Exemplar for Internal Assessment Resource Economics Level 2

Transcription

1 Exemplar for internal assessment resource Economics for Achievement Standard resource 2.4B Exemplar for Internal Assessment Resource Economics Level 2 Resource title: Investigate changes in unemployment and the impacts of these changes on various groups in New Zealand society This exemplar supports assessment against: Achievement Standard Analyse unemployment using economic concepts and models Expected responses The moderators have developed expected student responses from a wide variety of sources Date version published by Ministry of Education December 2011 To support internal assessment from 2012 Crown 2010

2 Exemplar for internal assessment resource Economics for Achievement Standard resource 2.4B 1. Grade Boundary: Low Excellence The student analyses unemployment comprehensively using economic concepts and models, which is required for Excellence. The student fully explains the different impacts of structural unemployment on workers of various age and skill level in relation to sunset and sunrise industries, and has integrated the changes in DL into the explanations, using the labour market model. Additionally, other secondary sources of information have been used to support the analysis. Refer to part A. The student has analysed the changes in unemployment rates for different age groups (line graph), providing reasons for the different figures and explaining the different impacts of cyclical unemployment on these groups, linking the global recession and structural responses in the manufacturing sector as causes of change in the presented unemployment figures. Refer to part B. However, these links need to be further explained and supported with a relevant economic model, like the PPF or AS/AD model. A more secure Excellence would be attained if the above point was addressed. However, the student explains in detail the impacts of changes in unemployment by comparing/contrasting the impact on various age groups in NZ society and has integrated sunrise and sunset industries (structural) changes into the analysis, using the labour market model. Crown 2010

3 Student 1: Low Excellence Increases in unemployment have had a greater impact on the young than on the older B worker. As can be seen in the unemployment by age group graph below all of the age groups considered have had increases in unemployment over the time frame considered but the impact has been greater for the youngest workers who have had unemployment rates increase from under 15% to over 25%. In the same time frame unemployment for older workers increased from under 3% to 5%. This is likely as many of the businesses affected by cyclical change caused by the business cycle (global recession) and structural responses were in the manufacturing sector. These producers often have space for low skilled workers and then develop the specialist skills and experience on the job. Young workers are less likely to have developed these specialist skills. Greater unemployment for young people is likely to be due to businesses operating a First in last off policy for workers who have similar skills. The last on are most likely to be the youngest workers. Younger workers are also likely to have less experience and lower skill levels than established workers so will also be laid off first as they are less productive. The third possible reason for this is that businesses when deciding laying workers off look at the wider impact. Older workers have dependents and financial commitments like mortgages. They are established in the community. For this reason a business may choose younger workers as it has less of an impact on their community that the business also operates in. However, it is possible that the older unemployed workers may have a greater chance of being long term unemployed than young workers. This could occur if the structural unemployment is geographic. Younger workers have fewer ties so are more flexible to be able to shift to new geographic areas where their skills are needed while older workers will find it harder to move due to having to sell houses, shift families and break strong community connections. These job losses don t only affect the overall economy but also has social impacts on the Nelson / Tasman region. Workers who are losing jobs in the forestry industry have said that this will make it difficult for them to meet their mortgage commitments and some have said that they will migrate to Australia. If less can afford mortgages or are migrating this will mean that more houses will be offered for sale seeing the supply of houses rise (while demand is low as few will move to Nelson due to lesser job prospects). This will mean that house prices will fall which will erode the wealth of other Nelson homeowners. Doctors have also seen increase in patients with stress related issues 1. This is caused by the actual unemployment or worry about becoming unemployed causing stresses in family and financial commitments. Due to greater commitments these social impacts are likely to be greater for older workers. Also the economic impact is likely to be greater due to the financial commitments that the older workers have. House ownership is greater with the older workers so the wealth impact of falling house prices are more likely with older workers. Older workers are also more likely to be linked into an area so will find it harder to shift to new areas where sunrise jobs are, meaning they are more likely to become long term unemployed. With Nelson/ Tasman s export focused production and isolation it is likely that these employment pressures will increase until such time that the global recession is lifted. With increasing demand for timber and timber products from China / India / Japan and Christchurch to help with building / rebuilding this is one area where we may see new job growth. Forestry demand has increased due to global disasters (earthquakes in Canterbury, flooding in Queensland and Tsunami in Japan) and it has gone from being an industry in Sources: 1. Downturn takes toll on nerves by Sally Kidson Published: 20/3/2009 The Nelson Mail

