Youth unemployment in Australia

Young people in Australia experience higher levels of unemployment than the rest of the population. This is for a variety of reasons including a perceived or real lack of experience and skills, a mismatch between the supply and demand of graduate jobs and social factors among other reasons. Research shows that younger workers are more likely to be adversely affected than the rest of the population when economic conditions slow. Furthermore, early-career labour market outcomes affect future outcomes; research indicates that those who graduate in a weak economy suffer long-term “scarring” effects in terms of their employment and earnings prospects. This is before monetising the impact on mental health and wellbeing to individual persons, which represents a less visible and more personal cost.

The Australian Bureau of Statistics defines ‘young’ as those aged between 15-24 years. Young people in Australia today have never experienced a “technical recession”, which Australia has not experienced for 28 years. A ‘technical recession’ is defined as two or more consecutive quarters of negative gross domestic product (GDP) growth. Some economists like to look at the labour market for another definition of a recession, more specifically, a ‘labour market recession’ – when unemployment climbs by 1.5 percentage points or more within 12 months or less. After all, most people (including economists) would find it difficult to explain what GDP is, but everyone knows whether they have a job.

Using the ‘labour market recession’ definition (a rise of 1.5 percentage points or more within 12 months or less), young Australians have experienced three recessions this century compared to one for the working-age population (the labour market recession that followed the global financial crisis), however they have yet to experience a ‘technical recession’. Young Australians last suffered a labour market recession in 2014 when the Australian economy transitioned from the mining boom; the youth unemployment rate rose from 12.5% in December 2013 reaching a high of 14.1% in November 2014.

Since peaking in November 2014, Australia’s youth unemployment rate fell to a recent low of 11.3% in August 2018, before rising to 11.8% in May 2019. This has been driven by declines in the ACT, New South Wales, Victoria and South Australia, however at the same time there have been large increases in youth unemployment in Western Australia, Northern Territory and Tasmania.

South Australia and Tasmania have largely had the highest youth unemployment rates since 1990, and since then, have actually experienced their youth populations decline. Western Australia and Northern Territory have also experienced a youth exodus since the end of the mining boom in 2014, alongside a rise in youth unemployment.

Younger workers are often the ‘last in, first out’ in the labour market, meaning employers could be willing to take a chance with younger workers if they are finding it difficult to find more experienced employees but may prioritise hiring older, more experienced employees when economic conditions deteriorate. As downside risks to employment increase, it is important to minimise the negative outcomes on those new to the workforce, Ai Group recommends:

  • increasing investment in programs that prepare students for work and transition following compulsory years while at school;
  • funding programs to help young people deal with health and wellbeing challenges faced when moving out of the school environment; and
  • funding transition programs for unemployed young people that increase involvement by industry through work-based activities.

 

 

The following two tabs change content below.
Andrew Bridger
Andy joined Ai Group as an Economist in 2017. He is responsible for analysis and commentary on Australian and international economic developments. Prior to joining Ai Group he worked for the Commonwealth Department of Industry, Innovation and Science and for a private economic consulting firm in Brisbane. He holds a Bachelor of Economics and Finance from the University of Queensland.
Andrew Bridger

Latest posts by Andrew Bridger (see all)

Leave a Comment

Your email address will not be published.