The Brotherhood of St Laurence has today released a new report on the growing scourge of youth unemployment and underemployment in Australia, which is at the worst level since records began in 1978, with more than 580,000 Australians aged 15 to 24 either under-employed or unemployed:
Today, young people are more likely to be underemployed – to have some work but want more hours – than at any time in the last 36 years…
Presently, there are more than 310,000 people aged 15 to 24 who are underemployed in Australia. When you add the numbers who are without any work, more than a quarter of 15 to 24 year olds in the labour market – that is, more than 580,000 young Australians – are either underemployed or unemployed.
Figure 1 shows the rate of underemployment for the 15–24 age group and for the overall employed population from February 2000 to May 2014. The proportion of employed people between 15 and 24 years of age who are underemployed is now twice that among the overall working-age population.
The graph also shows an upward trend in underemployment among young workers, which accelerated after the global financial crisis (GFC) in 2008. By May 2014, more than 15 per cent of workers in the 15–24 group were underemployed – the highest rate since this ABS data series started in 1978, when the rate stood at 3.1 per cent…
Figure 2 compares the proportion of employed 15 to 24 year olds who are employed on casual or fixed-term contracts with that of all workers aged 15 to 64. For every year between 2001 and 2012 except 2008 the proportion of employed youth with a non-permanent contract was more than 50 per cent, well above the proportion for all workers, which ranged between 30 and 35 per cent.
The gap has widened since the GFC as the proportion of young employees in precarious jobs has grown faster than for any other age group. This suggests a serious deterioration in the employment conditions of many young people, who face increasing difficulty in finding secure employment.
The labour force underutilisation rate is a measure that combines the numbers of the unemployed and the underemployed, as a proportion of the labour force. It is another revealing indicator of the scale of the problem facing young people seeking work today.
As Figure 3 shows, the GFC was a turning point in the trend of underutilisation of the youth labour force in Australia. By May 2014 the underutilisation rate for the 15–24 age group had risen steadily to 28 per cent, close to the historic high of 30 per cent reached in the early 1990s.
This indicates that more than a quarter of the young Australians in the labour force are either unemployed or working fewer hours than they would like. The GFC ushered in a period of tighter labour markets and limited job opportunities – especially for younger people…
The pool of entry-level jobs available to young people is diminishing and the jobs they can get are increasingly casual, temporary or part-time. These insecure roles are also more vulnerable to being axed and less likely to offer career development, opportunities and training.
Tinkering with welfare policy, while ignoring the realities of the new risks and opportunities present in our modern economy, is not going to provide an answer to the dual challenges of youth underemployment and unemployment.
The 580,000 young people identified in this paper are at risk of becoming a lost generation. Quite apart from their economic value to the labour market, as a society we can’t afford to waste their broader potential.
The Brotherhood’s findings broadly accords with my own analysis, which found that the employment situation for Australia’s youth has deteriorated markedly since the GFC, with employment for 15-24 year olds declining by 118,600 (-6.2%) since September 2008, whilst the rest of the labour market has experienced growth of 920,500 jobs (+10.4%).
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As I noted last week, the perilous situation facing Australia’s youth also brings into light the egregiousness of the Abbott Government’s plan to restrict welfare payments to young unemployed and its Work-for-the-Dole program, not to mention its loose approach to migrant work visas.
To bring these programs in during what is becoming a youth jobs crisis is a fundamental betrayal of the Government’s duty of care.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