4 decline (sunset) to one which has positive future growth (sunrise). As world demand rises so will demand for the skilled workers to be able to harvest and process the timber. As demand rises more workers will be employed in these areas and in the support industries like trucking. Other potential sunrise industries for the region are in biotechnology (algae based bio-fuel 2 ), marine farms and marine research; while for NZ there is continued growth in agricultural production. These industries are slowly growing and could grow rapidly as the world recognises the value and quality of their output. As world demand for fuel rises countries are looking for sustainable alternatives to oil and the rainforest destroying palm-oil biofuels. Harvesting algae from streams / lakes and sewerage ponds provides for the fuel needs and also benefits society. This is potentially an area where world demand could soar and jobs could be created producing the technology to allow this to happen. Jobs are also being created in the marine farms area where a new course has been opened in the Nelson Marlborough Institute of Technology to prepare workers for the increased demand for seafood especially that which can be farmed like mussels and salmon. As demand for this food source increases then demand for skilled workers will also occur. Some of the workers that have lost jobs at Sealords may gain employment in this area. Graph 1: Effect of increased demand for sunrise industries products on the labour market Real wage A As demand for the workers increases the SL employment will be able to rise from Q2 to the pre-recession Q0 (assuming wages have been unable to fall otherwise it will grow from Q1 to Q0 and wages will increase to W2). If it increased further then Nelson/ W2 Tasman will see increased wages and a drop in unemployment below the 2006 level. Many W1 of the social and economic effects of the DL recent job losses from the recession and DL1 structural changes will be reversed. Q2 Q1 Q0 Quantity Labour Graph 2: Effect of decreased demand for sunset industries products on the labour market Real wage W2 W1 DL1 SL DL As demand for the workers decreases due to less production needed, since no one wants it, the employment will fall from Q3 to Q4. This will mean that these workers are no longer needed. If the workers are too specialised in their skills they may become structurally unemployed. If there skills are required by the sunrise industries, and they are capable of moving to the areas where they are needed then the unemployment caused will only be short term as they shift into new jobs in the sunrise industries. Q4 Q3 Quantity Labour Sources: 1. Downturn takes toll on nerves by Sally Kidson Published: 20/3/2009 The Nelson Mail

5 Exemplar for internal assessment resource Economics for Achievement Standard resource 2.4B 2. Grade Boundary: High Merit The student analyses unemployment in depth using economic concepts and models, which is required for Merit. The student analyses unemployment, comparing regional and national unemployment figures (line graph), providing reasons for the differences in the explanations, linking the changes with the relevant phases of the business cycle and using the AS/AD model to support the detailed explanations. Refer to part C. The changes in DL have been integrated into the explanations, using the labour market model. Refer to part D. Additionally, a secondary source of information and economic concepts like involuntary unemployment has been used to support the analysis. The student has explained in detail the impacts of changes in unemployment on various groups of people, but the analysis has not compared or contrasted the impact on various groups in NZ society, which is required for Excellence. For example, a comprehensive explanation would compare and/or contrast the socio-economic impacts of the structural industry changes on older age groups versus younger age groups in the workforce. Crown 2010

