WhyNot

The economy was failing young Australians long before COVID-19

Words by Lachlan, 21 VIC

I am one of the lucky ones.

Throughout the COVID-19 pandemic I have had stable employment and the resources to continue university study.

Yet other young Australians have not been as fortunate, with the pandemic forcing almost one in three workers aged 18-24 into unemployment. These people are not just numbers. They are my Australian – particularly Victorian – friends and family.

The Australian Government is currently attempting to address the disproportionate impact of the COVID-19 recession on young adults through schemes such as JobMaker, which provides employers  with a $200 weekly wage subsidy to employ Australians under 35 who receive welfare benefits. However, one-off initiatives like this fail to understand the economy has been structurally failing young Australians for years.

A Productivity Commission study in June revealed that Australians aged under 35 were the only age bracket to experience reductions in disposable real income between 2008 and 2018. This means the rising cost of living has outpaced income growth, forcing young Australians to cover higher expenses with less funds. A 2019 Grattan Institute study also found the current generation of young Australians may be the first in 100 years to have poorer wealth outcomes than their parents.

Despite this, I often see Facebook flooded with anger towards young people…

‘Millennials are such snowflakes!’

‘I had to work for my money! Now young people expect to get it without working hard!!!’

‘Why are young people complaining all the time? They don’t know how good they’ve got it!’

Don’t worry, I know how lucky I am to be growing up in a wealthy, democratic nation. All I ask is that young Australians also experience equitable economic outcomes.

While there are many factors contributing to the current state of economic inequality, “junior rates” are a good place to start.

Currently, junior rates allow employers to pay workers under 21 a lower percentage of the adult minimum wage. Estimates indicate this sub-minimum rate may affect up to 57 per cent of Australians under 21, reducing total wages paid to this age group by approximately $3.5 billion compared to the minimum wage. Supporters of this sub-minimum rate argue it is necessary to incentivise and compensate businesses for hiring typically inexperienced young workers compared to older, more experienced Australians and thus reduce youth unemployment.

However, this rationale is incredibly flawed.

Firstly, Australians aged between 18 and 20 are legally treated with the same rights and responsibilities as all adults. You can drive, drink alcohol and join the Australian Defence Force at 18, yet around 38 per cent of 18 to 20-year-olds are not paid adult wages.

This is blatantly discriminatory.

Secondly, the argument that sub-minimum wages keep youth unemployment low is false. Multiple comparable developed economies – such as New Zealand and Belgium – have phased out sub-minimum youth wages over recent years, directly raising incomes with no significant negative employment effects.

Thirdly, businesses do not need to be compensated for the inexperience of those under 21. Research indicates the enthusiasm of young people, combined with their willingness to work flexible, sporadic shifts outside regular hours provides young workers with advantages which other employees may not have, thereby benefiting business productivity in other ways and maintaining incentives for the employment of young Australians.

Finally, discriminating based on age-related stereotypes sets an extremely troubling standard. Young people are not necessarily inexperienced. Despite being 20 years old in 2019, I had similar experience as my older colleagues in selling alcohol in a local bottle shop, yet I was paid as if I had less.

All workers have weaknesses in some areas and strengths in others. For example, older workers may have lower productivity in jobs which require high usage of modern technology. Yet, we rightfully do not lower their wages in technology-based industries to compensate for this age-based stereotype. But this happens to young Australians.

As a result of practices such as these, young people continually feel left behind and disillusioned. So, while a response to the specific economic ramifications of the pandemic is appreciated, without a vision for long-term economic reform, Australia will continue to fail to provide young people with a fair shot long after COVID-19.

Illustration by AileenYou can find more of her work on Instagram @aileenetc

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