A whacking stick is not enough to get young people into work

The demand for jobs among Australia’s young people is far outstripping supply. shutterstock

Australia’s young people are facing some urgent problems. The unemployment rate of 15 to 24-year-olds, at a staggering 13.9%, is more than double the overall national rate of 6.3%. It hasn’t been higher since the late 1990s.

The government has said time and again that we need to get young people working, but the figures are telling us that it’s not as simple as it would seem. The demand for jobs among Australia’s young people far outstrips the supply of jobs.

When we break down the figures, the scenario looks even worse: 13.9% of 15-24 year olds (291,832) in the labour market are unemployed; another 17.4% (365,575) had jobs but were looking for more work (that is, underemployed). This amounts to around one in three young people in the labour market. This rate is at its highest since the statistics were first available in 1978.

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Three pieces of a complex puzzle

In this situation, as in any market, there are three pieces to the puzzle:

  1. People wanting work (demand for the product);
  2. People looking for work (demand and active buy-in to the product); and
  3. Actual jobs (supply).

This is basic maths: 657,407 young people plus another 1,197,057 underemployed and unemployed adults 24 years and older looking for work minus 149,900 job vacancies equals not enough jobs. Assuming one job per person, this means 92 in every 100 of these people won’t get a job vacancy. Competition is fierce.

This is a serious problem for young people. It affects their income, long-term employability, social participation, mental health and housing stability. It affects the families who support them. And it is a problem for society.

The recently released Intergenerational Report predicted that the number of working-age people supporting each person 65 years or older will decrease from 4.5 today to 2.7 by 2054-55. We need young people to be working; we can’t afford for a large proportion to be unemployed. To achieve this, we need a supply of jobs and support for young people to obtain them. This was recognised in the report:

The community and economy will benefit from opportunities to support … young people … to participate in the workforce … Ensuring that more young people are able to find employment when they leave education and training will be important to avoid entrenching disadvantage over the long term.

The Abbott government is focused on “helping” unemployed people to “move into employment” through policies and programs. These include employment services, Work for the Dole, a Job Commitment Bonus, Relocation Assistance to Take Up a Job and proposed budget cuts to make young people who are not “earning or learning” wait up to six months before they can receive financial support through the Newstart or Youth Allowance.

These policy responses focus on part one of the puzzle – making sure young people “want” to work, or are at least looking for work. In the government’s words, they:

… strengthen the incentive for young unemployed people to participate.

But they do not address part two – people who want to work but are not competitive in the job market. Nor are they a solution to part three – the lack of job vacancies, not to mention ensuring jobs that are appropriate and accessible for young people.

The obvious response to make young people more competitive is to increase their education and skills. Traditionally, the more education you receive, the better chance you have of getting a job. As unemployment has gone up, the national Year 12 attainment rate for 20-24 year olds has risen from 78% in 2001 to 85% in 2011.

Education still matters. But as unemployment has risen, so too has the level and length of education needed to make someone employable. Today’s labour market is also highly casualised and often insecure, which means getting a job is not the same as keeping a decent job.

What does this mean for young people who don’t have their Year 12 certificate or other qualifications, or are struggling to stay in school? These young people often face serious social problems that make it difficult to stay in education or find work. Unstable, unsafe housing, not having necessities like an address, enough to eat, shoes to wear or a washing machine, a lack of social skills, mental health problems and/or substance use, and experience of domestic violence all hinder a young person’s ability and capacity to study or find or hold a job.

Towards a workable solution

Such complex problems are unlikely to be solved with a simple solution like the motivation stick of “earn or learn”. Instead, we need different solutions to help these young people get on a pathway towards working or learning.

These young people need a range of services before they can think about education and work. Varied, connected and ongoing support for young people who face complex problems has been shown to be very successful to get them through school and into work.

Young people may also lack the knowledge or networks to move from school to work, or know how to find a job. It is increasingly hard for young people to secure a job without family support. Many young people also lack opportunities for alternative and flexible education, work experience placements and employment skills training.

We need to match young people with the jobs available; support well-structured programs that help young people to develop the skills they need in today’s workforce; and support community organisations to do so. The recently defunded Youth Connections program made inroads in this area. The Senate Select Committee into the Abbott Government’s Budget Cuts recommended that “the government reinstate funding for Youth Connections immediately”.

We also need a response to the supply side. How can we create more jobs and encourage employers to take on young people?

There are a number of approaches and suggestions around. For example, the Australian Council of Social Service (ACOSS) has proposed a partnership approach to an evidence-based Youth Employment Strategy. Overseas, high youth unemployment has prompted large-scale structural reforms and comprehensive investment in young people in the European Union. Tax incentives for employees who hire young people have been introduced in countries like South Africa and Canada, and have been suggested as a possible solution in Australia.

Given that around one in three young people in the labour market are looking for work or want more work, the current policy environment does not add up. Whacking young people with a motivation stick smacks of blaming them for not wanting to work. The figures suggest this simply isn’t true.

It’s also a distraction from dealing with the supply side of the puzzle. This is a complex problem that requires a complex solution. As Social Services Minister Scott Morrison said recently:

Addressing the youth challenge is one that we can all share.

It’s time for a serious discussion between governments, business, not-for-profits, educators, the community and young people about creating more jobs and supportive, realistic pathways to achieving them. We must focus on purpose not politics.