What a year to come of age. To wander out of high school, or university, or Tafe, and into a world transformed by a once-in-a-lifetime pandemic.
To be young in 2020 is to have watched on helplessly as the exciting new freedoms that come with a birthday, or graduation, were quickly but necessarily taken away: That first “night out”. The first road trip in the first car.
For a generation of young Australians looking to their future, the wide vista of opportunities and possibilities they might have once counted on has dramatically narrowed with the arrival of recession in a nation blindsided by Covid-19.
We’ve seen recessions and recoveries before. In the years after the global financial crisis of 2007, Australia’s unemployment rate – which had been shielded from the ravages of mass unemployment by the then Labor government – recovered fairly quickly by international standards.
A few caveats: a chunk of the new jobs that emerged were insecure, and some older workers never returned to the workforce after they were laid off. And yes, underemployment became an increasingly stubborn problem.
But in general it’s said that Australia’s recovery was a world leader. Yet for young people, the recovery was so not quick, nor smooth, a phenomenon in part driven by these caveats that masked the quality of the recovery itself. For young workers, some might argue, there wasn’t really a recovery at all.
A report from the Productivity Commission, released in July, crystallised this reality. For those aged 15 to 24, “We show that from 2008 to 2018, young people had more difficulty getting jobs in the occupations they aspired to,” the researchers wrote.
“And if they started in a less attractive occupation, it was even harder than before 2008 to climb the occupation ladder. This suggests that poor initial opportunities could have serious long-term consequences.”
This was the state of play before coronavirus. Now, experts describe an already poor outlook for the young being accelerated by the virus-fuelled economic downturn: a “perfect storm”, says one; an “on speed” version of their current experience, says another.
Young people are worried, too. A survey of 2,200 young people by Headspace found 40% felt the pandemic had impacted their confidence about achieving future goals. Research from the Foundation for Youth Australians was similarly downbeat: 22% were concerned about their long-term employment future, while a third of those who lost their job in the pandemic did not expect to find work again for a long time.
The University of Melbourne’s Stefanie Dimov has been working this year on gathering young people’s testimony about their interrupted dreams and job losses due to Covid 19. It has been heartbreaking work, she says.
“The general sense I get from the hundreds of responses we’ve been getting is that young people are experiencing a sense of hopelessness and shock. I’ve been really humbled by their vulnerability with us.”
Dimov, project manager of the Youth Employment Study, says she is struck by the number of respondents, all aged between 15 and 25, who are worried about money – only 37% said they felt hopeful about their financial situation. But even more concerning, she says, is that 14% of respondents said they had run out of food, and 21% said they had skipped meals.
“This financial side of it is so concerning,” says Dimov. “But the hopelessness … very few of the respondents could say they feel they have a sense of hope for themselves, and for Australia.”
“Some of them are saying that before Covid it was near impossible to get a job, now they’re saying it is impossible. Clearly young people were already struggling, but now they are feeling a real sense of despondency.”
As for mental health issues – predicted by many to be the “next pandemic” – Dimov says: “We know that the longer young people are out of work the more likely their self-esteem and mental health will deteriorate. Our research shows that work and mental health are so intimately linked that we need to be urgently prioritising work for young Australians.”
But despite the “distressing” findings of her research, Dimov has cause for optimism: “The disruption of this year is actually a real opportunity to overhaul a system that already wasn’t working for young people,” she says.
Today Guardian Australia launches Dreams interrupted, a series that will amplify the voices of a cross-section of young Australians coping with the fallout of Covid-19 and the recession, explore the challenges they face, and look to the solutions.
Over the coming weeks you’ll hear from Madeleine, Tristan, Michelle, Emmanuel, Melis, Noah, Bethany and Jake about how 2020 has disrupted their plans and their dreams, and how they’re coping in these difficult times.
But for now the question is, how did we get here?
What has the pandemic done?
There is no doubt young workers have been disproportionately hurt by the economic crisis. Industries where young people are more likely to work – hospitality, tourism and the retail sector – have been decimated by the lockdowns put in place to protect us from the virus.
Those who were already behind the eight ball – because of generational disadvantage, or because they are likely to face discrimination – can expect an even more difficult future.
The statistics tell a bleak story: In April an estimated 13,000 people aged 15 to 24 lost their jobs, about two-thirds of all the jobs lost that month.Between March and July an extra 189,000 people between the ages of 15 and 24 started collecting unemployment benefits, according to the Department of Social Services.
Overall, the last Australian Bureau of Statistics survey put the overall unemployment rate for those aged 15 to 24 at 15.6% in October. It’s an improvement from the July figure of 16.3%, the worst in more than two decades. The general rate was 7%, although the true level remains obscured by the jobkeeper wage subsidy.
The youth underutilisation rate (that is, the unemployed and workers who want more hours combined) was estimated to have reached more than 60%, levels not seen since the Great Depression.
Although part of the damage wrought on the livelihoods of the young is down to the nature of the pandemic itself, it is not the only factor.
