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Special Article - The youth labour market (Sep, 1998)
1. LABOUR FORCE STATUS, 15 TO 19 YEAR OLDS, JUNE 1998
The discussion below provides some analysis of teenage unemployment measures and includes comparative analysis of young adults aged 20 to 24 and of adults aged 25 years and older in the labour force.
THE LABOUR FORCE AND UNEMPLOYMENT DEFINED
In the Labour Force Survey, employment is defined to include any paid work of one hour or more per week, while unemployment is restricted to those without work who are actively seeking and available to start work during the reference period. Together, these groups form the labour force, and those persons neither employed nor unemployed are not in the labour force.
These definitions ensure that estimates of the labour force measure, at a point in time, the economically active population, seen as the supply of labour available for the production of economic goods and services as measured by the System of National Accounts. The concepts underlying Labour Force Survey and National Accounts data are designed to be closely comparable with each other and consistent with international practice.
While the unemployment rate shows the proportion of those unemployed in the labour force (ie. the employed plus the unemployed) for any given group, the unemployment to population ratio shows the proportion of the total population for the group (ie. the labour force plus those not in the labour force) that is unemployed.
UNEMPLOYMENT AND EDUCATION
In June 1998, the teenage unemployment rate was 18.9% in original terms, compared to 11.9% for 20 to 24 years olds and 5.6% for persons aged 25 years and older. When comparing these rates it should be noted that a distinguishing feature of the teenage population is their level of attendance at educational institutions. In June 1998, 50% of teenagers in the labour force were attending an educational institution full time, compared with only 12% of 20 to 24 year olds.
For this reason, the teenage unemployment rate can be better viewed as a weighted combination of unemployment rates for four sub-groups of the teenage labour force. These four sub-groups are defined on the basis of their participation in the full-time or part-time labour force and their attendance or non-attendance at an educational institution full-time. They are:
The contribution of each sub-group to the overall teenage unemployment rate depends on the sub-group's share of the teenage labour force and on the unemployment rate for the sub-group. A similar presentation of the unemployment rate for 20 to 24 year olds is also possible.
2. CONTRIBUTION TO UNEMPLOYMENT RATES: TEENAGERS AND PERSONS AGED 20 TO 24 YEARS, JUNE 1998
In June 1998, teenage students in the full-time labour force had the highest unemployment rate (67.5%), but because they were a very small part of the teenage labour force (1.6%), this sub-group's overall contribution to the unemployment rate (1.1 percentage points = 67.5% x 1.6%) was very small.
Non-students in the full-time labour force had the highest contribution to the teenage unemployment rate (9.8 percentage points) and to the unemployment rate for 20 to 24 year olds (9.2 percentage points). Compared with other teenagers in the labour force, this sub-group had the second highest unemployment rate (25.8%) and the second largest share of the labour force (37.9%). In contrast, persons aged 20 to 24 in the full-time labour force who did not attend an educational institution had the highest share of the labour force (74.0%), and their unemployment rate was 13.4 percentage points less than the unemployment rate of the teenage equivalent sub-group. This difference is the major distinguishing factor between the unemployment rates of teenagers and 20 to 24 year olds.
A further significant contributor to the unemployment rate for teenagers is students in the part-time labour force. This group had the largest share of the labour force (48.7%) but its unemployment rate (15.0%) was lower than the rate for non-students in the full-time labour force, and hence its contribution to the teenage unemployment rate was smaller.
FULL-TIME UNEMPLOYMENT RATE
The full-time unemployment rate is the number of persons seeking full-time work, divided by the number of persons in the full-time labour force (ie. employed full-time plus unemployed seeking full-time work), expressed as a percentage (see diagram 3 below)
This rate is a key measure for monitoring trends in the degree of labour market 'slack'. It shows changes in the proportion of people without work in the full-time labour force who are making themselves available for full-time work.
The teenage full-time unemployment rate is sometimes misunderstood. For example, a rate of 28% might be interpreted to mean that approximately 1 in 4 teenagers are unemployed. Rather, this measure indicates that approximately 1 in 4 of the teenage full-time labour force is unemployed. In fact, the number of full-time unemployed contributing to this rate represents only about 1 in 16 of all teenagers.
As demonstrated above, the difference in these measures is, in part, a reflection of the marked differences in the labour force participation that corresponds with educational attendance. In June 1998, only 22% of all teenagers were in the full-time labour force, and 4% of this proportion were engaged in full-time educational attendance.
3. FULL-TIME UNEMPLOYMENT RATE, TREND
In trend terms, the teenage full-time unemployment rate peaked in June 1992 at 34.1%. The rate remained above 30.0% until the second half of 1994, when the trend fell sharply, then remained relatively steady between 27.0% and 29.0%. The trend rate stood at 28.1% in June 1998, representing 96,300 teenagers seeking full-time work, out of a full-time teenage labour force of 306,900.
