FactCheck Q A: does it take 4.7 years for young graduates to find employment in Australia?

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Excerpt from Q&A, March 28, 2016.

What I find really interesting is it now takes a young person 4.7 years to find employment after graduating. That was a year back in 1986. – Holly Ransom, entrepreneur and CEO of Emergent, speaking on Q&A on March 28, 2016.

The road from education to employment remains challenging for young Australians. A sluggish economy has dragged down the youth job market, and until very recently there have been few signs of recovery. These problems are not unique to Australia.

Entrepreneur and CEO, Holly Ransom, told the Q&A audience that it now takes a young person 4.7 years to find employment after graduating.

Is that right?

Checking the source

When asked for a source for that figure, Ransom’s spokeswoman referred The Conversation to a report published by the Foundation for Young Australians (FYA). The analysis behind the report was conducted by the National Centre for Vocational Education Research using Australian Bureau of Statistics (ABS) data. The report found that:

Graduates from education are finding it harder to find full-time work. It is taking on average 4.7 years for young people to move into full-time work after completing full time education and 2.7 years to find any work (compared to one year respectively in 1986).

FYA

You can read the full report here and the supporting analysis here.

The first thing to note is that while Ransom’s quote referred to employment in general, the 4.7 years statistic refers to time taken to find a full-time job. The report estimates that the average time required to find any job is 2.7 years in 2013.

The 4.7 years statistic isn’t just about university graduates. It includes all young people (aged 15-24 years), no matter whether they went to university, did a vocational education and training course (like TAFE or an apprenticeship), or finished their education in high school.

Apart from these clarifications about the meaning of “employment” and “graduates”, Holly Ransom’s representation of the report’s findings is broadly accurate.

How are the figures calculated?

The figures in the Foundation for Young Australians (FYA) report were calculated using data from the ABS' monthly Labour Force Survey, which is primarily a cross-sectional survey.

This means that when comparing Labour Force Survey figures for different years, we are comparing two entirely different samples, although each represents the population at that point in time. It’s not looking at the same people or households over time.

When asked how the figure of 4.7 years was calculated, a spokeswoman for FYA told The Conversation that, using the ABS Labour Force Survey data, the researchers:

• Looked at the average age at which more than half the population had left full-time education
• Looked at the average age at which more than half the population has got full-time work
• Then they compared those two numbers, factoring in that the people graduating and the people getting jobs are from slightly different age cohorts.

You can read the full response from FYA here.

A few grains of salt

Overall, the FYA report upon which Ransom’s quote was based showed that today’s young Australians are leaving full-time education later than in the past and entering full-time employment later than in the past. That could be for a range of reasons.

The Labour Force Survey doesn’t actually ask employed people how long they took to find their job. As the FYA’s spokeswoman’s told The Conversation in relation to the figure of 4.7 years:

It is worth noting that during these years [between full-time education and full-time employment] young people may be doing a range of things, including working part-time while studying part-time, travelling or volunteering overseas, working in a casual job or on a contract, and we are talking specifically about them finding full-time work.

They might also return to full-time education. Remember: the data used for the analysis doesn’t follow the same people over time. Instead, it shows two snapshots of different people at different points in time – those in full-time education and those in employment.

To illustrate, let’s imagine two young people, John and Mary, who represent the two basic categories used in the real data analysis done for FYA. John is 18 years old and taking a gap year after completing his HSC. He takes part in the Labour Force Survey in 2007 and is recorded as not in employment and not in full-time education. John’s situation is used to estimate that young people start leaving the full-time education system at around age 18 in 2007. A year after participating in the Labour Force Survey, John starts looking for work and quickly lands a job.

Mary is 22 years old and recently completed a bachelor’s degree in accounting. She went straight to university after finishing her HSC and never previously had a full-time job. After graduating, Mary quickly found a full-time job. She takes part in the Labour Force Survey in 2007 and is recorded as in full-time employment and not in full-time education. Mary’s situation is used to estimate that young people who are not in full-time education start finding full-time jobs at around age 22 in 2007. A year after participating in the Labour Force Survey, Mary loses her first job and starts searching for a new employer.

Using data from the Labour Force Survey, we could conclude that the average duration between study and employment for young Australians was four years in 2007. This figure is obtained by subtracting John’s age when he took part in the survey (18 years) from Mary’s age when she took part (22 years).

Does this figure of four years fairly represent either person’s experience? Clearly, it does not.

Of course, this is a deliberate simplification. But it helps to illustrate some of the dangers in comparing different population snapshots and interpreting these as durations.

Other data sources

Graduate Careers Australia surveys show that:

The National Centre for Vocational Education Research’s Student Outcomes Survey shows that:

• 64% of 15-19 year olds who completed a VET course in 2015 were employed six months after graduation and;
• 75% of 20-24 year olds who completed a VET course in 2015 were employed six months after graduation.

These figures suggest that only a minority of young VET completers struggle to find work.

What about the broader group of young people, including those who have never done any tertiary study? The government’s Longitudinal Survey of Australian Youth follows cohorts of young people for 10 years, starting at age 15. It allows comparisons between different cohorts at the same age.

Of those in the survey’s 2006 cohort, 55% had gained their first full-time job by the time they turned 21 (which, for this cohort, was in 2012). That represented a small decline compared to earlier cohorts from this survey.

So that data shows Australia’s current youth are indeed taking a bit longer than their predecessors to find full-time work.

The FYA’s estimate is that today’s average young Australian will not find full-time work until 23.4 years of age. This figure seems high compared to the Longitudinal Survey of Australian Youth’s evidence that most young people have attained a full-time job by age 21.

Verdict

Holly Ransom’s comment was a broadly accurate representation of findings published by the Foundation for Young Australians. It would have been more accurate to say “full-time” employment, but given the fast pace of live television, this omission is understandable.

Other data suggest that the current interval between study and work is typically shorter than FYA’s report implies.

Other data does, however, support the argument that Australia’s current youth are taking longer than their predecessors to find full-time work. – Joshua Healy

Review

This is a sound analysis. The FactCheck author correctly points out the dangers in trying to deduce dynamics (such as the time path taken to get a job) from static data (such as an average at a point in time).

For instance, according to the Labour Force Survey in 2014, the average duration of unemployment for the labour market as a whole was 36 weeks. This could be interpreted as meaning that on average someone becoming unemployed will take nine months to get a job. But the data also reveal that over 20% of the jobless were unemployed for less than four weeks and over 60% were unemployed for less than six months. Clearly, there are quite different interpretations possible from the same data set.

It is correct that Holly Ransom did, with the qualification pointed out by the FactCheck author, accurately quote the FYA report.

However, other data indicate that most young people get a full-time job relatively soon after completing study.

In the post-GFC economic climate, data do suggest the time taken to get the first full-time job has increased for VET and university graduates. – Phil Lewis

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