Modelling predicts ‘pandemic price tag’ for young people: $35,000
Young people starting their first job following the COVID-19 crisis will earn on average $35,000 less than their peers over the next decade – a 6% pay cut, or essentially working over 6 months unpaid, modelling from the Australian Greens has predicted.
With young people already enduring the hardest hit from working in those sectors that have been shut down, and half a million casual workers under 24 excluded from the JobKeeper scheme, the figure highlights the importance of putting young people’s needs front and centre in recovery plans and to start supporting them now through JobKeeper.
This modelling was undertaken by the Greens using predictions made by researchers looking at employment ‘scarring’ as a result of job market shocks and more young people competing for a shrinking pool of jobs.
The research finds that in a hostile labour market, young people are more likely to accept lower paid or less suitable work, which then takes a long time to undo. The underpinning body of evidence from US studies assume a 3% rise in unemployment, far less than the increase from 5% to 10% foreshadowed – so young people could be even worse off than predicted.
“Imagine if today you got a 6% pay cut locked in for the next ten years of your life. That’s the reality for every young person looking for their first job after the pandemic,” Adam Bandt MP said.
“If you’re entering the workforce now, you’re not only battling stagnant wages, unaffordable housing and the climate crisis, you’re trying to get into a job market that’s collapsing around you.
“Young people will be hit the hardest when it comes to looking for a job. Unemployment will be through the roof and there will be even more crappy jobs that don’t offer enough hours of work or high enough wages.”
“Even if you do manage to get a job on the other side, it will come at a cost. Young people can put a price tag on this pandemic. It will cost you $34,442 over the next decade and there’s no refunds.
“When you’ve got bills piling up and rent to pay, it can be tough to turn down a lousy job that barely pays the bills, if only to keep a roof over your head. All too often one bad job leads to another, so it’s really tough to get the experience and confidence needed to get the job you deserve.
“Right now in Australia employers have all the power, so it’s tough to get the leg up to the job you really want, and it will take up to a decade to get your career back on track.
“This $35,000 over a decade isn’t just loose change that could go to rent, it’s a housing deposit that’s been taken away from you, money that could pay off your car, or go into your savings to get ready for a rainy day.
“We can turn this around. When we’re rebuilding our economy, we need to put young people front and centre. We need to make sure that there’s enough available and meaningful work available to make sure everyone has the job they deserve.
“That needs to start with making sure that all young people can access JobKeeper. By locking new casual workers out of JobKeeper, the Liberals have shown they don’t understand the realities of the modern workplace.
“By ignoring young people, Scott Morrison is setting up the next generation to fail. The government is asking young people to pay for an economic stimulus package they’re not even allowed to access.
“It’s never been more important to get politically active and join your union. With the Greens as your strong voice in parliament and the unions behind you, we can take back the workplace rights and opportunities that have been snatched away.”
• A young worker entering the workforce in the COVID-19 downturn will have a mean 6% reduction in annual earnings each year for a decade.
• Across a decade, this represents the loss of 60% of a year’s annual income – or $34,442 when considering the average salary of a full time worker under 24 years old.
• As the underpinning body of evidence assumes a 3% rise in unemployment, far less than we are likely to experience, young people could be even worse off than predicted.
• This loss is compounded when considering the follow-on impacts on superannuation balance, a delayed move from renting to a mortgage, and a reduction in interest from savings.