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Developments in the youth labour market since the GFC

Geoff Gilfillan research paper from the Parliamentary Library: Young people bore the brunt of softening in the labour market in Australia following the impact of the Global Financial Crisis (GFC). But there is evidence of a gradual improvement in youth labour market indicators in the 18 months from late 2014 to May 2016.

  • ABS data shows the youth unemployment rate (for those aged 15 to 24 years) rose sharply from its most recent low of 8.7 per cent in March 2008 (in trend terms) to 11.9 per cent in May 2009. The unemployment rate then rose steadily to 13.9 per cent in September 2014 but has since fallen to 12.2 per cent in May 2016.

Young unemployed people account for a disproportionate share of total unemployment in Australia when compared with their share of the working age population.

  • unemployed people aged 15 to 24 years accounted for 35.8 per cent of unemployed people aged 15 to 64 years in May 2016—almost double their share of the working age population (19.9 per cent) at this time.

One reason for the medium and long term decline in engagement in full‑time employment of young people is their higher rates of participation in full‑time education.

  • over three quarters (78.0 per cent) of people aged 15 to 19 years were engaged in full‑time education in May 2016 compared with 69.9 per cent in May 2008. A similar, but less pronounced, trend is observed for people aged 20 to 24 years with just under a third (31.9 per cent) engaged in full‑time education in May 2016 compared with 28.5 per cent in May 2008.

youth-unemployment

Australia’s youth unemployment rate is below the average for the Organisation of Economic Cooperation and Development (OECD) and lower than many comparable OECD countries.

  • according to data compiled by the OECD, Australia had a youth unemployment rate of 13.3 per cent in 2014 (for people aged 15 to 24 years) which was below the OECD average of 15.0 per cent.

The rate of disengagement of young people—measured as the proportion that are neither engaged in employment, education nor training (or NEET rate)—climbed quickly from mid‑2008.

  • the rate of disengagement for people aged 15 to 19 years rose sharply from 6.8 per cent to 9.1 per cent in the 12 months to May 2009, from where it has gradually and progressively fallen to 5.9 per cent in May 2016.
  • in contrast, the NEET rate for people aged 20 to 24 years shows less pronounced signs of slowing—increasing steadily from 11.5 per cent in May 2008 to 15.2 per cent in May 2013 before falling slightly to 14.2 per cent in May 2016.
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