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Should government policy target youth unemployment?
Younger Australians have been disproportionately impacted by COVID-19, which leads to poorer financial and social outcomes, according to a financial specialist.
Should government policy target youth unemployment?
Younger Australians have been disproportionately impacted by COVID-19, which leads to poorer financial and social outcomes, according to a financial specialist.
The latest unemployment statistics showed that over 300,000 Australians aged between 15-24 are now unemployed and over 280,000 dropped out of the labour force in April and May.
This has been reflected in a rising youth unemployment rate, which rose from 11.6 per cent in March to 16.1 per cent in May.
Fidelity International cross-asset specialist Anthony Doyle believes the total impact from COVID-19 on youth unemployment is not reflected in the numbers.
“Arguably, the unemployment rate is not reflecting the true devastation that COVID-19 has had on Australia’s 15- to 24-year-old workforce, given a large proportion are employed in the heavily impacted food service, retail, hospitality and tourism sectors,” Mr Doyle said.
“Over 3.3 million Australians are on JobKeeper payments, with many coming from these key affected sectors.”
Mr Doyle noted that early unemployment leads to negative financial outcomes, with a loss of earnings, work experience, falling labour market skills and a lower perception of labour market work all impacting younger Australians.
“The current crisis is likely to have long-lasting impacts for Australia’s youth workforce. Academic studies in the US have shown that being unemployed while you are young has long-term implications for future earnings,” he said.
“There are also severe social ramifications, including loss of motivation and erosion of confidence. Globally, high youth unemployment levels have also been associated with social unrest, higher levels of criminal activity and political turmoil.”
Mr Doyle explained how previous governments who have used fiscal stimulus to support younger workers have been able to buck this trend.
“For policymakers, the question becomes how to support the youth of Australia during this recessionary period. In this sense, we may be able to learn a lesson from the 1930s during the Great Depression. According to Collin O’Mara, president and CEO of the National Wildlife Federation, in 1933 President Franklin Roosevelt created the Civilian Conservation Corps.”
“The CCC hired young unemployed men for projects in forestry, soil conservation and recreation. By 1942, 3.4 million participants had planted more than 3 billion trees, built hundreds of parks and wildlife refuges and completed thousands of miles of trails and roads. The CCC was the most expansive and successful youth employment program in American history,” Mr Doyle concluded.
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