6 Student 2: High Merit Unemployment in Nelson has been increasing since This can be seen in the graph below. Although unemployment in Nelson is lower than the rest of NZ it has increased from under 3% in 2006 to over 4% in This rise in unemployment is due to the global recession and businesses structural responses to this. Nelson / Tasman s main producers are in fishing, forestry, wood C products, tourism and horticulture. They account for most employment in the region either directly through employment in the businesses themselves, or indirectly in the support industries that help these producers and in the infrastructure that exists for the employees (like shops and schools). From January 2002 to 2007 Nelson/Tasman was in a strong growth phase of the business cycle. World incomes were high; meaning demand for fish, tourism and construction materials was high meaning there were plenty of jobs in these industries and the support industries. The exception to this was in 2006 when demand for wood and wood products fell. This saw some workers in the forestry firms and at the MDF plant lose jobs. Also high employment meant migration to Nelson was increasing so house prices in Nelson were rising. They increased from under $200,000 on average in 2002 to nearly $350,000 in This increased wealth for Nelson homeowners meant that they were able to borrow more money to purchase luxury items like boats and cars. In this time frame employment in retail and luxury items like cafes rose significantly. From 2007 a recession started to occur in Nelson, then the global recession which affected the whole of NZ a year later. With the global recession, incomes overseas fell and this saw a decrease in luxury spending like tourism. This has meant decreased demand by overseas tourists for accommodation and tourist activities. Graph 1: Effect of a decrease in demand for goods / services on the labour market Real wage D This has meant that fewer workers are now SL demanded by tourism firms to meet tourists demand. This has seen immediate loss in jobs in the tourism sector and also in support industries. Global recession has also meant that construction has decreased. This affects W0 Nelson s forestry and wood products industries as they have lost international contracts. This W1 loss in demand has seen 60 workers lose work DL at Nelson Pine Industries and many lose work DL1 in the forestry industries as companies like Nelson Forests Ltd. This is as fewer workers Q2 Q1 Q0 Quantity Labour are now required to meet the lower levels of production. The recession impacted Nelson / Tasman earlier as it has heavy reliance on Timber and Tourism, while the rest of NZ is less reliant (more diversified). When these job losses occur it leads to flow on effects in the Nelson area as less food, luxuries, clothes, etc. are demanded by the newly unemployed workers families. This decrease in demand starts to impact on the overall demand for shops in Nelson and if it is significant enough will see decreased demand for workers in these shops and may lead to further unemployment. Source: 1. Downturn takes toll on nerves by Sally Kidson Published: 20/3/2009 The Nelson Mail

7 The effect of decreased demand is illustrated above. When demand for output falls the demand for workers falls from D to D1 it means that employment will fall to Q1 if wages are able to fall or will fall further to Q2 if wages can t fall (due to employment contracts that haven t expired or minimum wage laws if W0 is the minimum wage). This would create involuntary unemployment (Q0 to Q2). This is part of the normal business cycle where areas go through times of economic growth and also have times of slowdown and recession when economic growth is negative. Until 2007 we were in a job growth phase. From 2007 to 2010 we were in job loss (increasing unemployment) and currently we are at a neutral phase. When economic growth is positive, more is being produced and this means that more resources, including workers are required. If the economy goes into recession (negative economic growth) then production is falling and fewer workers are required and this creates unemployment. AS/AD Model Price Level C This can also be shown on the AS/AD model as AS aggregate demand decreasing from AD to AD1. Consumers demand less goods and services because of reduced income, due to unemployment and the global recession. This also shows unemployment worsening as we PL move further away from full employment (Yf), as we are still in a recession stage of the business PL1 cycle. The price level has decreased from Pl to AD PL1, and output has also decreased from Y to Y1, AD1 so output or Real GDP has worsened, meaning negative economic growth. In the Nelson / Y1 Yf Y Output Tasman region this cycle exists on a long term track as evidenced by a number of years of overall growth followed by the current worldwide recession caused by the credit crisis. Nelson is currently showing signs of moving into a recovery stage with unemployment holding steady at 4% for the last year while NZ as a whole looks like it is still in the recession phase with unemployment still increasing. For the Nelson / Marlborough region this cycle also exists in a yearly seasonal way where each industry has time of high production (job creation) and low production (job losses). This seasonal production is evident in the horticulture industry when apple picking and processing is high from March to July, in the fishing industry where production peaks in August and in the summer Tourism season. This on-going regular seasonal cycle does mean that some workers can maintain regular employment by moving through the 3 industries. With the global recession, world prices for export products have fallen. This means that exporters receive less profit. In response to this industries (like Sealords 1 ) have attempted to decrease cost to maintain profit margins. They have done this by shifting processing of fish from a land based factory to being processed at sea. This has meant that land based factory workers are no longer required. This is structural unemployment as the skills of being a land based factory worker are no longer required and if the workers are not willing to work at sea they will have skills that no longer match the needs of the producers. As a result of this 180 workers have lost their jobs. As it is structural the workers involved will find it more difficult to find new jobs as factory based jobs are less available with the other major manufacturing industries also decreasing worker demand. This could lead to long term unemployment for these workers as many have a limited skill base. This structural unemployment has occurred throughout NZ in the manufacturing sector. Source: 1. Downturn takes toll on nerves by Sally Kidson Published: 20/3/2009 The Nelson Mail

