Although Australia’s labour market escaped the dramatic negative impact of the global financial economic crisis seen in other OECD countries, a substantial share of working age Australians either were not working or worked only to a limited extent as the global recovery gathered pace between 2013 and 2014. 18% were without employment during an entire year, and a further 6% had weak labour-market attachment, working only a fraction of the year, or on restricted working hours.
The paper extends a method proposed by Fernandez et al. (2016) to measure and visualise employment barriers of individuals with no or weak labour-market attachment, using household micro-data. It first develops indicators to quantify employment obstacles under three broad headings: (i) work-related capabilities, (ii) incentives, and (iii) employment opportunities. It then uses these indicators in conjunction with a statistical clustering approach to identify groups of individuals facing similar combinations of barriers. A novelty of this paper is the use of a statistical model to calibrate the definition of employment barriers in a way that maximises their explanatory power for predicting employment outcomes. The resulting typology of labour-market difficulties provides insights on the most pressing policy priorities in supporting different groups into employment in Australia. The paper concludes with a discussion of the empirical results and how they can inform people-centred assessments of existing labour-market integration measures.
The most common employment obstacles in Australia are limited work experience, low skills and poor health. Although financial disincentives, care responsibilities and scarce job opportunities are less widespread overall, they remained important barriers for some labour-market groups. A notable finding is that almost one third of jobless or low-intensity workers face three or more simultaneous barriers, highlighting the limits of policy approaches that focus on subsets of these employment obstacles in isolation. A statistical clustering approach points to seven distinct groups, each characterized by unique profiles
of employment barriers that call for different configurations of activation and employment support policies.
SOURCE: OECD. “Faces of joblessness in Australia: An anatomy of employment barriers using household data.” OECD, April 2019.