Infographic: Finding a policy fix for youth unemployment

Youth unemployment is a lingering global issue. Shutterstock

Review

The youth unemployment rate increased from 12.8% in August to 13.2% in September seasonally adjusted, in line with the slight overall increase in unemployment.

However, the latest figures for 15-24 year olds are consistent with an unemployment rate of around 13% over the last 12 months. An important indicator of the health of the youth labour market is the underemployment rate which measures the number of young people in part time jobs wanting more hours of work. This increased from 15.4% to 16.4% for 15-24 year olds between May and August continuing a long term trend over recent years. This means around 29% of the youth labour force has no work or not enough work at present compared to 14.4% of the labour force as a whole.

The current government approach to youth employment policy is broadly consistent with what the OECD recommended for Australia in its 2009 report, delivered in the depths of the global financial crisis.

The report was sceptical but not dismissive of the effects of labour market programs focused on employment and skills upgrading in reducing youth unemployment. It was also concerned about the large costs of such programs. However, it did support investment in education starting from early childhood as well as in the VET sector in ensuring good employment outcomes for all young people.

It also supports a carrot and stick approach with a strong “mutual obligations” “work for the dole”, and basic “earn or learn” approaches in relation to income support for young people. It sees the employment services model, which rewards providers for their outcomes in job placements, as very effective.

The report was a reminder of basic labour dynamics for youth - how Australia’s exceptional economic performance prior to the GFC was the source of strong jobs growth and low unemployment which also fostered such good youth employment statistics in the years prior to 2009 compared to the present. It also helpfully points out that young people tend to experiment and move about in the workforce when given the opportunity, to test out their preferences and capabilities before settling into a long term job and career. This is entirely normal and something that should not be forgotten in the current discussion about youth employment.

Young people tend to start off in casual and part-time jobs often as students and this leads into longer term employment. The report applauded the wide availability of casual jobs for young people in Australia as a result of the low protections in labour law in such jobs, but expressed concern about the relatively high minimum wage compared to other countries in the OECD.

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