Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: Jobless young risk joining lost generation

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Many young people looking to land their first real job have been hit hard by the recession. Photo / Hawke's Bay Today
Many young people looking to land their first real job have been hit hard by the recession. Photo / Hawke's Bay Today

Barack Obama's planned White House Job Summit struck a note with our own PM when he heard about it during the Singapore Apec meeting.

"Maybe he'll do a national cycleway," John Key quipped.

In reality, Key should think about scheduling another Job Summit here - or a least a follow-up - to get some new thinking around the big issues New Zealand faces.

Particularly, the dire outlook on the job front for too many of our young people.

In Singapore, there was plenty of talk at an adjoining business summit about the potential for a "jobless recovery" and more than a few allusions to a "lost generation" of young people who would either find themselves joining the ranks of the long-term unemployed, taking on work that is well below their expectations, or being cycled through short-term jobs.

This is a major issue, not just for the United States where overall unemployment levels have breached 10 per cent but also here in New Zealand where youth unemployment is close to that of the US.

The President is coming under pressure to consider all sorts of measures from major Depression-era style public works programmes, cutting small business taxes and introducing "sub-minimum" wages to get young people into work.

Key's Cabinet has already made some moves on this front.

But the follow-through from the February Job Summit has not been sufficient.

Three months back, the PM unveiled a $152 million "Youth Opportunities" package to provide young people with adequate development opportunities.

"If we don't we risk diminishing the potential of an entire generation of New Zealanders, and I won't accept that," he said then.

It contains some worthwhile initiatives: Six-month long job placements, $5000 wage subsidies, community programme jobs, cycleway jobs, industry training, fees-free places in polytechs, service academies, volunteer programmes and summer scholarships.

The problem is the package will barely scratch the surface.

The percentage of young people who can't find jobs snowballed after the global economic crisis hit New Zealand.

But (so far) the Government has only budgeted enough funds to provide "opportunities" for 16,900.

This is not going to make a large dent when 62,700 young Kiwis between 15 and 24 are already out of work. The number is set to swell when more school leavers and tertiary graduates hit the job markets this summer.

New Zealand has been down this track before in the early 1990s.

It was not a pretty sight. Young men who couldn't find work lost hope. There was an explosion of youth suicide. Many ultimately left for new opportunities offshore.

The problem New Zealand now faces is the international opportunities are not there. Other countries face just as many problems - if not more - than we do.

BusinessWeek highlighted the major social impact of unemployment on young people in its recent cover story - "The Lost Generation".

The international business magazine said this generation was "bright, eager - and unwanted".

"While unemployment is ravaging just about every part of the global workforce, the most enduring harm is being done to young people who can't grab on to the first rung of the career ladder. The problem isn't just confined to America. Right across the developed world from Britain to Japan, many people in the 16-24 year group (dropouts, graduates, newly minted lawyers and MBAs) couldn't get jobs.

"For people just starting their careers, the damage may be deep and long-lasting, potentially creating a kind of 'lost generation'," said BusinessWeek.

This vignette from an online respondent to BusinessWeek's article was typical of the many hundreds who responded to the article.

"I also graduated from one of the top universities in the nation and have been looking for a job since May.

"Scanning listings daily and sending out my resume and portfolio en masse with no replies except for one rejection email. It took me almost a year to find the $10 an hour, 10 hour-a-day graveyard shift warehouse job that I have now which is dirty, degrading, monotonous, tiring and insulting to my intelligence and capabilities.

"And every day I have a very high chance of getting fired from my job because there is no tolerance for any mistakes while on the clock and my position is as replaceable as a cheap $5 pair of supermarket sunglasses. You see kids, keeping a job these days is even harder than finding a job. The very few jobs available will fire you as quick as they hire you and these jobs don't pay living wages. On top of that, I live with my mother and my younger brother, who is 25, and both of them are broke and don't have jobs or any type of unemployment benefits or compensation. So I give most of my measly cheques that aren't enough to pay rent, car insurance, credit card bills, gas and food to my broke mother. God bless America."

If you think America's got it bad, then take a look at what our own statistics reveal. Some 25 per cent of 15 to 19-year-olds who are seeking jobs can't find work.

The last time unemployment was up at such stratospheric levels for the 15-19 year group was in the early 1990s - it peaked at 24.5 per cent in 1993.

Crucially, high levels of youth unemployment persisted for five years.

Some 20.3 per cent of 15 to 19-year-olds were unemployed by the December quarter of 1990 as the fallout from the 1987 sharemarket crash took its toll.

The percentage of unemployed in this age cohort did not drop below 20 per cent until the 1994 June quarter as the impact of National's "mother of all Budgets" exacerbated the underlying conditions.

Back then the 20 to 24-year-olds also did it hard. Official unemployment for this group peaked at 19.7 per cent in the March quarter of 1992 - but stayed in the 13-17 per cent range until mid-1994.

Social Development Minister Paula Bennett made great hay out of the Government's package at a recent OECD meeting.

But the more telling message comes from the OECD itself.

A 26-page report, called "Helping Youth to Get a Firm Foothold in the Labour Market," prepared for the September OECD meeting, said the most urgent priority is to prevent unskilled dropouts from losing touch with the workforce altogether.

"For disadvantaged youth lacking basic education," the document says.

"A failure in their first experience on the labour market is often difficult to make up."

The OECD reckons the short-term outlook for such people is grim - they tend to be the first to lose their job and may find it particularly difficult to get another one.

They are at a high risk of inactivity and social exclusion.

The OECD notes all of the 16 countries it studied (including New Zealand) have a group of "youth left behind" which it also says risks becoming a "lost generation".

It cites the measures others have taken, like the British Government's guarantee to place any young people under 25 who have been out of work for a year into a job, or offer them training or paid work experience. And the Australian Government's decision to bring forward a programme to ensure 90 per cent of its under 25-year-olds get extra qualifications.

Bennett was too busy puffing her own achievements to pay much heed to the OECD's warning.

Let's hope Key's ears are open.

- NZ Herald

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