Emma Dawson, the executive director of the progressive thinktank Per Capita, points out that about 40% of people under 35 were already in some form of insecure work before the pandemic hit. Many of those – who have been in casual work for less than 12 months – are ineligible for jobkeeper.
“They were already very precariously employed and this pandemic smashed into a labour market for young people,” says Dawson.
Things were already bad
If, as most suspect, there is little chance of the so-called V-shaped recovery that relies on governments essentially being able to switch the economy back on, it’s generally accepted young people will bear the brunt of what comes next.
Young people leaving school or further education in the Covid years will be less likely to get into work; many of those who do will start further down the “career ladder”, they will be more likely to be funnelled into insecure jobs; some will extend their study to delay unemployment.
The economic “scarring” effect is a likely reduction in lifetime earnings. They will take longer to get into the housing market or start a family. A Brotherhood of St Laurence report that analysed Hilda data found young people who experience unemployment are more likely to have poor health and have lower educational attainment than those who don’t. They are more likely to experience recurring bouts of joblessness and the difference is stark: 20% for those out work while young, compared with 6.4% for those employed.
Underpinning this reality is the simple principle that when there are excess workers, those with less experience or fewer skills will find it harder to snare the jobs that are available. And firms are more likely to keep their existing staff than employ new ones.
The University of Melbourne’s Jeff Borland has been studying the impact of Covid-19 on youth unemployment. He notes young people will be further crowded out as a sizeable group of older workers are likely to delay retirement to rebuild their superannuation balances.
In this recession, he says, he’s expecting to see “the type of adverse effects or disproportionate adverse effects on young people that we saw in the 80s and 90s recessions”.
And there are reasons to be worried it’ll be worse this time, argues Dawson, pointing to the deregulation of the labour market, ailing social security and employment programs and a lack adequate investment in education such as Tafe. “It’s a perfect storm,” she says of what’s to come.
As the Productivity Commission found, things were already bad. A report by the Grattan Institute released in 2018 was among those that sounded an increasingly common note of alarm, saying: “Today’s young Australians are in danger of being the first generation in memory to have lower living standards than their parents’ generation.”
“Youth unemployment is higher than we would normally expect at this point in the economic cycle,” the report says. “And youth under-employment is much higher than in the past.
“More young people are choosing to study – which may help them earn more in future – but for now, a growing share of those studying are unsuccessfully seeking work.”
Overall, according to a Youth Action research paper timed for last year’s New South Wales election, one in three young people were unemployed or underemployed. The reserve bank has also looked into the problem. It found there was a significant rise in underemployed young people over the decade to 2018, while the share of 20- to 24-year-olds disengaged from work or study had also increased.
Meanwhile, the average rate of youth unemployment within OECD countries steadily fell “albeit from a much higher rate, to below the Australian equivalent”.
Some have been out of work for a long time. The Brotherhood of St Laurence, which tracks youth unemployment through a regular monitor report, noted late last year that nearly “one in five unemployed 15 to 24 year olds today have been out of work for 52 weeks or more”.
“They’re not establishing that sense of economic security to leads them to a pathway where they’ve got some certainty about work into the future, that draws on their talents and their aspirations and that gives them that stability to make other choices,” says Conny Lenneberg, executive director of the Brotherhood of St Laurence.
“Whether it’s to do additional study, whether it’s to move out of home, to move to relationships, long-term relationships, it’s all underpinned by a sense of economic security.”
The problem is also linked to where they live. In some regional areas such as the Queensland outback and the Coffs Harbour and Grafton area, more than 20% of young people were out of work before the pandemic. Areas including Wide Bay (20%) and Moreton Bay (19%) in Queensland and Bendigo in Victoria (18%) were similarly affected.
Within the capital cities, a postcode is similarly indicative. “Here in Melbourne, out in the west, Deer Park and Brimbank, there is youth unemployment of 15%,” says Lenneberg, referring to pre-pandemic statistics analysed by the brotherhood. “You go to the south-eastern suburbs and it’s about 5%. It’s around the same level as the general unemployment rate.”
The Morrison government has acknowledged this bleak outlook for young people. In a speech to the National Press Club in October, the treasurer, Josh Frydenberg, noted that due to the recession of the early 1990s, it took nearly a decade for the unemployment rate to return to pre-recession levels.
But for younger Australians, he noted, “it took longer; around 15 years.”
“Young Australians have been disproportionately affected by this Covid-19 recession,” Frydenberg said, adding: “Employment for young Australians remains 8% below its pre-Covid-19 level. Lessons from past crises show that young people are often the last in and first out of jobs.”
The government’s jobmaker hiring credit, announced in the budget, is aimed at turning things around. The credit pays employers $200 a week for each additional employee they hire aged 16 to 29 and $100 a week for those aged 30 to 35. Though it has received some support from employer groups, it is estimated it will create an additional 45,000 jobs, fewer than initially anticipated.
Welfare to work?
Jeremy Poxon, an activist at the Australian Unemployed Workers’ Union, says the main problem is a lack of jobs. The AUWU – which is run by and whose members are unemployed people – has sought to change the narrative that people out of work are to blame for their predicament.
