What rising youth unemployment means for retail

JobTrainer aims to reskill young Australians. (Photo by Ali Yahya on Unsplash)

After months of worsening economic conditions, most people have been impacted negatively by the coronavirus pandemic.  

In fact, Prime Minister Scott Morrison said in May that Australians face a more difficult employment market than during the 1990s recession.

And although Covid-19 has impacted the workforce beyond just the young, it is far worse for anyone aged 15 to 24 – the youth long-term unemployment rate has tripled since the GFC and now sits at 2.3 per cent, well above the second-highest rate of 1.4 per cent for 55- to 64-year-olds, ANZ senior economist Catherine Birch says.

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Greens leader Adam Bandt, too, says that as more than a third of young people were unemployed or underemployed, they are carrying the impact of the current crisis and may be locked out of meaningful work for years.

“Based on the GFC experience, young people will feel both the immediate and longer-term impacts of the downturn more keenly than any other age group,” Birch says. 

“Substantial, targeted and ongoing support will be needed,” she says. “Connecting young job-seekers to employers and tailoring education and training to ensure young people’s skills meet the needs of local, regional and national industries will be critical to the recovery of the youth labour market.”

And youth unemployment is likely to remain high for the foreseeable future, says Gerard Dwyer, national secretary of the Shops, Distributive and Allied Employees’ Union (SDA).

“JobKeeper will inevitably be cut off, but the government should do that in a staged way that minimises the impact on employment, particularly among the young,” he says.

What comes first: Wages or sales?

And while many businesses are coming through the other side of this crisis looking to pare back their workforce, doing so will ultimately bring more trouble to retail.

“Sadly, this is the ultimate chicken-and-egg scenario at play,” says HR expert and Compono managing director Richard Wynn.

“We have a retailer who is struggling. Therefore a retailer who doesn’t have a need to employ a casual, for example. In turn, we have a casual who is not earning an income, and has no discretionary spend to spend in a retailer. Therefore the retailer is struggling.

“It’s like circling around a black hole.”

Data from Illion and AlphaBeta found Australians in this pay bracket spent 10 per cent more during the pandemic, while high income earners – those earning more than $104,000 a year – retreated, spending 36 per cent less. 

The figures showed that it was Australia’s low-income earners – those earning under $65,000 a year – that carried the economy through to the other side of the pandemic.

“We have to acknowledge that a major challenge is that youth unemployment is highly correlated with economic growth: the bigger the overall economic hit now, the more of it falls on our young workers,” says Wynn. 

“Even short stints of going without a job when young can affect a person’s long-term prospects. The consequences of rising youth unemployment now facing Australia could last for a generation at least.”

What can retailers do to support young Australians?

While there remains uncertainty around how businesses will be able to support their current staff moving forward, the government has announced its program designed to get Australians reskilled and back into work: JobTrainer.

The program, which seeks to retrain unemployed Australians to get them into growth industries, will offer around 340,000 training opportunities nationwide – around a third of the 990,000 unemployed people the Australian Bureau of Statistics reported in June.

National Retail Association chief executive Dominique Lamb tells Inside Retail she hopes the scheme will target getting workers into retail.

“We urge the National Skills Commission to ensure that retail is included as one of the designated targeted areas,” Lamb says. “The retail sector can’t afford to have a skills shortage in the future.”

Regardless of government support, bringing young people on board to learn the ins and outs of these e-commerce and delivery logistics systems can be a smart play, as a retailer can empower a young Australian who will likely be able to work for the next several decades.

And while retail has traditionally been seen as a ‘stop gap’ job for many, one way to potentially entice young people to seek out employment in retail is to offer paid study leave, for example, says Dwyer. 

“I think the training conversation is starting to strengthen in the industry,” Dwyer says. 

“The SDA is certainly engaging the major employer groups in retail with the objective of assisting in the development of more and better training for the industry. Training programs and modules should be recognised across the country and accredited as building blocks for certificate, diploma and bachelor qualifications.”

Centre for Social Impact chairman Professor Paul Flatau tells Inside Retail that targeted training and job internship programs will allow the retail industry to get young people onboard.

“[The industry will] have to give a little bit because it’s always great to get that young person who’s full of life,” he says.

“We do need to think as a society about the real difficulties going forward. Retail, accommodation and food services are the absolute front of the labour market package, and if you can’t get [training programs] in those industries, [the labour market] will have serious problems.”

A failure to protect young workers

The Centre for Social Impact, in its recommendations regarding the fallout of Covid-19 and its impact on young people, says that while JobKeeper had done a good job in general, it had almost entirely passed by under-25s.

“It is clear from the disproportionate adverse impact experienced by young people that JobKeeper arrangements failed to protect many [of them],” the report says. 

Flatau explains there were a number of reasons why young people have been so badly impacted by Covid-19.

“One is that they’re generally working in more consumer-facing industries. Retail trade has a significant youth employment component, and they’re more likely to have been in casual positions for a short period of time,” Flatau says. 

“A lot of young people have missed out on JobKeeper because, even if their business was eligible, they were ineligible because they had been employed for less than a year.”

Retail also saw a rise in underemployment, Flatau says, which is when people are still technically employed, but not working as many hours as before. This means that they could still be on the books of a retail business and unable to access JobKeeper or JobSeeker.

This is exacerbated when you take into account that the country is at the beginning of what could be a long recession.

“[So far] this has been a supply-side recession for Australia, but it can quickly move into a more traditional demand-side recession with spending reductions,” Flatau says. 

“You could have a loss of jobs, a loss of income, consumer confidence down – and people will delay what they’re spending because they’ve been told the best they can hope for is a wage cut. 

“This is terrible for consumer confidence moving forward.” 

And according to Flatau, the longer people stay unemployed, the more stigmatised they become by recruiters and the less likely they are to be welcomed back into the workforce.

However, retail isn’t necessarily shrinking. It’s just changing. Retailers may be downsizing in-store staff numbers, but other parts of the business are likely to grow. 

Covid-19 has seen the online retail industry pushed forward by five years or more by some estimates, and even retailers with staunch bricks-and-mortar presences are getting aboard the e-commerce train.  

Focusing on hiring and training in the growth sectors within the industry, rather than leaving young Australians solely on the shopfloor, may be the key to empowering a generation.

This story appeared in the August 2020 issue of Inside Retail Magazine. To receive a print copy, click here.

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