Labor market outcomes for young people

Cyclical causes to unemployment include and not limited to cyclical weakness, nature of work that is quite cyclical such as retail trade, food and accommodation that result in unemployment whenever the market is exposed to weakness in demand for a company’s output hence firm’s demand for labour. Labour demand developments such as secular decline in routine manual jobs for young workers due to entry of automation is a possible reason for unemployment. The fact that business undergoes cyclical downturns, it is expected when conditions are unfavorable unemployment is created for example during slowing demand. A good example of cyclical unemployment cause is during the 2001 slowdown and the financial crisis that followed thereafter. Frictional causes to unemployment alludes to a situation when laborers are either transiting from their old jobs or in search of new ones.

The population of those who have been disengaged from either study or work has increased causing a rise in demand for 15 to 24-year-old workers. Supply has also been increased by an increase in the rate of young migrants but at the same time increase in number of young people aged between 15-19 enrollment rate to full time education has caused a decrease in there supply. According to RBA 2018 bulletin, more than half of the net migrants to Australia are younger people aged less than 25 years. Decline in young people’s enrollment in TAFE or technical education has also resulted in increase in demand for young labourers. It is not farfetched truth that increase in immigrant rates increases demand for commodities hence increasing demand in labour.

For example, a changing structure of the economy has increased the rate of people working part time since it favors it as pointed out in the RBA 2018 bulletin. In particular, the research article points out that the Australian economy has tended to be more service oriented hence increasing demand for workers in service industries such as hospitality and tourism whose nature necessitates irregular work hours that can only be fulfilled on part basis. In Australia, there is both unemployment and underemployment. Generally, the has been a historical higher rate of unemployment rate among the youth (15-24 years) in comparison to other population. According to the RBA 2018 bulletin, in the past decade there has been over twice as much an increase in both unemployment and underemployment rates among the youth aged between 15-24 years.

Underemployment in Australia has also been attributed to mismatch between graduate skills and the current required skills in the job market. According to Caliendo & Schmidl (2016), youth unemployment rate was 20% in Europe which is about 7. 5% higher than in Australia. In contrast, the OECD shows that there is 18% and 9% unemployment rate among those aged 15-19 and 20-24 years respectively. While Australia initiated a set of policies to reduce youth unemployment rates for those aged between 15-19 years, Europe has been intensifying its effort on active labour market programs such as public work programs, subsidized employment programs, job search assistance and monitoring programs among other (Caliendo & Schmidl, 2016). Youth unemployment and active labor market policies in Europe.  IZA Journal of Labor Policy, 5(1), 1. Dietrich, H. , & Möller, J.