Youth unemployment: a two-speed divide?

Young people are subjected to the most harmful economic effects of the two-speed economy.

Much of the commentary around the “two-speed” economy focuses on the differences between the gains made by mining-related sectors and other parts of the Australian economy that have slowed in recent years. Alongside this commentary are broader debates and even civil unrest around the degree to which Australia’s economic growth over the last 25 years has been passed on to Australians more broadly.

Recent research published by the Foundation for Young Australians, in partnership with the Centre for Research on Education Systems at the University of Melbourne, suggests the possibility of another two-speed divide emerging in relation to young people in the labour market.

This year’s edition of How Young People are Faring shows a labour market that is still recovering from the economic downturn of 2008 while also undergoing a long-term transformation in which young people face different working environments from their peers in the 1980s.

In the short term, young people felt the impact of the economic downturn disproportionately to older population groups. They experienced greater job losses than adults. Those seeking or undertaking apprenticeships were among the first to feel the negative effects. Long-term unemployment for young people has increased dramatically during the last few years. In the longer term, the labour market for young people has changed significantly, making it very different from the one in which their parents first sought work.

These profound changes to the working lives of young people have four notable elements.

Firstly, opportunities for teenagers to undertake full-time work have sharply declined over the last 25 years. The rate of full-time employment among teenagers not in education has decreased by more than 22 percentage points since the mid 1980s.

Secondly, the stability of working life for young people has decreased. More young people who are not in some form of study or training have part-time jobs. Among those in the labour force, three times as many teenagers and more than twice as many young adults now have part-time jobs compared to the mid-1980s.

Thirdly, there is an additional layer to these trends that shows significant differences between the working environments of young people in relation to the rest of the working population. An average of nearly one in five teenagers changed their labour force status every month over the past year, compared with one in ten older workers. Young people change employers more regularly. Unemployment is consistently higher among teenagers with levels of unemployment reaching nearly 16 per cent in 2011.

Finally, too many young people experience long-term unemployment. One in four of the long-term unemployed is aged 15 to 24. Since 2008 the percentage of young Australians without a job for a year or longer has almost doubled. Australian teenagers have higher rates of long-term unemployment than in some OECD countries. Disengagement from work or study can be debilitating, isolating and incur social, economic and personal costs – to those who are disengaged, the communities in which they live and to the broader economy.

What makes these trends particularly troubling is that prior to the global financial crisis, Australia experienced an unprecedented period of economic growth, and fared relatively well overall during the crisis. They raise some key questions. Do the differences in labour force trends between young and older Australians suggest the emergence of a generational divide? To what extent has this prosperity been passed on to young people? The combination of a changing youth labour market, long-term unemployment and persistent marginalisation experienced by certain groups reinforces the need to ask how well we are preparing young people for increasingly changing worlds of work and life.

While Australia could be doing a lot better, there have been gains in educational participation. The evidence continues to affirm the benefits of completing year 12 or equivalent qualification. Educational attainment improves the labour market prospects of young people. Commencements of apprenticeships have started to increase again. But long-term trends indicate that much more needs to be done to address deep structural challenges.

The authors of this report – Lyn Robinson, Mike Long and Stephen Lamb – rightly recommend that policies to raise educational attainment must be directed at those groups of young people among whom rates of school completion continue to be low, such as those living in regional and remote areas. We need to continue to build pathways to employment, post-school study and training.

We further need to build the skills and competencies in young people that are relevant to these changing conditions.

The need to respond to these trends becomes all the more urgent at a time of global economic uncertainty. Looking back at the recession of the 1990s, we can see the immediate and deep impact it had on young people in Australia. And as we see a long-term slowing of full-time job opportunities for teenagers and greater fluidity in the take-up of part-time and casual work, we see significant differences in the labour force market of young people in relation to older Australians. These differences relate to both deep structural factors and a flux brought about by more recent economic instability.

The challenges faced by young people are compounded by the intersection of these developments with other forms of marginalisation across cultural, social and political lives. As Ros Black and I argue in our recent book, In Their Own Hands: Can Young People Change Australia?, challenges arising from racism, demographic change, disengagement from conventional political participation and outdated educational institutions serve as a reminder that while Australia is faring well on some indicators, the same cannot be said for many of its young people.

Whether we can describe these differences in terms of a generational divide as described elsewhere such as in the United Kingdom, it is arguably too soon to tell. But the differences as they stand necessitate closer and more sustained attention to ensuring that the current generation of young people are not left behind during times of economic prosperity and uncertainty.

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