Young Australians are deserting the job market.
According to Commsec, using data from the ABS, just 53% of Australians aged 15 to 19 are either in or looking for work right now, the lowest percentage on record.
The chart shows the dramatic drop in labour market participation among this cohort since the global financial crisis.
For those Australians aged 20-24, participation rates are also moving back towards the lowest levels on record, standing at two-year low of 78.5%.
Craig James, chief economist at Commsec, put the drop in both age groups down to more younger Australians preferring study over entering the workforce.
While undoubtedly a contributing factor, it perhaps masks a more troubling aspect about the strength of the Australian economy at present.
Perhaps economic conditions are too weak to absorb new entrants to the workforce, discouraging younger Australians from seeking work.
Certainly one look at unemployment levels for those aged 15 to 24 suggests that may well be a factor behind the drop in participation levels.
According to the ABS, the unemployment rate for this group currently sits at 13%, well above the high-8% level it resided in 2007, the year before the global financial crisis.
While below the near-20% levels seen in the immediate aftermath of Australia’s last recession in the early 1990s, that was a period when labour market participation in this grouping was around three percentage points higher than where it currently sits.
If participation levels were the same now as back then, unemployment levels for younger Australians today would be considerably higher than 13%.
It does suggest that weak labour market conditions are now, like then, discouraging young Australians from seeking employment.
Some are are no doubt choosing to study because of this, but it’s yet another sign that the Australian economy remains sluggish.
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