Australia’s youth unemployment has hit 13.5% and is still rising. Is the minimum wage holding Australia’s young people back — or is it the one thing they have to fall back on?
Australia’s unemployment figure has remained remarkably stable in recent years, with the job market not looking apocalyptic for most. That is, of course, unless you’re under 25.
Behind the headline figure of 6% unemployment last week was the news that the youth unemployment rate had risen to 13.5%, and experts and business say it should be addressed to mitigate possible long-term effects for the economy. Australia’s rate of youth unemployment is above the worldwide average of 13.1%, and of the 734,000 Australians between the ages of 15-64 looking for work, people between the ages of 15-24 are over-represented at 280,500.
Dr Veronica Sheen, a research associate at Monash University, says the lack of jobs hits younger people harder than others in the workforce. “Because there’s more applicants than jobs, employers can pick and choose and not worry about training a young person or an older person who needs re-skilling, they can just pick and choose among people who already skilled.
“There’s just insufficient jobs, and when young people are just starting out there’s more barriers to employment, there’s less entry points.”
Jeff Borland, an economics professor from the University of Melbourne, says just like in the 1980s, a high level of youth unemployment can have long-reaching effects. “We know that people who start their time in the labour market with periods of unemployment — it can have adverse consequences for them later.”
Kate Carnell, CEO of the Australian Chamber of Commerce and Industry (ACCI), says “it should worry all of us. We know that people who are unemployed at 25 are much more likely to be unemployed at 35 and 45, so it’s important as a society that we look at ensuring that young people are job ready and make sure that there are affordable jobs available.”
Both Sheen and Borland say that programs such as the government’s proposed six-month waiting period for people under 30 to receive welfare won’t address the softening labour market. “The fundamental problem is that we just don’t have enough employment. You can try to give supposed incentives to get people back in employment by taking the dole away or making them work for the dole, but unless you have employment growth, everything is tinkering on the edges,” said Borland.
Carnell says that business is waiting to see detail of the policy, but she emphasises “there needs to be good safety nets in place, so people aren’t falling through the cracks”.
New Family First Senator Bob Day told the Weekend AFR on Saturday that young people were restricted from looking for work by penalty rates and the minimum wage. He said those who were ”not very well educated, they’re not very intelligent, they’re not particularly savvy, they’ve come from the wrong side of the tracks, they’re not particularly good looking” should be able to offer their services at a cheaper rate than others to get a foot in the door.
Sheen and Borland warn against lowering the minimum wage, saying it actually removes incentives to work. Sheen says it also has knock-on effects for the economy: “It’s a dangerous way to go. It undercuts living standards, it goes through the economy, and people have less spending power”.
Carnell points to a skills mismatch between young people leaving university and what is needed by the workforce, making it difficult for employers to invest in younger workers. “One of the dilemmas of having one of the highest minimum wages in the world is that young people aren’t inexpensive to employ — I’m not suggesting they should be — but because they’re reasonably expensive they have to job ready, the capacity to be trained on the job is not there because rates are too high.”
Young people agree that employers aren’t interested in taking time with inexperienced employees. Helmy Afamasaga Faletolu is 22 and has been looking for a job since 2012, when she completed a certificate IV in financial services. Although she also has a certificate IV in business administration and has trained for medical reception work, her lack of experience is a barrier at interviews. She says tougher policies to get young people back to work are understandable.
“Working is good because you’re earning and spending on yourself and your family. It can be a little difficult to understand, but in a way they’re right, and that’s what I’m going to do: I’m going to get a job. When I hear that stuff I kick myself because I want to work,” she said.
The ACCI is also campaigning to lower penalty rates to give younger workers more access to the workforce.