By Professor Paul Kofman, Dean, Faculty of Business and Economics, University of Melbourne
Australia has comparatively low and declining youth unemployment, but new research by Infosys has found young Australians are pessimistic about their future job prospects, lack confidence in job skills and are reluctant to work for a start-up.
The Fourth Industrial Revolution is upon us, but young Australians are sceptical about their ability to tackle the opportunities and challenges it brings.
Surveying 1,000 young people aged 16-25 across Australia, the US, the UK, France, Germany, Brazil, China, South Africa and India, the Infosys report presents some unexpected results.
Charting the lowest sentiment score across all nine countries, only 12.66% of young Australians are “extremely optimistic” about their future job prospects, which is particularly surprising compared to other OECD countries where youth unemployment is substantially higher.
Australia’s ability to survive the recent decline in mining employment, offset by new employment opportunities in the services sector, as well as the closure of many labour-intensive manufacturing businesses over the past few years without any significant impact to employment rates, suggests an economy that is resilient; an economy that is able to provide future jobs.
SO, WHY THE PESSIMISM?
It can be difficult to break into the job market straight out of school or even tertiary education. People at the beginning of their career may find it difficult to get their foot in the door and are often the first to go with job downturns, which may lead to some disillusion. However, the situation is much more complex. The recent ABS figures show the declining rate of unemployment for young people over the past 12 months has actually outpaced that of the general population.
In southern Europe, for example, youth unemployment has been at an all-time high since the Global Financial Crisis (GFC) in 2008 but many countries are now experiencing slow growth in employment. According to the OECD Outlook 2015 this will continue, resulting in an estimated decline in unemployment of up to 6.6% by the end of 2016.
As Europe begins to experience growth following such a dramatic economic plunge, it makes sense that sentiment about future job prospects would also begin to grow.
Information dissemination also contributes to how Australians feel about employment prospects. Labour market predictions receive widespread media coverage, such as then Treasurer Joe Hockey’s predictions at the end of 2014 that “thousands more people will lose their jobs next year than previously thought…”, and the Bloomberg survey of economists that estimated 10,000 job cuts.
Extremist reporting on market fluctuations can have a similar impact on sentiment. Often the projected impact of a fluctuation is very different from the real impact. For example, the loss of 18,500 part-time jobs late last year coincided with an increase of 17,600 full-time jobs. The fluctuation did not change the unemployment rate and there was an improvement in under-employment.
SKILLS AND THE FUTURE OF WORK
While the current economic growth trajectory in Australia is positive, it is important for government, industry and educators to remain focused on reducing youth unemployment. The Infosys research reported that Australian youth recorded the lowest levels of confidence about job skills, while all four emerging economies — China, India, South Africa and Brazil — recorded high levels of skills-based confidence.
Most Australian universities recognise the need to deliver graduates that are work-ready and have embraced work-integrated learning in their curriculum. Business consulting opportunities, internships, case competitions, leadership forum all form part of the comprehensive learning experience.
On-site learning should be co-curricular, rather than extra-curricular. Picture: Shutterstock
We must continue to grow opportunities in partnership with industry for young people to gain experience, learn practical skills and develop business networks. Ideally, those learning experiences are co-curricular, rather than extra-curricular.
This means moving away from work placements that are merely considered a screening process for future employment, towards a work experience where both the student and the employer view it as investing in capacity.
The future of work requires innovation, initiative and constant questioning of effectiveness and efficiency. It is positive that many respondents felt it necessary to upskill on the job and, according to the research, Australian young people are amongst the most aware of the need to continuously learn new skills throughout life.
The workplace, regardless of the industry or sector, will become increasingly dynamic so it is about using established skills to address change with resilience and agility.
When asked about technology, self-perceived competence levels in Australia, as well as in many of the developed countries, were reported to be low, particularly compared to high perceived proficiency in emerging economies such as India.
It is worth noting, though, that the Fourth Industrial Revolution is not just about technological acumen, but rather an opportunity for new ways of working, collaborating and blurring traditional skill boundaries. The success of Uber, for example, does not lie merely in being able to write an app that enables the customer to hire a driver with a few quick taps on your smart phone. That is just an enabler. The business model as a whole is what underpins its global success. You need a finance person, a business expert, a marketing mind, a risk manager … and, yes, a tech wiz.
Perhaps least surprising in this new wave of innovation and start-up culture was the low desire among Australian young people to work for a start-up (3.81%) or set up their own business (10%). The desire for self-employment was low across all regions, but professionals in emerging countries were most willing to attempt setting up their own business.
I have seen the appetite and potential young Australians have for starting their own business through the University of Melbourne start-up competitions and high-calibre applications for the newly established Master of Entrepreneurship.
It’s not that the ideas and skills don’t exist, but the environment in Australia makes it very difficult for budding entrepreneurs.
The situation is unlikely to change without substantial regulatory and investment overhaul — some of it foreshadowed in the government’s innovation statement.
As the return to risk trade-off for a start-up is so much more favourable in emerging economies and high-tech innovation centres (like Silicon Valley), it is not surprising that our budding entrepreneurs are opting to put their skills into practice overseas.
India, for example, has just launched a $2.1 billion fund to support the country’s start-ups. Add to that the lack of start-up financing (business loans) and labyrinthine regulatory environment making start-up life miserable in Australia, and the choice for a traditional or established employer is easily made.
Banner image: Wei Wei Chong