Why a job can be a fast track into poverty

September 17, 2023

A job can be a fast track into poverty, says the author of a new report, while mutual obligation requirements for young people on the dole often perversely make them less employable, not more.

The solution lies in the creation of new-generation, earn-while-you-learn qualifications that embed practical paid-on-the-job training with formal education, in the style of a traditional apprenticeship.

More traditional apprenticeships could help young people avoid the low-paid jobs trap. iStock

This would not only provide young people with career pathways, but guarantee a source of new workers in skills-crippled areas, such as IT.

The report, Cracks in the Foundation, from the Centre for New Industry, says there is a willingness on the part of skills-starved sectors such as IT to embrace new-style qualifications that would not only help their individual businesses, but the sector more broadly.

Emma Dawson, executive director of the think tank Per Capita which was behind the report, says that a review into employment services by Labor MP Julian Hill could provide the springboard on how we think about unemployed and under-employed young people.

“The current system isn’t working, not for young people and not for employers,” Ms Dawson said.

Employment services cost the government $7 billion every three years. Efforts to get young people into work were often counter-productive to long-term gainful employment by forcing welfare recipients into low-skill, low-paid, part-time and gig economy jobs with no career path.

“But that’s not necessarily helping that person escape underemployment and a lifetime of insecurity,” she said.

Only 5 per cent of employers engage with employment services.

“We have record low unemployment for young people but when you combine that with underemployment, it is still over 20 per cent,” said Ms Dawson,

“Over the past 30 or so years we have, quite rightly, focused on education pathways and pushing young people to get a university degree. But there will always be a number of people who won’t do that and aren’t suited to it, but we have seen their career pathways atrophy over the past few decades.”

While many work in hospitality and retail, there are few career pathways and the jobs are often part-time and poorly paid.

Lisa Fowkes, from Social Ventures Australia, said all the evidence pointed to jobs of the future requiring more skills, not less.

“The report found that there were plenty of employers in the IT sector who were willing to try new approaches because the existing approaches aren’t working from their point of view. Apprentice-style traineeships could be incredibly useful,” Ms Fowkes said.

When young people who have dropped out of formal education find themselves in the welfare system, they are often forced to take on jobs that have no future pathway just to fulfil their mutual obligation requirements. This ends up trapping them in a cycle of unemployment and insecure work.

Gary Workman, executive director of the Apprenticeship Employment Network, said there needed to more viable education and training options for the 50 per cent of young people who did not want to go to university.

“Not everyone wants to do a law degree and there is a mismatch between job opportunities and training, which can be slow to react to industry needs,” Mr Workman said.

“At the same time, we need employers to be more open to new ideas, such as a combination of on-the-job training alongside formal education instead of just giving people a job when they are fully qualified.”

Originally published by Julie Hare in the Australian Financial Review, 17 September 2023