If you’re under 35 years of age, and you feel like you can’t get ahead, you’re not alone.
Hundreds of thousands of younger Australians are grappling with once-in-a-generation challenges right now and it’s causing pain.
I want to shine a spotlight on these problems in this column. But I also want to look at whether or not there’s light at the end of the tunnel for Generations Y and Z.
Also read: The Aussie economy: Where are we at?
But this column’s for everyone, because the problems facing Gens Y and Z ultimately spill over into other generations too.
The youth unemployment rate increased 1 per cent to 15.6 per cent in October. It’s now increased by 3 per cent over the year to October 2020.
Yes more younger Australians are finding work, but a heck of a lot are being rejected too. Check out this data set from the Bureau of Statistics:
Full-time employment increased by 97,000 and part-time employment increased by 81,800
Over the year to October 2020, full-time employment decreased by 186,800 people and part-time employment increased by 54,500 people
The part-time share of employment over the past 12 months, increased 0.8 percentage points to 32.3 per cent.
There’s talk of an economic recovery, and as Victoria opens up business and consumer confidence have been given a boost.
It’s seeing more hiring but, overall, bosses remain uncommitted to handing out secure on-going positions for younger Australians (as you can see by the data set above).
Of course students and those in their early 20s don’t necessarily need full-time work, but there’s still a big chunk of Aussies that do and have been left empty handed.
I fear part-time, gig-style work is being normalised and that’s just plain wrong.
The government’s actually acknowledged that younger Australians are at a comparative disadvantage to older Australians when it comes to finding work.
That’s why the JobMaker hiring credit scheme was devised.
It incentivises employers to take on new hires aged 35 years and under by offering a weekly cashback rebate on every new hire until October next year.
Many people have hit back at the scheme arguing it’s blatant age discrimination. The fact is, it is!
However, the Fair Work Act allows for this sort of discrimination because job seekers under 35 are considered to be in enough of a disadvantage to warrant extra help.
I’ve spoken to job seekers over the age of 35 though, and who have a family to support, who say they’re being passed over at every job offer for a younger person and it’s causing a lot of stress.
Meanwhile Labor argues younger Australians already in work will get fired and be replaced by JobMaker eligible workers.
The Industrial Relations Minister Christian Porter says the law protects against all of these problems.
So let’s assume you’re under 35 and you’ve landed a job thanks to the JobMaker hiring credit. Now you’ve got to get busy saving for a deposit to buy a home.
How can you do that when many Term Deposit rates under 1 per cent?!
Last week, for example, the ANZ Bank cut its 9-month Term Deposit rate to 0.15 per cent with a $25,000 deposit. That’s the lowest TD rate ever recorded in Australia.
Let’s be honest, the money being stashed away in this term deposit will most definitely help to grow a home deposit, but the interest on this account won’t do anything for you at all.
On the flipside though, interest rates are also next to nothing.
The cash rate itself, not the RBA’s cash rate target, but the overnight cash rate (or BBSW) is sitting at around 0.04 to 0.05 per cent right now. So near to zero basically.
The Reserve Bank’s also driving longer term interest rates down too.
What does all this mean? Well simply it’s pushed 3-year fixed rate mortgages down to all-time lows. The lowest recorded so far is 1.89 per cent (with a loan to value ratio of 80 per cent).
So borrowing, essentially, especially with the responsible lending laws set to be relaxed early next year, has never been easier or cheaper.
Is there hope for younger Australians?
Of course! There’s always hope.
If you’re in a relationship, have a secure full-time, on-going role, and you’re happy to be at least a little bit thrifty, there’s no reason why you can’t save up for a home (in the longer run).
Once you’ve built up a deposit, borrowing should be relatively easy, and you can lock in a 3-year cheap-as-chips fixed loan rate.
Beware though, sell your new property, lose your job unexpectedly or incur heavy unforeseen living expenses within those three years, and you’ll have to break the contract.
In this scenario you’ll be asked to stump up a break fee. Even the corporate cop, ASIC, warns this can hurt… a lot.
So borrowing at a cheap rate, and locking it in, is attractive in some ways, and quite scary in other ways.
For those in insecure work, as obvious as it sounds, the best you can hope for is to find more permanent work – unless of course you like the freedom that comes with that sort of work.
It’s all about what you want, and what risks you’re prepared to bear (your risk appetite).
The difference between younger generations and older generations is that for older generations a secure job and a home was a given, now it’s quite an achievement.
But life, for some, is more than just working to pay off a huge mortgage.
2020 has brought forward some big life choices our younger generations face. Let’s hope though that they’re able to make choices for themselves, and aren’t forced into taking a life path they wouldn’t otherwise choose.
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