Unemployment is falling, but who’s getting left behind?

Despite low unemployment figures in Australia, low-skilled workers are still finding themselves locked out of the job market, writes...

Janine Dixon, Victoria University and Chandra Shah, Monash University 

The unemployment rate is as low as it has been in the past four years, yet low-skilled workers are still doing it tough.  

Training can help unlock job opportunities for many, especially in the expanding health and social assistance sector.

A report from Anglicare paints an alarming picture for low-skilled, entry-level workers.

It found that in a typical month, the number of these job-seekers outstrips the number of suitable advertised vacancies by almost five to one.

There are other discouraging signs.

Youth unemployment remains high at almost 17%; unemployment among those without post-school qualifications is almost 9%; and the labour under-utilisation rate in the 15-24 age group is a staggering 31%.

What can be done?

For many, the solution is to undertake training and move up the skill hierarchy.

This will not only benefit the individual, but it will address potential future imbalances in segments of the labour market.

Public policies that identify where future job opportunities are likely to be and encourages the at-risk, low-skilled to undertake training in those areas can go a long way to addressing the challenges raised in the Anglicare report.

Classifying jobs

What exactly are “low-skilled” jobs? The Australian Bureau of Statistics classifies occupations into five skill categories. 

These range from level 1 occupations, which generally require at least a bachelor’s degree or five years of relevant experience, through to level 5 occupations, which require skills commensurate with a Certificate I qualification, secondary school education, some on-the-job training, or in some cases, no formal qualification or on-the-job training.

In the Anglicare report, low-skilled, entry-level jobs are synonymous with level 5 occupations.

Around 2 million of Australia’s 12-million strong workforce work in these occupations, the largest of which is sales assistants and salespersons, employing more than 600,000 people in 2017.

Other significant level 5 occupations include cleaners and laundry workers, food preparation assistants, checkout operators and office cashiers, and miscellaneous labourers.

More than half of all jobs in level 5 occupations average less than 30 hours a week, with a large proportion of these jobs on casual contracts.

Not all workers without post-school qualifications work in level 5 occupations; many who have extensive work experience do work in other occupations.

The figure below, for example, shows that many people without post-school qualifications work as managers.

Overall, however, most people without post-school qualifications work in occupations such as sales, clerical, machinery operators or labourers.

Challenges facing low-skilled workers

According to recent modelling from Victoria University’s Centre of Policy Studies, many occupations are affected by technological change.

While improving overall efficiency, technological change destroys some jobs and creates others.

Technological change has an adverse impact on the level of employment in most level 5 occupations.  

For example, automated self-serve checkouts in supermarkets improve efficiency. 

One staff member might supervise six self-serve checkouts, processing many more customers than he or she could serve from a single till.

In this way, technology makes the retail sector more efficient, and should lead to lower retail prices.

However, this is cold comfort to low-skilled job-seekers, as the savings come from reducing their employment prospects.

Low-skilled workers who are currently less affected by automation include cleaners, laundry workers and food preparation assistants.

Our modelling forecasts high employment growth in professional occupations and well below average growth in many level 5 occupations.

But there will still be many job openings in level 5 occupations because of high turnover in these jobs.

Level 5 jobs tend to have high turnover because many workers are in these jobs for relatively short periods; for example, students who leave soon after they have qualified and obtained a job in the occupation for which they trained.

We estimate that job openings in level 5 occupations will average 120,000 per year over the next few years.

Moving up the qualification hierarchy

Both state and federal governments have a role in identifying growth sectors, and encouraging young people, and others without post-school qualifications or work experience, to consider careers in these sectors.

Over the next few years, residential and community care will be one such growth sector.  

By some estimates, the National Disability Insurance Scheme (NDIS) will stimulate employment growth of 60,000-70,000 full-time-equivalent jobs, while the ageing population will boost demand for residential and community care services.

Female workforce participation will continue to underpin demand for childcare workers.

These factors will generate demand for aged and disabled and child carers, as well as nursing support and personal care workers.

Due to the nature of tasks performed in these occupations, automation is less likely to have a negative impact on employment at this stage.

This provides opportunities for young, inexperienced workers.

However, it requires them to undertake the appropriate training, usually at certificate III level which can be completed within 12 months.

Strategies should be developed to make work and training attractive in growth sectors. 

This means well-defined career paths, and decent working conditions and wages.

Jobs in these sectors have to be promoted as valuable and providing personal satisfaction.

Those wishing to train for these jobs should be offered financial incentives while undertaking training, including income support and fee waivers.

If governments are serious about encouraging low-skilled workers into meaningful employment, and avoiding future skill shortages, then new policies are urgently needed that improve the long-term prospects of low-skilled job-seekers in a rapidly shifting labour market.

Janine Dixon, Economist at Centre of Policy Studies, Victoria University and Chandra Shah, Affiliate (Monash University), Adjunct Associate Professor (Victoria University), Monash University

This article was originally published on The Conversation. Read the original article.

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