8 Exemplar for internal assessment resource Economics for Achievement Standard resource 2.4B 3. Grade Boundary: Low Merit The student analyses unemployment in depth using economic concepts and models, which is required for Merit. The student analyses the changes in regional unemployment caused by the global recession, linking it with the business cycle, and using the AS/AD model to support detailed explanations. Refer to part E. The sunrise and sunset structural industry changes have been explained in detail using the labour market model. Refer to part F. Although, the line graph shows regional and national unemployment trends, a comparison has not been made or the differences explained. Refer to part G. The student has explained in detail some of the impacts of structural and recessionary changes in unemployment regionally, using a secondary source of information to support the analysis. For example, the job losses at Nelson Pine Industries and how it was due to recessionary changes were explained. Refer to part H. A more secure Merit would be attained if the student compared the regional and national unemployment figures (line graph), providing reasons for the differences in the explanations, and fully explained how the job losses at Sealords were the result of structural changes. For example; In Nelson structural unemployment has occurred at Sealords where land based processing has been shifted to sea-based as it is cheaper. The skills of being a land based factory worker are no longer required and if the workers are not willing to work at sea they will have skills that no longer match the needs of the producers. As a result of this 180 workers have lost their jobs. Crown 2010

9 Student 3: Low Merit Unemployment in Nelson has been increasing since This can be seen in the graph below. It has increased from under 3% in 2006 to over 4% in G This rise in unemployment is due to the global recession. Nelson / Tasman s main producers are in fishing, forestry, wood products, tourism and horticulture. They account for most employment in the region either directly through employment in the businesses themselves, or indirectly in the support industries that help these producers and in the infrastructure that exists for the employees (like shops and schools). From January 2002 to 2007 Nelson/Tasman was in a strong growth phase of the business cycle. Demand for output was high meaning that more workers were demanded. This created jobs for workers directly in the main industries and in the support industries for the producers and the infrastructure. From 2007 a recession started to occur in Nelson, and then the global recession which affected the whole of NZ a year later. With the global recession, incomes overseas fell and this saw a decrease in luxury spending like tourism. This has meant decreased demand by overseas tourists for accommodation and tourist activities. This has meant that fewer workers are now demanded by tourism firms to meet tourists demand. This has seen immediate loss in jobs in the tourism sector and also in support industries. Global H recession has also meant that construction has decreased. This affects Nelson s forestry and wood products industries as they have lost international contracts. This loss in demand has seen 60 workers lose work at Nelson Pine Industries and many lose work in the forestry industries as companies like Nelson Forests Ltd. This is part of the normal business cycle where areas go through times of economic growth and also have times of slowdown and recession when economic growth is negative. When economic growth is positive, more is being produced and this means that more resources, including workers are required. If the economy goes into recession (negative economic growth) then production is falling and fewer workers are required and this creates unemployment. In the Nelson / Tasman region this cycle exists on a AS long term track as seen by a number of years of overall growth followed by the current worldwide recession. This can also be shown on the AS/AD model as aggregate demand decreasing from AD to AD1. PL Consumers demand less goods and services E PL1 because of reduced income, due to unemployment and the global recession. This AD also shows unemployment worsening as we AD1 move further away from full employment (Yf), as we are still in a recession stage of the business Y1 Yf Y Output cycle. The price level has decreased from Pl to PL1, and output has also decreased from Y to Y1, so output or Real GDP has worsened, meaning negative economic growth. Source: 1. Downturn takes toll on nerves by Sally Kidson Published: 20/3/2009 The Nelson Mail

