A slowing economy could mean higher youth unemployment, economist warns

Young people struggling to find work can be the canary in the coal mine for the rest of the jobs market.

And a recent rise in the youth unemployment rate could be a sign of things to come.

Australian Bureau of Statistics data from September showed youth unemployment at 11.1 per cent compared with the overall unemployment rate of 4.7 per cent.

While still lower than before the pandemic, a slowing economy could mean youth unemployment rises further in the coming months.

"We tend to see younger workers affected more heavily when there is a slowdown," chief economist at jobs website SEEK, Blair Chapman, said.

Commonwealth Bank economist Harry Ottley said the youth unemployment rate was "definitely rising more quickly than other cohorts".

Hundreds of applications, constant rejection

Lachlan Riddell has experienced what he describes as "job hunting depression".

"I started to fall into a bit of a slump, [asking myself], 'why am I even doing this'," he said.

The 24-year-old estimated he had applied for hundreds of jobs over the past three years, from collecting supermarket trolleys to retail and hospitality roles.

"I feel like there is a mentality that … generation Z don't want to work, that they're very selective about what they want to do, which is simply not true," he said.

Mr Riddell has a Diploma of Music and works casually as an audio-visual technician, but shifts are sporadic.

He said that despite having wide-ranging work experience, he rarely received a response from employers, and most job applications were online.

"I've seen a lot of companies now use AI for their job hiring process. I'm not even talking to a real human."

He has concerns that success in Tasmania's small jobs market can depend less on what you know than who you know.

As he continues his search for more permanent work, Mr Riddell said he was struggling to make ends meet on his Jobseeker payment and relied on support from his fiancee.

"It's pretty hard financially to survive."

Graduate jobs

Graduate job ads have been trending down after post-pandemic highs, according to SEEK.

"There is anecdotal evidence that several larger firms have reduced their graduate intakes in recent years," Mr Chapman said.

"The big four accounting firms are a good example of this as they reduced their intakes in response to declines in demand."

He said he suspected a slowdown in demand for graduates would continue in Australia as the economy softened.

But it is not all bad news.

The rise in youth unemployment has come alongside continued job growth for young people.

"The share of young people in work [the employment-to-population ratio] is 63.6 per cent, down from a peak of 66.7 per cent in November 2022, but well above its 2019 average of 59.7 per cent," Mr Ottley said.

He said youth participation was also high at 71.4 per cent compared with 67.7 per cent in 2019.

"So more young people are in the labour market looking for work,"

he said.

AI disruption and multiple job holders competing with young people for work

There have been fears that the growing use of artificial intelligence (AI) could lead to a jobs apocalypse, particularly for young people and white-collar workers.

But a study by the Department of Employment and Workplace Relations found the technology was not yet causing broad disruption to Australia's labour market.

The study, released in July this year, also found that jobs for people aged 20 to 24 had grown slightly faster than those for people aged 25 and over since the introduction of ChatGPT, while young graduate outcomes remained resilient.

But the report did cite evidence from the US suggesting young people have experienced slower employment growth than older people since the introduction of generative AI tools, especially in occupations more exposed to AI.

Qantas last week announced 850 job cuts and plans to accelerate its use of AI.

"We do think there'll be some job disruption at the margin, let's say, over the next five years," Mr Ottley said.

Federal Skills and Training Minister Andrew Giles said AI was mostly augmenting jobs, "so changing the way in which a job is done rather than completely automating a job".

"We've got to really focus on our skill to make sure workers are equipped to manage this transition," Mr Giles said.

Young people are also facing increasing competition for positions from existing job holders.

One million people in Australia have multiple jobs.

Mr Giles said it was important young people understood where job opportunities were and which sectors had job vacancies.