Young Australians to feel social impact of unemployment for years after COVID-19

COVID-19 is shaking the economy and increasing unemployment figures. Young Aussies are particularly vulnerable to the long-term impacts of youth unemployment. (Image source: Alvaro Reyes on Unsplash)

By Jordan White | @JordanBWhite1

Young Australians will face great unemployment due to COVID-19, with subsequent negative social impacts for years to come, a new report warns.

The Centre for Social Impact (CSI) last week released a report on the impact of youth unemployment due to the COVID-19 pandemic.

The report highlights the significant impacts COVID-19 has had on youth unemployment, and warns Australians aged 15 to 25 will feel these impacts in the long-term.

The national youth unemployment rate rose to 13.8 per cent in April, well above the national rate of 6.2 per cent. These rates are set to rise further if the economy doesn’t recover later this year.

But these statistics paint only half a picture; the national underemployment rate rose to 13.7 per cent in April 2020, and is much higher for those aged 15 to 25.

Youth unemployment varies across regions, with particularly high rates in regional areas like outback Queensland, where the rate was 25 per cent before COVID-19.

University of Melbourne research assistant, Marissa Shields, said youth unemployment needs to be taken seriously because it can negatively impact the lives of young people.

“Mental health conditions are common and a key concern among young people. What’s further concerning is that these negative effects on mental health may persist for years, well into adulthood,” Ms Shields said.

“The impacts aren’t just related to health … they can influence a young person’s future working life. When young people are unemployed, their skills, productivity, and self-esteem deteriorate.

“Missing out on work experience and skills development can permanently damage a young person’s career prospects. Experiencing unemployment can damage a young person’s career prospects and lead to wage penalties when they do get a job.

“Some research has found that this perceived job insecurity has negative impacts on mental health comparable to those of unemployment. On the flip side … better quality jobs with more security lead to improvements in mental health.”

Lead research professor Paul Flatau from The University of Western Australia told CSI that COVID-19’s impact on youth unemployment will be long-term, with further social impacts for years to come.

“One lasting effect that has occurred after past crises—and that is likely to follow the COVID-19 pandemic—is that young people [transitioning] from education to work will find it difficult to find entry-level positions due to increased job competition,” Professor Flautau told CSI.

“Without timely and targeted intervention, young adults are at a high risk of missing out on a strong entry into the labour market and, therefore, of being financially disadvantaged and even being welfare dependent for their whole lives.”

Calls to raise JobSeeker payments

The CSI report makes policy recommendations including widening JobKeeper eligibility criteria, more employment programs for younger Aussies, and “not returning JobSeeker payments to their original poverty level”.

Ms Shields said maintaining a higher JobSeeker payment, and not reverting to the previous amount, will help people maintain financial security.

She also agreed the criteria for JobKeeper eligibility should be widened.

“Currently many young workers who were employed on a casual basis, but who have been with their employers for less than 12 months, are not eligible for the JobKeeper scheme,” Ms Shields said.

History of youth employment downturns

Young Australians have historically been hit by recessions the hardest and are vulnerable to job losses in the short-term because of their increased likelihood to work in customer-orientated roles like fast food or hospitality.

In the mid-1970s recession, unemployment for those aged 15-19 rose from four to ten per cent, according to The Conversation. It climbed to 12 and 15 per cent respectively over the next two years.

Statistics from the global financial crisis tell a similar story – youth unemployment rose from 8.7 per cent in March 2008, 11.9 per cent in May 2009, all the way up to 13.9 per cent in 2014.

Not all doom and gloom

Ms Shields said that although youth unemployment is certainly an issue, “it’s not all doom and gloom,” and that there is hope to improve the youth employment outlook.

“One key place to start is by talking to impacted young people themselves. My colleagues and I … are currently running a study called YES [Youth Employment Study].”

YES aims to gain a better understanding of the employment situation young Australians are experiencing by targeting young people who access employment programs.

Ms Shields said we also need to work to tailor education and training so it helps young people build the skills required by employers.

“Moving forward, we’re going to need to create employment opportunities for young people. Not only are young people going to be negotiating a shrinking labour market, but they will have less work experience and finding jobs will be more difficult,” Ms Shields said.

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