10 Structural Unemployment Structural unemployment is when the skills of a group of workers are no required by producers in the area. This could be a skill that is no longer needed anywhere or where the skill is needed, but not in the geographic area where the worker is. In NZ structural unemployment has occurred in the manufacturing sector as manufacturing has been shifted to overseas to take advantage of the lower costs. In Nelson at Sealords, there have been structural changes and 180 people have lost their jobs. With structural unemployment the workers involved will find it more difficult to find new jobs as factory based jobs are less available with the other major manufacturing industries also decreasing worker demand. This could lead to long term unemployment for these workers as many have limited skills. Effect of decreased demand for sunset industries products on the labour market F Real wage W1 W2 DL1 SL DL Quantity Labour With decreased demand for products from sunset industries like manufacturing fewer workers are demanded as less needs to be produced. This means demand for workers falls from DL to DL1. This means that real wages fall from W1 to W2 and employment falls from Q1 to Q2. These workers are likely to be unemployed long term due to having skills that do not match the needs of producers. Q2 Q1 Effect of increased demand for sunrise industries products on the labour market Real wage If they do have transferable skills, or can SL move to areas where their skills are needed they may be able to pick up work in the growth industries (sunrise industries). These are industries which are having increasing demand for their W1 output, for example dairy products, marine farming or oil exploration. With W2 increased demand for their output, DL producers require more resources so DL1 increase demand for labour. As demand Quantity Labour increases from DL to DL1 this causes the Q2 Q1 real wage to rise and more workers to be employed (Q2 to Q1). Source: 1. Downturn takes toll on nerves by Sally Kidson Published: 20/3/2009 The Nelson Mail

11 Exemplar for internal assessment resource Economics for Achievement Standard resource 2.4B 4. Grade Boundary: High Achieved The student analyses unemployment using economic concepts and models, which is required for Achieved. The student explains unemployment concepts like structural unemployment and sunset/sunrise industries, using regional examples. The analysis includes an explanation of causes of changes in regional unemployment due to recessionary changes, specific regional unemployment figures and the AS/AD model has been used to support the explanation. Refer to part I. The line graph shows regional and national unemployment trends but a comparison has not been made or the differences explained. Refer to part J. The labour market model has been used to support the explanation of structural industry changes with examples of regional sunset and sunrise industries included. Refer to part K. However, detailed explanations are required for Merit. For example, the links between the changes in regional unemployment and the recession need more explanation in relation to the business cycle and how or why the regional jobs have been lost in export markets due to the global recession. Additionally, a detailed explanation of the impacts of recessionary and structural changes in unemployment regionally would include specific information with numbers of unemployed. Also, the student would compare the regional and national unemployment figures (line graph), providing reasons for the differences in the explanations for Merit. Crown 2010

12 Student 4: High Achieved Unemployment fell from 2002 to 2005 due to Nelson/ Tasman having an economic boom with lots of tourism and high house prices. This has created J wealth, spending and jobs. Unemployment in Nelson has increased from 2.7% in March 2007 to 4.2% in March 2011.Unemployment has risen due to job losses from major producers in Nelson; especially in Sealords, Nelson Pine Industries and Nelson Forests Limited. The timber based areas have lost jobs because of lost export markets due to the global recession. AS/AD Model Price Level PL PL1 AD1 AS AD This can be seen on the AS/AD model as I aggregate demand has decreased from AD to AD1. Consumers demand less goods and services because of reduced income, due to unemployment and the global recession. This also shows unemployment worsening as we move further away from full employment (Yf), as we are still in a recession stage. The price level has decreased from Pl to PL1, but output has also decreased from Y to Y1, so output or Real GDP has worsened. Y1 Yf Y Output Structural Unemployment Structural Unemployment occurs when workers no longer have the skills that the market wants or are in the wrong areas of the country for the jobs. Because their skills are no good this means they will not be able to find work in the same areas. This has happened to fish processing in Nelson. Sealords has decided to shift its fish processing out to sea on the boats and this has meant that the land based workers either need to shift onto the boats or lose their jobs. Factory workers are not needed as much so they are now structurally unemployed. As people are losing jobs structurally they will struggle to find work that matches their skills in Nelson. For this reason they will have more financial hardship and greater stress. Some will chose to leave the area to find work even go to Australia like the logger who did not wish to be named, said he would move out of Nelson, and would probably go to Australia. On-going unemployment also means that more and more people apply for each job and it is possible that you will keep missing out, even if you are a good worker, and this will make you feel worse and worse. Nelson Independent Nursing Practice got 102 applicants for a receptionist job so lots will miss out.

