Recent reports suggest improvement to the economy, but one group of Australians feel the impact of the global financial crisis (GFC) harder than any other, and will likely be feeling that impact for years to come. Youth unemployment in Australia sky-rocketed as a result of the economic downturn.
Federal Government responses have been fairly swift, with the announcement of a range of measures such as the Youth Compact, new targets for attainment of Year 12 or equivalent and, most recently, the National Strategy for Young Australians. The challenge of ensuring that young people make smooth transitions from school to work and/or further study and training not only involves responding to the immediate economic impact of the GFC, but also to longer term problems extending back well over a decade such as a lack of significant growth in full-time job opportunities for young people.
Another challenge lies in listening to and understanding the needs of young people entering a changing labour market. Contrary to a popular but erroneous view of “Generation Y” and subsequent generations, the evidence suggests that many young people seek financial security and solid post-school pathways just like their parents. Policy makers would do better by asking young people themselves.
The first immediate challenge is responding to the impact of the downturn on young people. Recent research published by The Foundation for Young Australians entitled How Young People Are Faring (HYPAF) (available for download from here) indicates the depth and breadth of this impact.
Prior to the GFC, unemployment for youth aged 15 to 24 was at its lowest since the 1970s. Between 2008 and 2009, however, the rate of unemployment among teenagers who were not in full-time education rose from 12.2 per cent to 18.5 cent - one of the largest annual increases in 20 years. The number of 20 to 24-year-olds not engaged in full-time work or full-time education also shot up (to around 25 per cent), reversing the trend of the previous decade.
Young males have been particularly affected. One factor is the halt in the percentage of teenagers undertaking traineeships and apprenticeships (which tend to be male dominated) after a decade of growth. As unstable global financial markets continue to affect Australian labour markets, young people remain vulnerable. Those lacking experience, or in traineeships or apprenticeships, are amongst the first to go when businesses feel the pinch.
Based on trends from the early 1990s, it is likely that youth unemployment will rise during the next 12 months at least. During the last recession, the percentage of unemployed 15 to 19-year-olds continued to rise significantly over three years, peaking at 27 per cent in 1992. There was a lag effect on youth unemployment from which the rates of teenage disengagement from earning and learning did not fully or stably recover to 1980s levels - despite years of record growth.
What makes the current situation more difficult to predict is the global nature of the financial downturn. Earlier this year, the OECD’s Jobs for Youth review observed that economic downturns affect young people with particular severity. In the United States, for example, youth unemployment soared to 18.5 per cent this year - one of the highest rates on record. The UN Secretary General suggested that where young people make up 25 per cent of the work force worldwide, as many as 40 per cent of that cohort is unemployed. This is a disturbing trend.
It may be suggested that young people seek flexibility and are less likely to want full-time work, but the evidence suggests that this is a myth. While more young people are taking on part-time work, much of this is involuntary - that is, many young people would prefer to work more hours. In fact, Australia has high levels of involuntary part-time employment compared to other OECD countries.
The evidence from HYPAF indicates that young people who are fully engaged in work or study are happier in life. The proportion of 19-year-olds who were “very happy” with life as a whole was 10 percentage points higher for those fully engaged in study or work than for those not fully engaged. Similarly, teenagers undertaking an apprenticeship or traineeship are significantly happier with their work and career prospects than those in full-time study or other employment.
Young adults in full-time work are much more likely to report being “very happy” about career prospects, standard of living, the future and life as a whole than young adults who are unemployed, in part-time work or not in the labour force. Those in full-time work, including apprentices and trainees, indicate the greatest satisfaction with wages, social life and life as a whole. Just 21 per cent of unemployed young adults reported feeling very happy about career prospects, versus 60 cent of those in full-time work.
But longer term shifts in the labour market suggest a deeper, structural problem faced by young people seeking full-time work. Levels of full-time employment have not made significant gains over the past two decades - even during the long period of tremendous economic prosperity prior to the GFC. Any modest gains in recent years have been reversed. The long term data suggests a structural bias against young people seeking secure work in the labour force. This trend may be permanent.
We have a series of State and Federal initiatives seeking to improve the way in which government responds to youth voice in policy. This is a welcome shift but the risk of tokenism remains. The recent National Youth Strategy, for example, has been criticised for a lack of consultation with its key stakeholders, young people (Crikey, October 23, 2009). The lack of attendance by the Minister for Early Childhood Education, Childcare and Youth at the recent consultation on the National Strategy for Young Australians may suggest something about the government’s priorities.
In the current economic climate, the pathways of young people to work are a priority. Security is as important to young people as it is to most Australians. But the shock of the economic downturn will continue to be felt by young people, particularly new entrants to the workforce. This is a critically formative period of development when young people gain valuable experience and training. Many will struggle with the erosion of confidence and financial security. The biggest challenge lies in re-engaging those young people as confident and secure lifelong earners and learners.