The largest unemployed demographic

Posted on April 24, 2017 by ATB Chartered Accountants

For young Australians, aged 15-24, both unemployment (13.5%) and underemployment (18%) are at a record high. This may not seem like much, but as of February 2017, 659,000 young Australians are either un- or underemployed. It may be assumed that the reason for these levels of un- and underemployment are due to the youth of Australia attaining degrees and qualifications while working part time, however a 2017 study by The Brotherhood of St Laurence have found that majority of these people are not studying. The figure and tables below provide an indication of the jobs landscape Australian youths currently face.

Figure 1: Youth underutilisation and its components in Australia, February 1978 to February 2017

Source: ABS 2017, Labour force Australia, February 2017, Cat. no. 6292.0, Table 22, trend data.

Table 1: Employment conditions of youth aged 15-24 in Australia, 2001-2014

Source: HILDA data wave 14

Table 2: Volume measure of underemployment of youth aged 15-24 in Australia, 2001-2014

Source: HILDA data wave 14

Despite these figures however, recent studies have found that the largest gap in the labour market are young men in their 20s with low levels of education. In 2015, the Chicago Booth University’s School of Business conducted a survey which uncovered that 14.3% of American men aged 21-30 spent the year without work, with this number reaching 17% for those without a tertiary education. This number is up 9% from 2000, and excludes those men who are not working due to education commitments. This global phenomenon of young men who don’t seek higher education levels and don’t work has increased since the early 2000s.

While experts admit they don’t yet have knowledge of all factors which may impact this rise in unemployment of young males, new technologies which are automating relatively repetitive and unskilled jobs, particularly in manufacturing, are taking its toll. Technological advances are improving efficiency and effectiveness for companies, and so, entry level jobs are much more difficult to attain without an education.

Technology advances in the workplace are not the only factor impacting this gap in employment. The Chicago study also found that 70% of unemployed and low-skilled men lived with relatives., and overall in the US, there has been an rise in the weekly video game use in the US, from 3.5-5.9 hours between 2000 and 2015. A quarter of young unemployed men reported playing video games for around 3 hours a day, with around 10% of those surveyed men playing for 10 hours daily. The hours spent playing video games have surprisingly been found to increase the overall satisfaction of these men despite dwindling job prospects. Between 2001 and 2005, 81% of men without a bachelor’s degree rated themselves as “very happy” or “pretty happy”, with these numbers rising to 88% between 2011 and 2015. During the same time period, these numbers plummeted for the 31-55 age group of men without a tertiary education. A key finding of this study indicated while technology is reducing the demand for labour, it is also reducing the supply as a result of video games and other virtual leisure activities.

During an economic downturn, the less educated are more at risk in society. With a rising demographic of low-educated, unemployed last men comes a risk that they will be less likely to return to the workforce. This could potentially lead to fewer people in the workforce, a smaller tax base, and more people on government-funded welfare services, eventuating to a poorer country with falling standards of living.

Employment among 25-34 year old males by education

Country % of population employed in 2000 % of population employed in 2015
Australia
Tertiary educated 91 92
Without tertiary education 72 69
Korea
Tertiary educated 86 85
Without tertiary education 64 58
New Zealand
Tertiary educated 90 92
Without tertiary education 70 70
United Kingdom
Tertiary educated 95 93
Without tertiary education 74 70
Spain
Tertiary educated 81 77
Without tertiary education 69 61

Source: Extracted from OECD Educational Attainment and Labour Force Status by Gender