Aussie youth: Overqualified and underemployed


By Leith van Onselen

The Foundation for Young Australians (FYA) has released its 17th annual report card examining how young people are faring in the transition from school to work and how prepared they are for the future economy.

According to the FYA, it now takes a young Australian an average of 4.7 years once they finish full-time education to find full-time work – a marked increase on the one year taken to find full-time work in 1986. The FYA has also found that young people are increasingly ill-equipped with the skills required to navigate the jobs of the future:

Young people are finding it harder to move into full-time work, even after graduating from higher education… The proportion of young people (20-24) in full-time work decreased from 52% in 2008 to 42% in 2014…

This report card also shows that there is a growing gap between the skills young people have and what they will need to secure and navigate the jobs of the future.

While 75% of the jobs of the future will involve Science, Technology, Engineering and Maths (STEM), 35% of 15 year olds are not proficient in science, 42% are not proficient in maths, and 35% are not proficient in technology.

In fact, proficiency in maths, science and reading is getting worse and Australia is falling in international ratings.

The story is no better when it comes to digital literacy. Around 90% of jobs of the future will require digital literacy, yet 35% of 15 year olds are not digitally literate.

To make matters worse, the report claims that 70% of young people’s entry-level jobs are at risk of automation in the future. Further, 60% of young people are currently studying for jobs that will be radically altered by automation.


To counter these trends, the FYA is calling for a “national enterprise education strategy to ensure young people are digitally literate, financially savvy, innovative and adaptable and can navigate the increasingly complex careers of the future”:

Enterprise skills are transferrable across different jobs. They have been found to be as powerful predictor of long-term job success as technical knowledge and it is predicted they will be increasingly important in the future…

Our policy choices today will determine whether Australia’s young people are ready to take on the challenges of the future for decades to come. These are not just challenges for individual young people. They are challenges for our nation. We must act now to ensure young Australians can thrive in this new work order.

Unfortunately, FYA’s calls for a “national enterprise education strategy” are likely to fall on deaf ears. Instead of supporting employment opportunities for younger Australians, the Government has instead all-but encouraged employers to fill job vacancies with foreign workers under the illusion of “skills shortages”.


There is no better example of this than the 457 visa system, where there are around 200,000 foreign workers residing in Australia, with around 80% of these positions not subject to any labour market testing to determine whether an Australian can do the job. Many of these foreign workers are also working in roles that are neither “skilled”, in short supply nor critical to the economy, such as chefs, restaurant staff, call centres, etc. Other heavy users of 457 visa workers, like accountants, are in massive oversupply (see next chart).

ScreenHunter_9372 Sep. 10 10.34

We also know that the latest Department of Employment skills shortages report revealed that skills shortages across Australia have all but vanished, with “more than enough applicants with relevant qualifications, or appropriate skills and experience, for vacancies in almost every occupation”. It also noted that “in 2014-15, there was an average of 13.6 applicants for each skilled vacancy (15.8 for professions and 12.1 for technicians and trades), of whom an average of 2.2 were considered by employers to be suitable”.


So based on the above, the case for widespread foreign worker visas is non-existent. Virtually all of these jobs could be filled locally with a little bit of training.

By ignoring the evidence from its own employment department, as well as not requiring employers to prove that local workers are unavailable to fill positions in the vast majority of cases, the Government has make it systematically easier to import labour from offshore rather than training local workers. In turn, it is depriving our youth of employment opportunities, and is very likely exacerbating the pool of unemployed and underemployed younger Australians.

Unfortunately, with little political representation, the dire employment situation facing younger Australians is unlikely to change anytime soon.


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About the author
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.