13 Labour Market Model Real Wages K Sunset Industries are ones that are SL decreasing in size and slowly dying. This has happened in Nelson to apple orchards. Most of them have been replaced now with vineyards. Vineyards can be seen as a sunrise industry as there are more and more of them W0 being created. This means that workers will move out of sunset industries (apple pickers) W1 and shift into sunrise industries if they have DL the skills (grape pickers). In NZ manufacturing DL1 is another good example of a sunset industry. Quantity Labour A good example of this is Sealords who now Q1 Q0 are processing all fish at sea meaning land based factory workers are no longer demanded. This is shown in the labour market diagram above. Because fewer products are being demanded from the sunset industry they don t need to produce as much. This means that fewer workers are needed and demand for workers falls from DL to DL1. This means that real wages fall from W0 to W1. When the quantity of labour falls from Q0 to Q1 this is unemployment increasing. Sunrise industries are ones which are growing and demand for their product is increasing. A good example of this in New Zealand is Dairy Products and in Nelson is Marine farming. As demand for these products grow it will mean that more workers are needed to make the products. This will increase demand for labour and cause employment and wages to grow.

14 Exemplar for internal assessment resource Economics for Achievement Standard resource 2.4B 5. Grade Boundary: Low Achieved The student analyses unemployment using economic concepts and models, which is required for Achieved. The student describes unemployment concepts like structural unemployment and sunset industries, using Sealords as an example. The response includes a brief explanation of causes of changes in regional unemployment, referring to the information in the graph and the AS/AD model is used to support the explanation, although (Yf) has not been referred to in the explanation, which provides more evidence of unemployment increasing with a shift left of the AD curve. Refer to part L. The labour market model has been used to support the explanation of structural changes and examples of regional sunset and sunrise industries are included. Refer to part M. The impact of these structural changes on younger and older workers has been briefly explained, but there is no information or data used to support these explanations. Refer to part N. A more secure Achieved would be attained if the above point was addressed and there was more explanation of the impacts of recessionary changes in unemployment regionally, using specific information with numbers of unemployed. Crown 2010

15 Student 5: Low Achieved Unemployment fell from 2002 to 2005 due to Nelson/ Tasman having an economic boom with lots of tourism and high house prices, but it has been increasing since This can be seen in the graph below. It has increased from under 3% in 2006 to over 4% in L Unemployment has risen due to job losses from major producers in Nelson like Sealords, Nelson Pine Industries and Nelson Forests Limited. The timber based areas have lost jobs because of lost export markets due to the global recession. Since overseas has less incomes they demand less timber. Because less is demanded, less is produced and this means fewer workers are needed. AS/AD Model Price Level PL AS This can be seen on the AS/AD model as decreased AD to AD1, consumers demand less goods and services because of reduced income, due to unemployment and the global recession. So while the price level may come down, output also decreases, so national income or GDP worsens. PL1 Structural Unemployment AD AD1 Structural Unemployment occurs when workers Y1 Y Yf Output no longer have the skills that the market wants or are in wrong areas of the country for jobs. Because their skills are no good this means they will not be able to find work in the same areas. This has happened to fish processing in Nelson. Sealords has decided to shift its fish processing out to sea on the boats and this has meant that the land based workers either need to shift onto the boats or lose their jobs. Factory workers are not needed as much so they are now structurally unemployed. This is because a lot of manufacturing has moved overseas where costs are lower, so demand for these types of skills has decreased. Older unemployed factory workers may find it hard to get another job or be able to retrain and do something else as they do not have as much time as a younger worker. N Sunset Industries are ones that are decreasing in size and slowly dying. A good example of this is Sealords who now are processing all fish at sea meaning land based factory workers are no longer demanded. This is shown in the labour market diagram below. Because fewer products are being demanded from the sunset industries they don t need to produce as much. This means that fewer workers are needed and demand for workers falls from DL to DL1. This means that real wages fall from W0 to W1. When the M quantity of labour falls from Q0 to Q1 this is unemployment increasing.

