The Catch 22 of youth employment

Businesses want to have a supply of qualified employees and that means involvement in where and how those future workers are being made.

The tricky part is how to do this, employers want young people in their work force but they also want productive staff members who can contribute from day one, they want a pipeline of employees but find the process is too expensive or unwieldy.

There are many factors standing in the path of youth accessing good jobs. In-demand roles increasingly require a range of specialised and digital skills so young people are subject to “upcredentialing,” employers inflate the credentials required for advertised jobs.

Entry-level administrative jobs, like registration clerks are declining as businesses increasingly incorporate automated workflow technologies. This means that businesses expect new skills mixes in entry-level jobs that didn’t previously exist.

Employers that have had negative experiences in the past have reservations around the business etiquette, reliability and commitment of young people.

There is also a perception that the cost of equipping inexperienced employees with the required skills and knowledge is too expensive, relative to the work they produce. Many employers believe that it is unlikely to be profitable to hire young people new to work as resourcing is required for work placements.

Employers need to be able to recognise the benefits and opportunities associated with developing a long-term employment relationship with young and entry level employees.

Some employers find their ability to nurture the development of young workers has been diminished by a lack of supervisors with the skills and experience to provide training and support.

It is clear that government action, like The Boosting Apprenticeship Commencements scheme can make a difference.

Individual employers have developed innovative pathways for young people into and within their organisations, proactively engaging with low income and marginalised groups but too often these initiatives are temporary, fragmented or ad hoc.

A cultural and behavioural shift is needed across the labour market toward greater long term workforce planning and greater investment by employers in nurturing future workers.

Employers cannot do it alone. Government policies and decision making are critical to creating incentives for change and ensuring that the wider ecosystem of employment and training supports employers in their efforts to create more job opportunities.

While many employers identify cost as a significant barrier to investing in young people, wage subsidies are not always the most effective way of addressing cost barriers. On their own, they are not enough to address the challenges employers face.

Some employers have the knowledge, experience and scale to build employment pathways within their own organisations. They are reaching into schools and communities, working with VET providers, and creating support structures within their own organisations. But most employers lack this capacity and have to navigate a complex, and often costly, system. They often find themselves in a vicious cycle in which their inability to find new skilled workers means that they keep experienced workers fully deployed ‘on the tools’, rather than using them to train future workers.

As the workforce ages and the economy changes, these obstacles to developing our skills base will become more critical.

Employers have said that they want to see better-designed incentives, more coherent and comprehensive intermediary support and a quicker return on investment when they hire young people.

A combination of measures is needed to generate change. There are five broad approaches, which might work:

• Financial levers including more tailored subsidies and consideration of schemes to promote training investment
• Stronger and more coherent intermediary support models for employers
• Collaborative pre-employment (training) models which are directly linked to employers
• Use of integrated work and learning, particularly in sectors without strong existing apprenticeship systems
• Use of Government procurement and contracting to drive skills development.

Young people who are entering the workforce benefit from additional mentoring and support, above and beyond what would normally be provided to new hires. Organisations stated the need for mentors and appropriately trained supervisors have impacted their decisions around hiring young people.

Finding the right young person with the right attitude and goals is critical. Young people are successful in organisations where they are joining an industry that they have an interest in and have prior training or on-the-job experience (e.g work experience) within. Without this, employers found that the young person struggled to stay committed and would leave, which means a loss of investment for the employer.

Employers are seeking skilled employees and many use qualifications as a prerequisite for roles because it allows them to easily identify the skills of an applicant. This is resulting in qualifications being used as a proxy requirement, even where they are not required for a role. A shift towards skills being recognised in other formats is critical for both employers and young people.

Engagement from employers at the beginning of the career and learning journey for young people is critical. Programs where employers are engaging with young people from the beginning and where they are investing in the program are seeing success.

People have more jobs and individuals are less likely to stay with the same organisation for their entire career than they were in the past. As a result investment in upskilling individuals may need to be thought of at an industry level and not an individual organisation level.

Programs and initiatives need to be aligned across the supply and demand side to integrate both employment and skills development. Presently, initiatives often target only one side which can lead to frustration as there is not a commitment on both sides.

From What Will It Take? – A research paper by SVA and AEN, with analysis by PwC

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