Education can mitigate COVID-19 employment shocks

More support for education and training of young people is the key to offsetting the employment shocks of pandemics like COVID-19, according to the University of Adelaide’s SA Centre for Economic Studies (SACES).

SACES Executive Director, Associate Professor Michael O’Neil, says dramatic employment cuts caused by COVID-19 in areas like hospitality, retailing and recreation services disproportionately affected young people. These jobs cuts amongst teenagers and people in their twenties, appear to have encouraged them into training over the past 18 months.

“Our analysis confirms the dire need to improve the levels of support for education and training for young people, not only in response to COVID-19 but in the interests of creating a well-qualified base on which young people can build long-term, sustainable careers,” Associate Professor O’Neil said today.

SACES found that the ABS Labour Force Survey significantly overstated the employment performance of youth aged 15 to 19 years during the outbreak of the pandemic in South Australia. SACES’s report says the State’s payroll data shows that “persons aged 15 to 19 years experienced the largest decline in employment during the first couple months of the pandemic, followed by those aged in their twenties”.

“Looking beyond the immediate impact of the pandemic, one year after the outbreak unemployment rates for prime adults aged 25 to 39 years had actually improved relative to pre-COVID levels as social distancing measures were relaxed and social intensive activities increasingly resumed,” the report says.

“On the other hand, unemployment for younger adults aged 15 to 24 years had actually deteriorated further, while older age cohorts such as those aged 50 to 54 and 60 to 64 had also seen an uptick in unemployment.”

The latest SACES research paper, the fourth in its series related to the economic and social effects of the COVID-19 pandemic, was undertaken on behalf of the SACES Independent Research Fund, a group of key private and public sector individuals which sits under the umbrella of SACES.

Associate Professor O’Neil said a recent drop in the labour force participation rate – the extent to which unemployed people are actively looking for work – may be explained by more young people opting for education and training rather than employment.

“State and Federal authorities should learn the lessons of the pandemic and put more resources and support behind education and training and build the State’s human capital,” he said.

“Recent events should cause a much deeper consideration of the persistently high youth unemployment rate and the suite of measures required to boost training rates and reduce youth unemployment.

“The transition from school to work should, at the very least, be based on a systematic suite of offerings for skills development, training, work exposure/experience that are not contingent on macro-economic considerations and employer willingness (and ability) to hire and train.

“These are critical formative years in which skills and interests are developed and good work patterns are established.”