Australia’s growing youth unemployment scourge

By Leith van Onselen

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…

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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.

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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…

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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.

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  1. Leith what are your thoughts on Bob Day’s idea that he won’t support the welfare reforms for under 30s until labour market deregulation occurs, particularly his call for young people to be able to opt out of the IR system?

    • if someone wants to make people “free” to “to be able to opt out of the IR system” they should make them free to opt out of taxation system as well.

      I have nothing against this kind of “anarchy” but only if it works for poor as well

  2. When you factor in the increase in student numbers, those who have been fed the higher education cool-aid, then you see how the true unemployment levels have been manipulated.

    Another example of how our youth are being fed to the lions. The list also includes

    Increases in University fees
    Higher HECS Debt and interest rates
    Poor employment outlook
    Unaffordable housing
    Higher taxes to maintain pensions / medicare costs
    and environmental destruction

    The Greens should be able to communicate this to the youth market and capitalise on the inequality of current Laboral Govt policies.

    It really is a disgrace.

    • Manipulation on top of manipulation, lies on top of lies.

      It’s what the boomers do to make themselves feel ok about f..g over the kids and selling the country.

    • Yep. It’s just shouting at the ocean waves. It is pointless.

      The economy will continue to crumble, house prices will rise, we will go to war.

      • I’m not convinced we’ll go to war. As much as Tony wants to be Australia’s greatest war-time PM, we’re basically impotent, so our appetite for war = the US appetite for war. I’m not convinced there is much of a US appetite for war these days (I live in California, for what it’s worth – perhaps not much).

        But yes, both major parties will keep attempting to prop up existing wealth by screwing the young. At some point the voting patterns will change, and so will this. But not yet.

  3. Simple solution. If the young want to work move overseas to countries where unemployment is low. Done.

    Who cares that baby boomers sold out the youth and Australia by locking down house prices and jobs for only themselves while giving themselves every tax break known to man.

    I bet if any one of you had 3 houses as well as getting to retire at 65 you’d also fight tooth and nail to ensure anyone who comes along has to pay 10x what you paid 🙂 I would…

    Far as I’m concerned Gen Y can get stuffed. If they want a house they can pay me 10x what I bought it for. That’s Australia and economics.

    • Don’t blame the boomers. They got a far better deal than they ever could have imagined. Blame successive governments whose number one priority has been to inflate the housing bubble.

  4. I’m not really sure why Youth unemployment and Housing Affordability fit so neatly into the same sentence but they do seem to belong together in any modern day Australian narrative.

    I should probably be the last person in the world to proffer advice on youth unemployment because I’ve never employed anyone with less then a masters degree in engineering (Phd preferred):
    So what does it mean when an economy cant create jobs /remunerated activities for the least skilled participants?

    To be honest this is probably the first time in my life when I’ve even considered the youth unemployment issue and I’m only thinking about it because my son wants a summer job and I’d really like to see him get the job without my intervention.

    • Y’know, I’ve never gotten a job by using any sort of network, because the interests of my family and friends and my career interests simply don’t intersect.

      I never understood what that meant until I met some relatives of my wife who have been able to use their family networks very effectively.

      My advice – if you have the opportunity to help your son, do it. The principle isn’t worth the long term pain.

  5. Has anyone ever considered that an imploding housing sector would be good for unemployment. Perhaps bad in the short term in that the tradies and the like would be hit hard but in Adelaide they already are. Lower housing prices and as a result smaller percentages of Incomes being used to service loans and paying rents would free up cash to spend in the service sector to boost demand along with making it possible for people to get a foot into the market whilst giving them the ability to do all this and accept internationally competitive wages and maybe exporting a manufacture product or two. Cheaper housing would make housing more affordable for more people boosting demand and creating a building boost not for investors but for young people who would now be homeowners rather than renters.