The Future of Work: Prospects for Young People

by Ian Watson

What does the future hold for young people in the labour market? Rather than speculate about what might unfold, it makes sense to look backwards, to discern the trends over the last few decades and make some tentative conclusions from these. At just over 4 per cent, the unemployment rate has not been this low since "Elvis last played Memphis". For many commentators, we have a very "tight labour market". But what about for young people, and for those without skills? To get a glimpse of what a really tight labour market looks like, consider the following comments. They come from the late 1940s, when young people were eagerly sought after in the labour market. They are excerpts from job advertisements for factory work:

Ž AExcellent working conditions in modern airy workroom@

Ž "Modern cafeteria, social and recreation club, tennis courts and sports fields"Ž "Music while you work"Ž "Free Medical and Dental services - Tea supplied free"Ž "Special tuition given, and permanent positions assured"

Writing in the 1950s, during a heated debate about raising the school leaving age, Don Spearritt commented: "Will the advantage to the community of providing more education for these adolescents offset the economic consequences of their withdrawal from the labour market." How things have changed. Today, far from being essential to the health of the labour market, young people are often seen as an embarrassing surplus, and policy makers strive to keep them out of the labour market. While we are a long way from the 1950s now, isn't it the case that the labour market is buoyant? The unemployment rate is only half the story. The Labour Underutilisation Rate, which measures the hidden unemployed and those part-time workers who want more hours of work, stands at just under 10 per cent. Throughout the late 1990s, as the unemployment rate crept down from 8 per cent to just over 4 per cent, the labour underutilisation rate tracked this fall in a parallel fashion, always hovering about 6 percentage points above the unemployment rate. If the labour market were really thriving, we would expect to see the gap close over time, but this hasn't been happening. The reason for this is quite simple. We live in a "two-speed economy". For those workers in the more marginalised sectors of the labour market, under-employment and job churning (movement between unemployment and employment) is still the order of the day. And, unfortunately, this is the sector where many of today's young people end up. In 1981, over 60 per cent of 19 year olds were in full-time employment. The proportion in part-time employment was negligible: about 9 per cent. Twenty years later, in 2001, less than 30 per cent of 19 year olds were in full-time jobs. More were in part-time jobs (about 37 per cent). Now part of this is a good thing, because a larger proportion of young people are studying today, something which increases their prospects for good jobs in years to come. But what about those young adults (the 19 to 24 year olds) who are not studying? What is their situation? The good news is that about two thirds of them are in full-time jobs. The remainder, though, are spread across part-time work (15 per cent), unemployment (8 per cent) and being outside the labour market (9 per cent). For some of these latter groups, things might be OK. Some have begun child rearing, a small number might be travelling, but the majority are at risk of descending into a labour market limbo. A future without decent prospects. And the figure of a third is probably an under-estimate of how problematic their prospects are. If we look more closely at the jobs they hold, then a disturbing picture emerges. Most of the jobs are casual: even the full-time jobs are predominantly casual. Indeed, revising the above picture with this in mind shows:Ž less than half of those aged 19 to 24 (who are not studying) have permanent jobsŽ about a third are in casual jobsŽ the remainder are either unemployed, not in the labour market, or are self-employedWhy are casual jobs a problem? Well, they may be fine for students working part-time to get themselves through their studies, but they aren't the kinds of jobs which position young adults to build a solid working life. For a start, job turnover is high and the opportunities for job training are much lower. The proportion of casuals who get on-the-job training from their employers is only about half of what it is for permanents. Both of these factors mean that building a career moves further beyond the reach of these young adults.It's sometimes said that today's young workers like the"flexibility" of moving around in the labour market. They have become "portfolio workers"for whom careers don't matter. Now this may make sense for young highly skilled workers whose scarce talents are well rewarded in the dynamic sectors of the labour market.. But for young people in casual jobs, this is not likely to be the case. Particularly if they are in part-time jobs. Recent research has shown that over the decade from the mid-80s to the mid-90s, the importance of knowledge to the job, and the required levels of knowledge, rose for full-time jobs. But the reverse applied to part-time jobs: there were "substantial declines in the knowledge intensity of part-time jobs over the decade".

The conclusion? There was a steady decline in the quality of part-time work. So, for young adults in part-time jobs, the prospects of building skills through working is declining. For young adults in casual jobs, the prospects of training or promotion are also declining.

Looking back to the 1950s, not only did the labour market value the contributions of young people, but "youth policy" was a serious area of public concern. Today, the "tight labour market" which the commentators harp on about, is only a tight labour market for some workers. For young adults today, particularly those not heading into the professions or the trades, the labour market is far from hospitable. And "youth policy" is a total vacuum: policies aimed at assisting young people to lay down the skills, habits and resources for building a long and stable working life are simply missing!

Dr Ian Watson is a Visiting Senior Research Fellow in Politics at Macquarie University.