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Youth employment is the struggling canary down our mine Youth employment is the struggling canary down our mine
(2 months later)
The most recent unemployment figures have revealed a problem with youth unemployment that has for the most part been hidden by the traditional “youth unemployment” rate.The most recent unemployment figures have revealed a problem with youth unemployment that has for the most part been hidden by the traditional “youth unemployment” rate.
The June labour force figures released by the ABS last week showed that the unemployment rate for 15-24 year olds (the standard definition of youth unemployment) was 11.7% (in trend terms), slightly below where it was this time last year. For 15-19 year olds it is 15.6% – more than one percentage point lower than the 16.7% of June 2012.The June labour force figures released by the ABS last week showed that the unemployment rate for 15-24 year olds (the standard definition of youth unemployment) was 11.7% (in trend terms), slightly below where it was this time last year. For 15-19 year olds it is 15.6% – more than one percentage point lower than the 16.7% of June 2012.
So the rate is coming down. Cigars all round?So the rate is coming down. Cigars all round?
Alas no.Alas no.
Last week we noted that the unemployment rate hides important details; this is magnified when it comes to youth unemployment. What has been noticeable of late is the unemployment rate of those looking for full-time work has surged, while the overall rate has stayed flat or declined.Last week we noted that the unemployment rate hides important details; this is magnified when it comes to youth unemployment. What has been noticeable of late is the unemployment rate of those looking for full-time work has surged, while the overall rate has stayed flat or declined.
There is now a bigger gap between the two rates than at any time in the past 20 years:There is now a bigger gap between the two rates than at any time in the past 20 years:
And yet despite this there is actually a smaller percentage of youth looking for full-time work than there was during the height of the global financial crisis.And yet despite this there is actually a smaller percentage of youth looking for full-time work than there was during the height of the global financial crisis.
So what is going on?So what is going on?
There are two issues: participation and jobs.There are two issues: participation and jobs.
First participation.First participation.
For young people, especially those between the ages of 15 and 19, there is a clear alternative to participating in the labour force: education. And what we have seen is that since the GFC, more youth have been staying in the education system rather than entering the labour market.For young people, especially those between the ages of 15 and 19, there is a clear alternative to participating in the labour force: education. And what we have seen is that since the GFC, more youth have been staying in the education system rather than entering the labour market.
For most of the 2000s up to the middle of 2008, around 26% of all 15-19 year olds were studying full-time and neither working nor looking for work. When the GFC hit, that changed and in the past five years the percentage has fairly zoomed up to over 40% – a level not seen since the early 1990s recession.For most of the 2000s up to the middle of 2008, around 26% of all 15-19 year olds were studying full-time and neither working nor looking for work. When the GFC hit, that changed and in the past five years the percentage has fairly zoomed up to over 40% – a level not seen since the early 1990s recession.
Now this is not necessarily a bad thing. They are staying in school and learning skills. But it does suggest that fewer are obtaining skills on the job – either as an apprentice or in an entry-level job. The ALP remains extremely focused on trades training and keeping youth in school, so to an extent this is a vindication of their policy.Now this is not necessarily a bad thing. They are staying in school and learning skills. But it does suggest that fewer are obtaining skills on the job – either as an apprentice or in an entry-level job. The ALP remains extremely focused on trades training and keeping youth in school, so to an extent this is a vindication of their policy.
But you can’t stay in school forever, which brings us to jobs.But you can’t stay in school forever, which brings us to jobs.
Young people are always hit harder by downturns than the rest of the adult population. Because they are less experienced, and thus often less productive, young full-time employees are often the first let go during times of economic downturn. This means that full-time youth employment growth can actually be a bit of a canary in the mine for the broader economy.Young people are always hit harder by downturns than the rest of the adult population. Because they are less experienced, and thus often less productive, young full-time employees are often the first let go during times of economic downturn. This means that full-time youth employment growth can actually be a bit of a canary in the mine for the broader economy.
This was certainly the case during the GFC when full-time youth employment began falling severely at a time when employment for those over 25 was still increasing:This was certainly the case during the GFC when full-time youth employment began falling severely at a time when employment for those over 25 was still increasing:
The problem of youth unemployment is best displayed by the fact that currently a smaller percentage of 15-to-24 year olds are working than at any time since 1997. In the past three months only around 59.1% of youth have been in any type of employment – more than 1.5% fewer than in June 2009 when the economy was hit hardest by the GFC. And yet the youth unemployment rate is actually now better than it was then.The problem of youth unemployment is best displayed by the fact that currently a smaller percentage of 15-to-24 year olds are working than at any time since 1997. In the past three months only around 59.1% of youth have been in any type of employment – more than 1.5% fewer than in June 2009 when the economy was hit hardest by the GFC. And yet the youth unemployment rate is actually now better than it was then.
So looking at the youth unemployment rate actually can give a distorted image – the picture of the past five years since 2008 has not been about youth unemployment – but youth employment.So looking at the youth unemployment rate actually can give a distorted image – the picture of the past five years since 2008 has not been about youth unemployment – but youth employment.
This is made clear when we compare the employment to population ratios of youth to that of those in the “prime working age” of 25-54:This is made clear when we compare the employment to population ratios of youth to that of those in the “prime working age” of 25-54:
For most of the past 20 years, the level of young people in employment has grown at around the same pace as that of the prime-age workers. But while the percentage of prime-age workers has increased since the GFC (and is just below the record high of early 2011) the level of youth in employment has fallen off a cliff.For most of the past 20 years, the level of young people in employment has grown at around the same pace as that of the prime-age workers. But while the percentage of prime-age workers has increased since the GFC (and is just below the record high of early 2011) the level of youth in employment has fallen off a cliff.
The reason youth unemployment hasn’t risen in the past year the way the overall adult population rate has is because young people are responding to the economic downturn not by staying unemployed, but by staying out of the labour force and remaining either in school or a vocational education.The reason youth unemployment hasn’t risen in the past year the way the overall adult population rate has is because young people are responding to the economic downturn not by staying unemployed, but by staying out of the labour force and remaining either in school or a vocational education.
The Liberal party’s employment participation spokesperson Sussan Ley said early this month that the Liberal party’s policy was to “suspend the welfare payments of young people after six months in areas where there are available unskilled and unfilled jobs”.The Liberal party’s employment participation spokesperson Sussan Ley said early this month that the Liberal party’s policy was to “suspend the welfare payments of young people after six months in areas where there are available unskilled and unfilled jobs”.
But this suggests a punishment for an attitude not in existence. Indeed, the average duration of youth unemployment has followed much the same path as that of all other age groups.But this suggests a punishment for an attitude not in existence. Indeed, the average duration of youth unemployment has followed much the same path as that of all other age groups.
The policy settings for youth employment needed at the moment aren’t so much about getting kids off unemployment as about getting them into the labour force in the first place.The policy settings for youth employment needed at the moment aren’t so much about getting kids off unemployment as about getting them into the labour force in the first place.
And the issue of keeping them in their jobs as well remains paramount. At present annual full-time youth employment is falling at around 5%, while employment of those over 25 remains positive.And the issue of keeping them in their jobs as well remains paramount. At present annual full-time youth employment is falling at around 5%, while employment of those over 25 remains positive.
History suggests, however, that when youth employment drops, sooner or later it drops for everyone else.History suggests, however, that when youth employment drops, sooner or later it drops for everyone else.
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