His case is aided by the data. In a report released this year, the Australian Council of Social Services found that in November 2019 there were eight people unemployed or underemployed for every job vacancy, while the previous year a government survey estimated there were an average of 19 applicants in total for every advertised job.
Analysing the job market in May, Anglicare found there were eight disadvantaged jobseekers for every entry-level position. Similarly, when Youth Action analysed 1,355,513 positions online in 2019, it found only 6,311 or 0.5% were advertised as “no experience required”.
In the case of young people particularly, Borland, and the economist John Quiggin both say that broadly speaking, the key to their success in the labour market is the overall strength of the economy. Quiggin points to the 1970s to make his case.
“I mean, whatever you think of the gig economy and part-time jobs and all that kind of stuff, in the 70s, there were no jobs,” he says. “So there was very high level of youth unemployment, and of course the usual cliches about young people.”
Borland says: “There are always hypotheses out there like, ‘Maybe the university system is failing, it’s not providing people with the right skills, maybe it’s technology.’
“Everyone comes back to the conclusion that, ‘Look, this is not on the supply side.’ It’s not to do with young people’s characteristics, or their motivation to work or anything like that. This is completely about the balance between labour demand and labour supply.”
Since the 1990s, the approach of the federal government has appeared increasingly removed from this reality. The commonwealth has spent billions on privatised employment – or “welfare to work” – programs and set various arbitrary or punitive hoops for people to receive increasingly inadequate unemployment benefits.
Pre-pandemic, an unemployed person in Australia lived one of the lowest unemployment benefits in the OECD. The usual rate of the jobseeker payment, about $40 a day, might seem unspeakably low; but for those under 21 living out of home, it is lower: a measly base of $33 a day.
Welfare benefits are set at such a low rate that, by the government’s logic, they provide an incentive for people to take a job. Jobseekers also lose their benefits if they refuse a “suitable job”. These payments were temporarily raised during the pandemic, but have been tapering down since September. Where they might end up after March, when the coronavirus supplement expires, is anyone’s guess.
Low rates of welfare benefits not only guarantee the unemployed to poverty, there is plenty of research to show they also impede their efforts to get jobs. If you can’t afford to eat properly, decent clothing or transport, you will undoubtedly be disadvantaged in a competitive labour market.
Most young people who are out of work are sent to a private provider of the federal government’s $5bn flagship employment program, Jobactive. Myriad reports have found the scheme dysfunctional and ineffective. For young people, in particular, though not exclusively, it can be soul-crushing experience. “It’s not a system where you have breathing room of any kind to be able to plan the future and then try and get your life back on track,” says Poxon. “No one really goes in there coming coming out with their dream jobs. I’ve never heard an example.”
The National Youth Commission, a non-partisan inquiry conducted outside parliament, is examining the issue of youth unemployment. Its chair, David Eldridge, says the commission has heard some “appalling” evidence about the “essentially failed” Registered Training Organisations system, which he says led to a “devaluation and defunding” the Tafe system.
Some things caught Eldridge by surprise, like how some young people living in suburban fringe, rural and regional communities felt state government rules making it more difficult to get a licence had hurt their employment prospects.
Twenty years ago Eldridge penned a report for the Howard government on “youth transitions”. “I suppose what surprised me a little bit was that 20 years ago we probably had some better systems in place in young people’s transitions through school,” he says.
Young people were more likely to experience structured workplace learning where they could get a sense of what career they’d like to pursue after school. School career advice had also deteriorated.
Of course, it’s all academic if the jobs aren’t there. Quiggin and Dawson both say that leading out from the pandemic the federal government should focus on job creation. “We actually need an active role for government in job creation,” Dawson says.
“And that doesn’t mean big state nationalising industries, but it does mean a government that works hand in hand with the private sector.”
She points to opportunities in the green economy and the care economy, such as disability or aged care, now one of the fastest growing sectors. Per Capita has also called for a youth guarantee, which would ensure all people under the age of 25 were guaranteed a place in a place in employment, education or training.
The employment aspect might be modelled on the Victorian government’s youth employment scheme, which gives long-term unemployed young people a year-long traineeship in the Victorian public service.
What’s at stake?
When asked, Eldridge agrees with two propositions: one, that the transitions from school to employment for young Australians now are much less clear than they were when he penned the report for John Howard; and two; that their futures are increasingly left to chance.
In too many cases, good outcomes are “accidental”. “If young people are well supported by family, have some networks and connections, they’re likely to find both part-time work in school and work beyond school and have a better understanding of what they want to study and where they want to go,” Eldridge says.
“But if you haven’t got an adequate family support, if you’re a ward of the state, or a young person or homeless, or even if you just struggled at school, you’re not going to get the right sort of advice.”
This dynamic only further entrenches inequality and disadvantage. Already, within statistics counting young people who are not in work or study, Indigenous people, those from non-English speaking backgrounds, and those who live in areas of lower socioeconomic status are overrepresented.
And so the cost of inaction will be great.
“If we just allow the situation to continue then what we know is that people who’ve already got experience will find work,” Lenneberg says. “And that’s that’s important too, but we’re not wanting to leave the next generation of young people behind.”