be well monitored and tracked due to the many risks associated to the variations, element adjustments and fluctuations. As economic elements, such as GDP, GDP growth and overall economic welfare, increase, living standards in a given society are also expected to increase.
If this happens, the demographics most commonly affected are the average people earning only the average income. If economic trends, such as employment rates, compensation levels, inflation rates, etc. , are not carefully monitored, this can immediately result to an imbalance in both economic growth and the capacity of employed recipients to cope up with the high living standards being imposed by the society. Consequently, long-term results, such as increase in poverty levels, etc, may occur affecting dramatically as well the living standards of the area.