Youth unemployment a major issue when economy takes a downturn

Wednesday, 11 March 2015  Media Alerts

​​​New research from the UNSW Australia Business School shows how an economic downturn can impact on the Youth Labour Markets.

“Unemployment rates for young people go up much more dramatically and remain much higher for younger people, compared to those who have been in the workforce for some time,” says Professor Raja Junankar, an Honorary Professor at the Industrial Relations Research Centre at UNSW Australia.

Official unemployment figures for January are published by the Australian Bureau of Statistics on Thursday. Australia's unemployment rate surged to 6.4 per cent in January. The unemployment rate is currently 21.7 % for 15-19 year olds, and 10.6% for 20-24 year olds. However the adult (25-64 year old) unemployment rate is at 5.1%.

Long term unemployment of young people has also increased rapidly in Australia with almost 30% of youths being unemployed for more than 12 months. He says “this is a major problem as most forecasts suggest that the overall rate of unemployment will increase over the next few years, and youth unemployment increases more than proportionately.”

Professor Raja Junankar has examined what happened during the Global Financial Crisis with youth unemployment, and the lessons to be learnt.

“Many young people work in part-time and casual work, along with those in cyclically sensitive industries, are always the first to lose their jobs in a recession. The real issue is that when unemployment is high and rising, young people are disadvantaged as they have little or no experience, and so find it much harder to find another job,” he says. 

“My research argues that as youth wages have been declining relative to adult wages, youth unemployment cannot be explained by rising wages. Similarly, minimum wages - including for youths - have been relatively constant over the past decade. The main reason for the growth of youth unemployment is a fall in aggregate demand,” he says.

“Even though there has been a significant increase in the ‘retention rate’ of young people in schools and a big increase in young people graduating from universities, they are still finding it difficult to find employment.”
The research will be published in the Economic and Labour Relations Review.

For comment please contact Raja Junankar ​on 0416 511 694

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