A slowing economy could mean higher youth unemployment, economist warns

Economists are warning that a slowdown in the economy could lead to an increase in youth unemployment. The competition for jobs among young people is becoming increasingly fierce, with university students encouraged to start engaging with the job market well before graduation. The Australian Bureau of Statistics reported youth unemployment at 11.1 per cent in September, compared to the overall unemployment rate of 4.7 per cent.

While this is still lower than before the pandemic, a slowing economy could cause youth unemployment to rise further in the coming months.

Blair Chapman, chief economist at SEEK, noted that younger workers are typically more affected by economic slowdowns. Harry Ottley, a Commonwealth Bank economist, also pointed out that youth unemployment is rising more quickly than other age groups. Lachlan Riddell, a 24-year-old with a Diploma of Music, has struggled to find stable employment, applying for hundreds of jobs over the past three years without much success.

He feels that there is a negative stereotype about Generation Z, assuming they don't want to work or are very selective about their career paths.

Mr Riddell has experienced job hunting depression and currently relies on support from his fiancée to make ends meet. Graduate job advertisements have been trending downwards after post-pandemic highs, with larger firms reducing their graduate intakes in response to declining demand. The big four accounting firms are a prime example of this trend.

Despite the challenges, the employment-to-population ratio for young people remains high at 63.6 per cent, a figure that is well above its 2019 average of 59.7 per cent. However, there is concern that the growing use of artificial intelligence (AI) could lead to job disruption, particularly for young people and white-collar workers.

A study by the Department of Employment and Workplace Relations found that AI has not yet caused broad disruption to Australia's labor market, but there is evidence from the US suggesting that young people have experienced slower employment growth since the introduction of generative AI tools.

Federal Skills and Training Minister Andrew Giles emphasized that AI is mostly augmenting jobs, changing the way they are performed rather than completely automating them. He stressed the importance of focusing on skills to ensure workers are equipped to manage this transition. Young people are also facing increased competition for positions from existing job holders, with one million Australians working multiple jobs.