Historically, the 20 to 24 year old full-time unemployment rate trend has been below that for teenagers, but above the rate for persons aged 25 and older. From a peak of 18.5% in late 1992, the trend generally declined to reach a low point of 12.4% in mid 1995. Since then, the rate has been higher, with trend estimates above 15% from March 1997 to September 1997, then declining over the past year to 13.3% in June 1998.
The overall pattern of trend movements for persons aged 25 and over was less marked than for teenagers or 20 to 24 year olds. The trend lay between 9.5% and 9.7% from November 1992 to November 1993, followed by a period of slow decline. Since May 1995, the trend has been relatively flat, lying between 6.8% and 7.4% throughout the 38 months to June 1998.
FULL-TIME UNEMPLOYMENT TO POPULATION RATIO
An additional measure that may assist understanding of the teenage labour market is the full-time unemployment to population ratio.
For any selected population group, this ratio shows the unemployed who are looking for full-time work as a percentage of the civilian population in the same group (see diagram 4 below).
Such a ratio can provide an indication of the extent to which unemployment is experienced by the entire teenage population, rather than the teenage labour force. For teenagers, a full-time unemployment to population ratio of, say 6.0%, means that 6 in 100 teenagers are unemployed and looking for full-time work.
4. FULL-TIME UNEMPLOYMENT TO POPULATION RATIO, TREND
In trend terms, the teenage full-time unemployment to population ratio reached a peak of 9.8% in mid 1992. Since then, the trend has been generally falling, and has remained relatively steady since June 1997, between 6.5% and 6.7%.
In contrast with the full-time unemployment rate, the 20 to 24 year old full-time unemployment to population ratio is above that for teenagers. Although both series were at similar levels between 1988 and 1990, the ratio for 20 to 24 year olds rose and has remained at higher levels than the teenager ratio since 1990. After peaking at 12.3% in October 1992, the ratio then fell, generally at a faster rate than for teenagers, to a low point of 8.2% in mid 1995. Since then, the trend has fluctuated between 8.3% and 9.8%.
Again, movement in the full-time unemployment to population ratio trend for those aged 25 and over was less marked than for teenagers or 20 to 24 year olds. From November 1992 to November 1993, the trend was stable between 4.6% and 4.7%, it then fell slowly over the next 18 months. Since April 1995, the trend has again been relatively flat, lying between 3.4% and 3.6%. It remained stable at 3.3% from November 1997 to June 1998.
Combining part-time employment with full-time education is a common practice for a large number of teenagers. Approximately one third of all teenagers in full-time education have a part-time job. This practice is also common for persons aged 20 to 24 years participating in full-time education, with 40% employed part-time. Of all non-student teenagers, 20% are employed part-time compared to 13% of 20 to 24 year olds.
In June 1998, 14% of teenage students working part-time would have preferred a job in which they worked more hours. Of these, 10% were actively seeking full-time employment. By contrast, 64% of teenagers employed part-time who were not attending school or a tertiary institution full-time were actively looking for full-time work. Compared with teenagers, a greater percentage of 20 to 24 year old full-time students employed part-time would prefer to work more hours (19%), with 18% of those actively looking for full-time work.
Of the 146,700 unemployed teenagers in June 1998, 58,600 were looking for part-time employment. Some 91% of those looking for part-time employment were also involved in full-time education.
The part-time unemployment rate for teenagers (or the number of teenagers seeking part-time work, as a proportion of all teenagers in the part-time labour force) was 13.3% in June 1998. By comparison, the rate for 20 to 24 year olds was 7.9%.
OTHER LABOUR FORCE SURVEY MEASURES
The Labour Force Survey can provide a number of other measures to assist with the analysis of the youth labour market. The labour force behaviour of teenagers (and to a lesser degree, young adults) is characterised by a high level of full-time attendance at educational institutions, so a measure which takes into account both full-time educational attendance and labour market participation is useful. One such measure involves combining teenagers attending educational institutions on a full-time basis with those teenagers who are not attending educational institutions full-time but are in the full-time labour force (either employed full-time or looking for full-time work). These teenagers could be described as "fully active".
In June 1998, the proportion of "fully active" teenagers in the teenage population was 90%. On the same basis, the proportion of "fully active" persons in the 20 to 24 age group was 71%.
OTHER SOURCES OF DATA
ABS supplementary surveys provide information about a number of related labour market activities, such as underemployment; labour mobility; marginal attachment to the labour force (including discouraged job seekers); and job search experience. The Survey of Employment and Unemployment Patterns (SEUP) also provides information about young jobseekers aged 15 to 24 years. It collects information from the same individuals over a three year period. SEUP provides a range of social and demographic information, including employment history and level of education. These surveys can shed further light on the labour market activity of young people and other population groups of interest.
For further information on this and other related topics, contact Michael Johnson on telephone (02) 6252 6525; email email@example.com: or contact any ABS office.
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