State of Australia’s Skills 2021: now and into the future
Trends in the youth labour market
Labour market conditions for young people have also been significantly affected by structural change in the economy over the past several decades and also tend to be disproportionately negatively affected by fluctuations in the business cycle. Young people are a traditionally disadvantaged cohort and are particularly vulnerable during periods of economic and labour market softness as they tend to have less education, skills and experience than their prime-age counterparts and are therefore the first to be retrenched by employers in times of economic difficulty.
The youth unemployment rate has been consistently above the overall unemployment rate for the past 40 years and stood at 12.2% in February 2020, more than double the rate recorded for all persons, of 5.1%. Figure 7 shows that the youth unemployment rate also tends to increase to a greater extent during economic downturns and remain elevated for longer, even as overall labour market conditions improve.
Figure 7: Youth (15-24 years) and overall unemployment rate, February 1980 to February 2020
Encouragingly, however, there has also been a considerable rise over several decades in the proportion of young people participating in full-time education, from 31.9% in February 1988, to 53.1% in February 2020 – see Figure 8 11. This is significant, given the strong link between higher educational attainment levels and a person’s future employment prospects. In this regard, prior to the onset of COVID-19, the unemployment rate for persons aged 15 to 64 years with a bachelor degree or above stood at 2.9%, well below the 6.8% for persons whose highest level of educational attainment was Year 12 or equivalent 12.
Although the increase in participation in full-time education for young people continued throughout most of the 1980s, the disappearance of many entry-level jobs during the 1990s recession meant that there was an even greater incentive for young people to either remain in school for longer or enrol in further post-school study. In addition, the structural shift in the economy at that time and advances in technology also resulted in an increase in demand for more highly skilled labour. This became more evident throughout the 2000s.
Figure 8: Youth participation in full-time education and youth full-time employment, February 1988 to February 2020
Figure 8 shows that the sharp rise in youth participation in full-time education, which began in the 1980s and rose again during the 1990s recession, was associated with a significant fall in youth full-time employment. Indeed, youth full-time employment fell by nearly 30%, from a high of 1,410,700 in June 1981 to 998,900 in November 1992 – the peak of the 1990s recession. Notwithstanding some occasional marginal improvements, youth full-time employment continued on a general downward trend until the mining boom in the early 2000s.
During the mining boom there was a period of strong and sustained economic growth, an increase in wages, particularly for low-skilled labour in the resource-rich states, and an overall rise in full-time employment. As a result, full-time employment for the youth cohort also increased, by 22.0%, from 879,100 in September 2001 to 1,072,700 in September 2008 at the onset of the GFC. From that point, full-time employment for young people deteriorated significantly and has failed to recover since. It fell by 225,800 (21.0%) between September 2008 and February 2020.
Another trend over recent decades has been the increased tendency for young people to combine full-time study with part-time work. The proportion of young people in full-time education with a part-time job has risen substantially, from 25.3% in February 1988, to 40.2% in February 2020 – see Figure 9 13.
Figure 9: Proportion of youth in full-time education with a part-time job, February 1988 to February 2020
Trends in entry level jobs in Australia
Each year, approximately 300,000 young Australians aged between 15 and 24 years are in the process of transitioning into the full-time workforce. Making this transition successfully is critical to their future career opportunities, income and wellbeing.
To understand the availability of entry level jobs, economics consultancy AlphaBeta created for the NSC an entry level job advertisement index to show the change in the rate of entry level jobs advertised over time 14. This index shows that the share of entry level jobs advertised decreased between March 2006 and January 2020, compared with the share of jobs advertised for more experienced workers, which increased (see Figure 10) 15. The decline in entry level jobs being advertised was driven by a reduction in job advertisements for the lowest skilled entry level jobs (defined as ANZSCO skill level 5, commensurate with secondary education attainment), which fell by 13%.
Figure 10: Jobs available to experienced and entry-level workers, 2006 to 2020
Note: The index is constructed to control for the hours worked by young people, fluctuation in overall
job advertisements, and the changing composition of occupations that young workers take up.
Young workers have a higher employment share than average in accommodation and food services, retail trade, and arts and recreation services, which have been relatively steadily growing industries over the longer term, particularly before the COVID-19 pandemic. By contrast, older workers have a much larger employment share in faster growing industries such as health care and social assistance, mining, and professional and scientific services. The reasons that young people are entering steadily growing industries are varied. Some young people may choose to take up entry-level jobs in the retail trade industry, for example, because entry-level roles may serve as a stepping stone to other jobs in faster-growing industries and a valuable means of developing skills and accruing experience.
One explanation for the decline in lower skilled occupations employment could be their vulnerability to outsourcing, automation and technological change. For example, six of the ten largest declining occupations over the 30 years to February 2020 were lower skilled (skill levels 4 and 5 occupations). Of these lower skilled occupations, keyboard operators (down by 83,400 or 62.8%) recorded the largest fall in employment over the 30 years to February 2020. They appear to have been displaced by the widespread adoption of technology and software such as personal computing – see Figure 11.
Figure 11: Employment for keyboard operators
Although the share of employment at the lowest skill level fell over the 30 years to February 2020, against this trend there were some occupations at the lowest skill level that grew strongly. For example, employment for sales assistants (general) recorded the largest increase in employment of occupations at the lowest skill level over the period (up by 168,000 or 48.2%), followed by checkout operators and office cashiers (up by 99,400 or 152.6%), kitchenhands (up by 49,100 or 56.0%) and fast food cooks (up by 40,100 or 322.7%).
The proportion of young workers in occupations was calculated during 2008, before the global financial crisis, so the index does not capture the decline in the proportion of young people in jobs over time. AlphaBeta did not analyse if the number of young people working in each occupation is low or high, because if the Australian labour market is efficient the dominant reason would be that a young person isn’t able to compete for a job in that occupation, or there is not enough financial incentive for a young person to work in that occupation, given their preferences.
NSC research shows that, in recent years, employers have increasingly used online recruitment methods such as recruitment websites, job boards and social media to advertise vacancies compared with advertising in newspapers. Recruitment websites and online job boards generally have greater coverage for professional and managerial occupations, and as such they may not reflect the full range of entry level opportunities for job seekers.