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When COVID first hit, job losses were most severe for our oldest and youngest workers. It’s a trend we’ve seen in past economic downturns, and one that highlights the unequal impacts of recessions.
In a matter of weeks, nearly a quarter of all payroll jobs for those under 20 were lost, while 14% of jobs for those aged 20-29 and 12.5% of jobs for over 70s also disappeared.
Chart 1: Payroll jobs index by age, March 14 = 100
Source: ABS 6160.0.55.001
A large part of the initial fall for younger workers reflected the disproportionate impact of lockdown restrictions on the industries that make up a higher proportion of their employment. Specifically, large sections of the accommodation, hospitality and arts and recreation sectors were unable to operate during the height of restrictions. Added to that, the tenure requirements for JobKeeper meant many of these workers were unable to maintain a connection to their workplace through that scheme, and instead were forced onto JobSeeker or Youth Allowance.
In the weeks and months since, the under 20s have been able to regain almost all of those losses. But for those aged 20-29 and over 70, gains have been harder to come by. After making up some ground when the majority of restrictions were eased, the over 70s have fallen steadily since early June, while jobs for 20-29 year-olds have essentially gone sideways since early July.
So where to from here?
Looking back at the early 1990s recession, it was also older and younger workers that felt the initial brunt of job losses. But the pain from that recession lasted well beyond the two quarter fall in GDP. It took 14 years for the employment of 15-24 year-olds to return to pre-recession levels, five years for those aged 25-34 and four years for those over 55. All the while, employment for those aged 35-54 continued to steadily rise. Lack of work experience may have played against younger workers, while older workers faced the scrutiny of longevity.
Chart 2: Change in employment by age from month preceding recession, comparison to Australia’s last recession
Source: ABS 6202.0
Worryingly, the immediate employment falls in this recession have been far greater than in our last. In the first four months of this downturn, employment has fallen 4%, compared to a 1% contraction over the first four months of our last recession. In large part, the sharper initial fall reflects the lockdown restrictions that prevented workplaces from operating.
However, as restrictions are eased and some businesses are able to operate more normally, the economic crisis may begin to reflect more traditional recessions. That would see households and businesses rein in spending (particularly investment spending) given lower incomes and higher uncertainty.
Going forward, that will mean job losses won’t come from lockdowns but from weakness in the economy. And judging by the last recession, that means both young and older workers may face the most difficulty in the labour market.
David is a macro economist with extensive experience in applied economic and quantitative analysis of the Australian economy, along with considerable experience in labor market analysis. David is a regular commentator on macroeconomic trends, and prepares a weekly economic briefing newsletter.
Harry joined Deloitte Access Economics in January 2017 after completing a Bachelors of Arts and Commerce, with honours in Econometrics and Business Statistics from Monash University. Harry’s area of focus is data analytics and econometric modelling, having conducted a range of research surrounding mental health, prescription drug use, labour markets and ageing populations.