Employment trends and its social impact

We have transitioned to a knowledge-based economy, where education and training are key for workers. Here is how the Australian workforce has evolved in the last two decades.

It is a widely held belief that change is the only constant in life. Employment trends are no exception. Over the past few decades, the nature of our jobs has greatly affected not only our incomes, but all aspects of our lives. Australia has been transitioning into a knowledge-based economy where education and training are key for workers. The shift towards a knowledge-based economy has affected demographic trends significantly, especially among young adults.

Here is a breakdown of the Australian workforce that explains how jobs have evolved over the past two decades. According to the 2021 census, all jobs are categorised under 1356 occupations. Each occupation is categorised into five skill levels based on the level of formal training and qualification required.

In a skill level 1 job, the minimum qualification is holding at least bachelor’s degree or higher (example – doctors, engineers, teachers); in a skill level 5 job, no education or experience is required, and the skills required for performing the tasks are learnt on the job (example – cleaners, cafe workers, fruit pickers).

Australia had a workforce of 13 million according to the ABS Labour Force data in August 2021, of which 4.5 million were skill level 1 jobs. Skill level 1 jobs were the most common kind of jobs, accounting for 35 per cent of all jobs, followed by skill level 4 jobs at 25 per cent, skill level 5 jobs at 15 per cent, skill level 3 jobs at 13 per cent, and skill level 2 jobs at 11 per cent.

The percentage of millennials who own a home has decreased.

Only skill level 1 and skill level 2 occupation groups has had an increase in employment between August 1991 and 2021, with skill level 1 jobs growing by 11 per cent from 24 per cent in August 1991 and skill level 2 jobs growing by 1 per cent from 10 per cent. Within the same period, jobs at skill levels 3 and 5 decreased by 5 per cent each, while jobs at skill level 2 decreased by 2 per cent.

The National Skills Commission’s mid-year economic and fiscal outlook data for 2020-21 shows that more than half (52.8 per cent) of the projected employment growth over the coming years to November 2025 is expected to come from skill level 1 occupations (up by 523,100 or 11.8 per cent). Considering this data, it is fair to conclude that education and training are the most sought-after skills in workers.

Skill level 1 jobs also have the biggest pay cheques in Australia. As per the 2021 census, skill level 1 workers had a median annual personal income of $93,710. This is followed by skill level 2 workers at $69,278, skill level 3 workers at $57,812, skill level 4 workers at $51,701 and finally skill level 5 workers at $34,734. This data proves that obtaining even a certificate or diploma level qualification makes a world of difference to income.

The changing nature of occupations contributes substantially to the inter-generational difference in population.

Consider the population of ages 25-39: this is a remarkably interesting cohort. It is at this stage when majority of the population have established a career path, form relationships, buy houses and have children. Let’s call them the household builders.

Comparing the household builders in 1991 (mostly baby boomers) with the household builders in 2021 (millennials) will give us a clear picture about what’s different for today’s household builders.

The first and most obvious effect is that millennials study longer. As the job market for skilled positions grows, millennials are driven to pursue an extra qualification to become employable. About 79 per cent of the millennials had a non-school qualification (certificates, diplomas and university degrees) compared with 48 per cent for baby boomers.

Forty-one per cent of millennials have a bachelor’s degree or higher, compared with only 11 per cent of baby boomers. This is despite tertiary education being free from 1974 until 1989 when the Higher Education Contribution Scheme was introduced.

In 1991, baby boomer men earned more degrees than women, but millennial women now dominate higher education. About 82 per cent of millennial women had post-high school qualifications, compared with about 77 per cent of men in 2021.

Nowadays, girls and women surpass their male counterparts in all areas of education, enabling them to obtain well-paid, skilled jobs. This is supported by the ABS Labour Force data.

In 1991, 36 per cent of the male workforce held skill level 1 or 2 jobs compared with 32 per cent of the female workforce. In 2021, 49 per cent of women in the workforce were employed in skill level 1 and 2 occupations compared with 44 per cent of men, reversing the trend previously seen.

The shift is more pronounced among millennial household builders. In that cohort, women held 57 per cent of skill level 1 and 2 jobs in 2021 compared with 46 per cent of men.

As a consequence, today even the most highly educated, best paid women can’t find a partner meeting their standards. It is natural for most people to seek a partner with similar educational and social standards. Many millennial women will choose to stay single and focus on their knowledge-based jobs over lowering their standards to increase the pool of men available to them.

The number of baby boomer women who never married was 21 per cent in 1991. Almost half of millennial women (48 per cent) had never married in 2021. The number of people living with a partner and children has fallen significantly from 52 per cent of baby boomers to just one out of five (21 per cent) among millennials.

Millennials worked from home about four times as much as baby boomers.

The average number of people per household for millennials in 2021 was 3.0, compared with 3.4 people for baby boomers in 1991. Although household sizes decreased for millennials, their dwellings were more likely to have extra bedrooms compared with baby boomers. Thirty-five per cent of millennials owned houses that had four or more bedrooms compared with 20 per cent for baby boomers in 1991. Working from home has made an extra bedroom essential for a home office.

Flexibility in working arrangements is on the rise in Australia, with more people working from home. Millennials worked from home about four times as much as baby boomers – 22.5 per cent (enhanced by Covid) v 4.6 per cent.

The percentage of millennials who own a home has decreased. Home ownership rates among millennials are 55 per cent, compared with 66 per cent of baby boomers.

Even though more millennials hold well-paid skilled jobs, housing affordability remains an issue no matter what their occupation level is. Many millennials are in debt due to the extra qualifications they needed to compete in the labour market.

According to the latest data released by the ATO on student Higher Education Loan program, out of three million debtors in the fiscal year 2020-21, millennials accounted for 71 per cent (2.1 million) of the total. Not only will this debt reduce borrowing capacity, it will lengthen the time it takes to build a deposit.

The National Skills Commission projections show about 60 per cent of projected employment growth to November 2025 is in skill level 1 and 2 jobs. Middle and lower skilled jobs will have subdued growth. These lower skilled jobs are often part of the gig economy; these workers will have to work longer to secure a mortgage. So first-time homebuyers are on average older than previous generations.

Over the next few decades, occupations will continue to influence demographic trends and shape society. We are heading towards a society that is more splintered based on income. This will lead to a broader spectrum of homebuyers in the first homebuyer market. In addition to low- and high-income families/individuals, single and wealthy female home buyers will become more prevalent. The property industry should be on the lookout for these emerging segments and adjust its offerings accordingly.

Hari Hara Priya Kannan is a data scientist at The Demographics Group