Averting an escalating labour market crisis in Australia: A proposed national job cadet program

Australia should create a national job cadet program to help young people into work –a new report released today by the Mitchell Institute and supported by the national employer association Ai Group.

The report, Averting an Escalating Labour Market Crisis for Young People in Australia: A Proposed National Job Cadet Program (PDF, 2.62 MB), argues that utilising parts of Australia's apprenticeship platform in new occupations, not covered by the current system, will create the tens of thousands of jobs needed to avert a major crisis in the youth labour market.

There is very strong evidence that combining an employment contract with formal education and training improves employment outcomes. This job cadetship program will help reverse the long-term deterioration in youth employment outcomes that the pandemic has intensified," report co-author and Vice-Chancellor of Victoria University, Professor Peter Dawkins said.

New research in the report shows that school leavers and recent graduates have been hardest hit by the coronavirus pandemic. While there has been a small improvement in other parts of the labour market, recent graduates have missed out with 100,000 fewer jobs available than before the pandemic.

Most concerning is the increase in young people who are not in employment, education or training (NEET). NEET is an indicator of disengagement and is associated with higher rates of long-term unemployment and underemployment, and a lifetime engagement with the workforce characterised by insecure work and low pay.

Without action, Australia faces an explosion in the number of young people who are NEET. The next wave will come at the start of 2021 when an additional 120,000 young people graduate from education with gloomy job prospects to say the least.

To avert the crisis, the report recommends a series of incentives for employers to hire young people. Ai Group Chief Executive, Innes Willox said: “The best way to help young people into work is to provide incentives to employers to create real jobs that develop their skills and lay the foundations for long term sustainable employment. Government support for the Job Cadet program will help prevent young people being the biggest economic casualties of the current pandemic-driven recession.”

Report co-author and University of South Australia Vice-Chancellor Professor David Lloyd said customised training would embed learning in the workplace.

"This cadetship program is more aligned to the German model of employer-based learning and will leave a legacy of improved pathways from education to work," Professor Lloyd said.

The report outlines two streams of a cadetship program. The first stream is a longer form 'higher apprenticeship' program of one to four years, which extends current apprenticeship arrangements into higher-level occupations. The second stream is a shorter program of six months to one year aimed at young people who already have some skills or training.

To support the program, the report recommends an employer incentive of between $14,000 and $28,000 per year depending on the cadet and the employer. These amounts align to support the Federal Government already provides as part of the JobSeeker payment and Supporting Apprentices and Trainees Initiative.

Key points

• Young people, and particularly those that are not studying, have been hardest hit by the coronavirus (COVID-19) pandemic. Of those 15 to 24 year olds who are not studying, there are 100,000 fewer in jobs than before the coronavirus.
• Of particular concern are young people who are not in employment, education or training (NEET). This category is an indicator of disengagement and is associated with poor long-term outcomes.
• In early 2021, a forecast 120,000 extra young people will become NEET and try to find employment in a weak labour market. This suggests a looming 'bottle-neck' effect where a queue forms behind waves of young people looking to enter the labour market when there are fewer jobs.
• The current crisis compounds pre-existing problems of deteriorating labour market outcomes for young people who have been subject to occupational 'scarring' and difficulty getting a foothold on the jobs ladder.
• To avert a looming crisis, Australia should invest in a National Job Cadet Program to help young people to enter growing industries and jobs.
• The National Job Cadet Program has two streams. The first stream is a 'higher apprenticeship' pathway that extends current apprenticeship and traineeship arrangements into jobs that require more skills development. The second stream supports young people in non-apprenticeship/traineeship contracts to enter the labour market with targeted education and training.
• To support the program, the government should invest in employer incentives to encourage employers to hire young people and to offset the cost of the new hires.