Over 870,000 Australians lost their jobs during the first few months of the covid-19 pandemic. Around 38% or 332,200 of these Australian workers were young Australian aged between 15 and 24.
By June 2020, as Australia’s overall unemployment rate hit 7.4%, the youth unemployment rate jumped to 16.4%, with a further 19.7% underemployed. An underemployed person is an employed individual who works fewer hours than they aspire to work.
In February 2021, the overall unemployment rate dropped to 5.8%. This is compared with the 5.1% unemployment rate in February 2020. The youth unemployment rate meanwhile was 12.9%, compared with 11.5% the year before in February 2020, and a further 16% were underemployed.
There is currently more jobs available in the Australian economy than the number of jobs that existed before the covid-19 pandemic. However, this is only true for Australians aged 25 and older. There are currently 77,600 people more Australians currently employed than the number of employed individuals before the covid-19 pandemic. However, for Australians aged 24 and below 74,100 less Australians within this age group are currently employed when compared to the number of people in this age group who were employed prior to the pandemic.
One of the reasons why the covid-19 pandemic has impacted young workers the hardest is because young people are more likely to work in casual jobs. Casual employers are often the first kinds of employees that businesses cut when they are experiencing tough economic times. Another reason why young people have been impacted is due to border closures and lockdowns which has resulted in the loss of jobs in retail, hospitality and tourism. These three industries are fields that feature a large percentage of young workers.
The most significant of the federal government’s covid-19 support measures was the A$100 billion JobKeeper program. JobKeeper originally paid a subsidy of $750 a week before tapering and finally being discontinued at the end of March.
It is estimated by The Reserve Bank of Australia that JobKeeper payments prevents an excess of 700,000 workers off the dole queue. However, for an employee to qualify for JobKeeper, the employee had to have been working for their employer for a minimum of 12 months.
This significantly excluded younger workers as young people are more likely to be recent workforce entrants, more likely to change jobs more frequently than older workers, and to be in employed in casual or other forms of insecure work.
Data from the Australian Bureau of Statistics illustrated that from August 2019 young Australians made up 17% of the workforce but also accounted for 6% of all short-term casual employees.
26.4% of these employed young individuals had been with their employer for under 12 months. This is compared to 6.5% of the Australian workers who were aged 25 and above. This means that one in four young people who were employed casually were ineligible to receive JobKeeper this is compared to only one in 16 of their older counterparts.
All unemployment is costly for individuals, families and the community. High and long-term youth unemployment can have serious consequences that can impact the individual’s job and income prospects for their entire life time.
Young people have been hit hard by the covid-19 pandemic’s impact on the economy. It is essential that an entire generation is not permanently disadvantaged.
In Australia one entry-level job is advertised for every 48 people who are relying on JobSeeker payments. Now that JobKeeper has been discontinued and thousands of Australians are at risk of losing their jobs the competition for these highly sort after new employment opportunities has risen significantly.
There are eight people who receive the JobSeeker or Youth Allowance payment for every job that is advertised. The ratio is higher when it comes to entry-level jobs, with 48 people on the social security payments for each job being advertised.
The situation is even more challenging in regional parts of Australia, where there are 12 jobseekers for every employment opportunity that is advertised and 57 jobseekers for every entry-level employment position.
The Australian Retailers Association (ARA) has joined ACOSS to protest that the $50-a-week cut in JobSeeker starting on 1st April 2021 has the potential to significantly damage the economy.
ARA argues that the number of people on JobSeeker when compared with every job advertised was high and the payment should be raised to the same level as the age pension “to keep people above the poverty line”.
Australia is set to revert to having one of the lowest rates of unemployment payment in the OECD. Australia comes in at the second lowest only behind Greece.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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