I’d like to quickly address this claim made by RBS, reported by Christopher Joye:

teenage unemployment has fallen, but at 16½% it is still very high as many youths have found it hard to get a job with recent legislative changes making it more difficult to employ younger workers on short shifts.

I assume this “legislative change” that RBS are referring to is the adoption of a three hour minimum shift rule for casual employees in the retail sector. This means that if a casual retail employee is rostered on, they must be paid for at least three hours.

There are a few points to make about RBS’ claim. First, this is not a legislative change, it is a change enacted by a full bench of the independent industrial relations tribunal, Fair Work Australia, as part of the award modernisation process. This process saw the tribunal consolidate several thousand state and federal awards into 122 modern awards.

Second, the tribunal’s decision only changed the status quo for a small number of employees. For juniors, the minimum shift for most of the country was three hours prior to the creation of the modern award. Only some employees in Victoria and South Australia, as well as particular classifications in Western Australia, had a shorter minimum shift of two hours.

Third, for those few employees who saw an increase in their minimum shift, it was an increase from 2 hours to 3 hours, not an increase from 0 hours to 3 hours. So, this is a marginal change that only changes the status quo for some junior casual employees in the retail industry in a minority of states. This is not a “legislative change” that affects juniors across the board.

Fourth, the data do not suggest that there has been any blow out in the teenage unemployment rate. The chart below shows the ratio of the teenage unemployment rate (15-19 year olds) to the adult unemployment rate (all civilians aged over 19). If teens have suddenly become “more difficult to employ” relative to other employees then we’d expect to see this ratio spike. It hasn’t.

Ratio of the teenage unemployment rate to the adult unemployment rate

When the first incarnation of the Howard Government’s IR legislation, the Workplace Relations Act, came into effect, the teenage unemployment rate was around 2.8 times the adult unemployment rate. By the time the Rudd Government came to power in November 2007 the junior unemployment rate was 4.3 times the adult rate. It’s now around 4 times the adult rate.

The trend we see here is that when economic times are good, such as in the first phase of the mining boom, the adult unemployment rate falls more rapidly than the teenage unemployment rate. This means that the ratio of the junior unemployment rate to the adult rate (depicted above) rises. In the downturn from mid-late 2008 the ratio fell a little; since the labour market turned around in mid-2009 we’ve seen a resumption of the pre-GFC trend. The ratio of the junior unemployment rate to the adult rate is currently lower than it was when the Rudd Government took office.

There seems to me little reason to conclude from the data that the marginal change in minimum shifts for a small number of casual junior employees in the retail industry in a minority of states has caused a structural increase in the number of unemployed teenagers.