In June 2020, the rate of unemployment for those aged between 20 and 24 reached 13.9%, while for people aged 25 to 34, the jobless rate climbed to almost 7.5%, together disappearing over 314,000 jobs.
Young Australians (aged 15 to 34), many of whom are recent university graduates, are facing a dire job market during this coronavirus pandemic and risk being trapped in low-paying jobs or remaining unemployed for years.
Training programs and apprenticeships offered by Federal and State/Territory governments would help the youth to build confidence and ambitions in the job market.
Young people are disadvantaged because they are young, inexperienced and now they face competition from experienced adults who lost jobs in other sectors of the economy.
Motivation, staying on track and just focusing are necessary for a successful career building in this highly demanding job market.
The industries where young people are more likely to be employed have been hardest hit by the COVID-19. These locked down sectors particularly include tourism, hospitality, retail food and entertainment.
In 2007, around 19% of all people aged between 22 and 25 working in their first full time job after leaving education were employed in sectors that are now essentially shut down by the pandemic, while by 2019 this had increased to 22%.
Historically, teenage and youth unemployment spiked since the Global Financial Crisis (GFC) in 2008 and 2009 which resulted in a low level of income and it didn’t fully recover. The Coronavirus is a double whammy for this young cohort of Australians.
On 30 July 2020, Productivity Commission (PC) released a report into “Why Did Young People’s Incomes Decline?” in the years from 2001 to 2018. The analysis of the report found that the growth in wage rates for people aged 15 to 34 was negative from 2008 to 2018.
In contrast, average wage rates for people aged 35 to 65+ continued to positively grow, on an increasing scale, in the same period. Hence, the disadvantage in wage growth observed since the GFC was primarily a phenomenon experienced by young Australians, aged under 35.
There has been a shift from full‑time to part‑time work for people aged 15 to 24 which was associated with young people studying longer. This contributed to a decline in hours worked and incomes earned. This age group has seen a slow decline in full‑time employment since the early 1990s due to then impending recession, except the period of the mining boom from 2001 to 2008.
The PC report suggests that, after 2008, young people obtained work in lower‑scored occupations (a ranking of occupations developed by Australian National University) than did comparably‑skilled young people before 2008.
Young job seekers still found work in the more competitive labour market, but accepted lower‑scored occupations with essentially lower pays. The movement down the jobs ladder of young people with university degrees is highly likely to push those with vocational degrees or no tertiary qualifications further down the ladder in the current job market.
After 2008, changes in the transfer income such as Youth Allowance and Newstart (now called JobSeeker) from the government did not compensate for the decline in employment income for our youth population. Students aged 16 to 17 became ineligible for Youth Allowance. The unemployed aged 21 only qualified for the lower Youth Allowance rather than higher Newstart payment.
The decline in income for the youth was partly offset by an increased support from parents. Parents transferred more funds to children who had moved out of home and many more young people remained in the family home with sizeable financial benefits in the forms of free or concessional rent, food, utility bills and other amenities which would have been equivalent to a third of the young peoples’ income.
This is and has been an extraordinary time for our youth and extraordinary measures are necessary to resolve the high level of youth unemployment and low level of income.
The Australian industries have a significant role to play in engaging young people in work at various capacities. All three levels of Australian government (Federal, State/Territory and local councils) should build targets into their agencies and out sourced contracts on the recruitment of young people.