16 Labour Market Model Real Wages W0 W1 Q1 Q0 DL1 SL DL Quantity Labour Sunrise industries are ones which are growing and demand for their product is increasing. A good example of this in New Zealand is Dairy Products and in Nelson is Marine farming. As demand for these products grow it will mean that more workers are needed to make the products. This will increase demand for labour and cause employment and wages to grow. This may help younger workers who have more time to get education and training in these N industries and gain employment.

17 Exemplar for internal assessment resource Economics for Achievement Standard resource 2.4B 6. Grade Boundary: High Not Achieved An economic model and some economic concepts have been presented, but the student has not adequately analysed unemployment, which is required for Achieved. The student describes unemployment concepts like structural unemployment and sunset/sunrise industries, using Sealords as an example. The response includes a brief explanation of causes of changes in regional unemployment, and has referred to the information in the graph. However, there is no use of an economic model like the PPF or AS/AD model to support the explanation. Refer to part O. The labour market model has been used to support the explanation of structural changes and focuses on sunset industries, but there are no examples of regional sunrise industries included. Refer to part P. The impact of these structural changes on younger and older workers has been briefly explained, but there is no information or data used to support these explanations. Refer to part Q. The analysis of unemployment is limited as there is a lack of economic models used to support an explanation of recessionary changes in regional unemployment, which is required for Achieved. Additionally, more explanation of the impacts of recessionary and structural changes in unemployment regionally; using specific information with numbers of unemployed is needed. Crown 2010

18 Student 6: High Not Achieved Unemployment fell from 2002 to 2005 due to Nelson/ Tasman having an economic boom with lots of tourism and high house prices, but it has been increasing since This can be seen in the graph below. It has increased from under 3% in 2006 to over 4% in Unemployment has risen due to job losses from major O producers in Nelson like Sealords, Nelson Pine Industries and Nelson Forests Limited. The timber based areas have lost jobs because of lost export markets due to the global recession. Since overseas has less incomes they demand less timber. Because less is demanded, less is produced and this means fewer workers are needed. Structural Unemployment Structural Unemployment occurs when workers no longer have the skills that the market wants or are in wrong areas of the country for jobs. Because their skills are no good this means they will not be able to find work in the same areas. This has happened to fish processing in Nelson. Sealords has decided to shift its fish processing out to sea on the boats and this has meant that the land based workers either need to shift onto the boats or lose their jobs. Factory workers are not needed as much so they are now structurally unemployed. This is because a lot of manufacturing has moved overseas where costs are lower, so demand for these types of skills has decreased. Older unemployed factory workers may find it hard to get another job or be able to retrain and do something else as they do not have as much time as a younger Q worker. Labour Market Model Real Wages P Sunset Industries are ones that are SL decreasing in size and slowly dying. A good example of this is Sealords who now are processing all fish at sea meaning land based factory workers are no longer demanded. This is shown in the labour market diagram above. W0 Because fewer products are being demanded from the sunset industry they don t need to W1 produce as much. This means that fewer DL workers are needed and demand for workers DL1 falls from DL to DL1. This means that real Quantity Labour wages fall from W0 to W1. When the quantity Q1 Q0 of labour falls from Q0 to Q1 this is unemployment increasing. Sunrise industries are ones which are growing and demand for their product is increasing. As demand for these products grow it will mean that more workers are needed to make the products. This will increase demand for labour and cause employment and wages to grow. This may help younger workers who have more time to get education and training in these industries and gain employment. Q