Young people 'worse off' in 2018 than in 2001 as entry-level jobs fall

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on November 09, 2021 Fact Checked
Young people 'worse off' in 2018 than in 2001 as entry-level jobs fall

A new report revealed there is a lack of employment pathways for young people, and that this is likely to worsen due to COVID-19.

Quality job opportunities for young Australians appeared to decline over the past decade as young people face an increasingly challenging labour market, according to new joint research by Social Ventures Australia, Apprenticeship Employment Network, and PwC.

The new paper titled What Will It Take? points out that young people have seen their average income decline in real terms by 1.6% from 2008 to 2018. 

Additionally, there has been a 50% reduction in the number of entry-level jobs available since 2006, and some middle-skill jobs once seen as a 'stepping stone' have disappeared. 

Young people have been 'disproportionally impacted' by the 'weaker' labour market according to PwC. 

Employers are reducing investments into training their employees, meaning it now takes an average of 4.7 years for a young person to move into full time employment.

According to The Productivity Commission, young people face an increase in underemployment, a reduction in average working hours, and a decline in average income.

This slow climb is resulting in long-term societal and economic impacts, including people remaining on a 'low-scored job trajectory' for longer.

Why are young people being left behind?

The report reveals the problem might be compounded by employer attitudes towards young employees, and that many have long-standing misconceptions about hiring young people. 

Additionally, rapid technological innovation increased the expectations of prospective employees, which increased competition for entry-level positions typically sought by young people.

While there is 'goodwill' and a desire to hire young people, a combination of factors are leading to inaction.

For example, limited capability, capacity, as well as limited ability to achieve this on an operational, administrative, and financial scale.

The 'lack' of employment pathways leaves young people unable to apply and develop their skills.

This problem is likely to worsen in response to the pandemic, as 'uncertain economic times' tend to make employers hesitant to hire to new employees according to the report.

Underemployment is on the rise

Underemployment increased to 8.6%, or 1.23 million people, in October according to Roy Morgan's latest data.

The number of people unemployed or underemployed rose to 119,000 from September, accounting for 17.8% of the total workforce, according to Roy Morgan.

Michele Levin, CEO Roy Morgan, said increasing unemployment and underemployment was driven by lockdowns in NSW in Victoria.

"Looking at an industry-specific level shows the industries to shed jobs during October were led by retail, recreation and personal services and community services – all industries that are disproportionately impacted by extended lockdowns and store closures," Ms Levin said.

"Although the increases in employment are unlikely to match the resurgence from a year ago there is likely to be a strong rebound in the industries most heavily impacted by the COVID-19 lockdowns as more than 12 million Australians who’ve been forced to remain at home for months are allowed to return to their normal lifestyles and spend some of the savings built up over the last few months."

This can be compared to the Australian Bureau of Statistics' (ABS) unemployment and underemployment data, which varies slightly to Roy Morgan's.

What needs to change?

The report suggests five measures to be taken that may help address employer needs to overcome 'complex' obstacles to hiring young people. 

  1. Financial levers for longer-term considerations to rebates and training levies.
  2. Establish support models for employers to help them navigate the system they are currently lacking.
  3. Collaborative pre-employment (training) models so that there is employer 'skin in the game' from the beginning, i.e. share risk.
  4. Use of work and learning combination to suit industry needs.
  5. Procurement and contracting to establish opportunities for young people and disadvantaged groups and drive skills development.

Dr Lisa Fowkes, Director, Employment at Social Ventures Australia, emphasised the need for a national approach to address the problem of declining youth incomes.

"Employers are telling us that they need more skilled workers," Dr Fowkes said.

"Yet employer spending on training has gone backwards and young people are getting fewer opportunities to build their skills at work."


Image by Magnet.me on Unsplash

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Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

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