Young people are likely to be hit hard by rising unemployment as the global downturn continues. In Australia, where more young people work than in most OECD countries, the government should encourage more teenagers to stay in school past the age of 16 in order to boost their skills and improve their long-term career prospects for when the economy recovers and labour demand picks up again, according to a new OECD report.
Jobs for Youth: Australia notes that between July 2008 and January 2009 youth (15-24) unemployment rose from 8.7%, the lowest level since the 1970s, to 9.7%, while the adult rate grew from 4.2% to 4.9%.
The priority for the coming months should be to avoid the build up of a large pool of youth at high risk of becoming long term unemployed, the report says. Before the beginning of the current economic crisis, only 10% of young unemployed Australians were unemployed for more than a year, compared with an OECD average of 19.6% (Table A).
The economic downturn may also be an opportunity to address one of the country’s long term labour market challenges of boosting young people’s skills. More Australians leave school at 16 than in most other OECD countries. Experience shows that in an economic slowdown, young people are more likely to stay in education or undertake advanced studies rather than look for work. Policy initiatives should seek to capitalise on this trend.
The Australian government is aware of the need to develop education, labour market and welfare institutions that are likely to maximise youth labour market opportunities and incentives to participate in the workforce. Although many sound measures were put in place recently as part of the Education Revolution programme to help improve the school to work transition, several barriers to better skill formation and youth employment remain. The OECD recommends further action, targeting youth at risk. The following measures should be considered:
• Raise average educational attainment. The focus should be on retention until an ISCED 3 (upper-secondary) qualification is obtained rather than simply on staying in education until a given age (e.g. 18). More vocational education and training courses and apprenticeships should be set up within secondary schools. Investment of more resources in tertiary institutions offering short and flexible programmes should be increased. The Youth Allowance should also be made conditional on having attained, or committing to attain, the equivalent of an ISCED 3 degree.
• Ensure indigenous children aged under 5 use more health care and pre schooling services. To boost demand, authorities should consider offering financial incentives that reward pre school attendance and regular health checks among indigenous families.
• Preserve the core of the traditional carrot and stick activation mechanisms and maintain its effectiveness. The planned move from the current eight week non payment period for participation failures to a more gradual compliance system will be tougher to implement and monitor. It will at least require a greater capacity and willingness on the part of Centerlink to promptly assess and handle problematic cases reported by Job Network providers.
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