Is there any better example of the decrepit state of business leadership in this country than the response of the Business Council of Australia to the government’s innovation policy?

Appearing at the AFR’s workplace and productivity summit, the head of the BCA, Catherine Livingstone, responded to the $1.1bn innovation statement by arguing for greater labour market flexibility, saying “we have to be able to talk about whether the current workplace relations system in Australia is able to accommodate the changes we are talking about”.

Of course she did.

The BCA responds to every issue by suggesting more labour flexibility is the answer. Were someone from the BCA to be a judge on The Great Australian Bake Off, they would suggest the sponge cake was beautifully baked, the icing elegantly done, but it really lacked a dollop of labour force flexibility to bring out the taste.

But rather than suggesting it is about charging lower wages for workers or being able to fire workers with greater ease, those who favour greater labour market flexibility often couch it in terms of being for the benefit of workers, especially youth workers.

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The productivity commission’s draft report on workplace relations, after admitting there was no real evidence of a link between labour market flexibility and improved productivity, noted “there are some potentially concerning trends. In particular, youth unemployment is rising, and by more than the growth in the unemployment rates of prime-aged people in the labour market”.

Back in June, Catherine Livingstone also asserted that youth unemployment was at a “crisis”.

Yes, the call for labour market flexibility is really just Helen Lovejoy asking “won’t somebody think of the children?”

But the odd thing is, youth employment is now actually doing quite well – for the past nine months it’s been growing faster than the employment of prime-aged workers:

This week at the workplace and productivity summit, Andrew Charlton, the director of AlphaBeta Economics, also asserted that youth unemployment was “already at 12% – twice the rate of the rest of the Australian population” and that somehow this was costing $13bn in lost GDP.

But there is absolutely nothing unusual about the current youth unemployment rate – it is always about twice that of the total. Young people are always the first to be sacked when economic times get tough, and are usually the last to be hired when things start improving.

There’s not a lot we can do about this fact, because young workers are never, on average, going to be more valuable to an employer than someone who has say 10-15 years of experience.

You can improve the training and skills of youth to help them be better prepared for work, but, as they say, you can’t teach experience.

What we need to beware is if youth unemployment becomes higher than you would expect it to be given overall unemployment.

In the labour force figures released on Thursday, the unemployment rate of prime-age workers – aged 25-64 – was 4.83%. Over the past 20 years, given such a rate, you would expect youth unemployment to be around 12.6% ... which is exactly where it is.

Or, to put it another way, over the past decade – a period which includes the mining boom and the GFC – the youth unemployment rate has on average been 2.83 times that of the unemployment rate of 25-64 year olds. But right now, the youth rate is just 2.6 times the prime-age rate:

That is, given recent history, the youth unemployment rate is actually lower than we otherwise would expect.

Hardly something that cries out for labour market reform.

And the link between youth and overall unemployment in Australia is nothing out of the ordinary. From 2000 to 2014, the average across the OECD was for the youth unemployment rate to be 1.98 times that of the unemployment rate of 15 to 64-year-olds. Australia in that time averaged a ratio of 2.07 – lower than the UK and New Zealand, and even with the USA:

And you would be hard pressed to suggest greater labour market flexibility would do anything. Germany, Israel, Denmark and Japan, which have the lowest ratio of youth to total unemployment, are also ranked among the highest in various categories of labour market regulations:

Now that doesn’t mean all is fine and dandy with youth employment, but suggesting a lack of flexibility is the cause of any concerns (especially given Australia’s labour market is already one of the most flexible in the OECD) is a tough ask.

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One of the complaints about the Fair Work Act was that the new regulations would make it harder to employ youth on a part-time or casual basis. But a look at the data shows youth part-time employment has been growing strongly, and kept going even while overall employment growth was weak:

Youth full-time employment has been struggling a bit, but even here, the growth largely follows that of prime-aged full-time employment. Historically, youth full-time employment growth is only ever stronger than that of prime-aged workers when the economy is really growing fast – as occurred during the mining boom years of 2003-08:

Certainly the percentage of youth in employment has fallen since the GFC, but a big reason for that is an increase in the numbers of youth choosing to stay in education. And while being in education may not be an economic cure-all, the percentage of 20 to 24-year-olds who are unemployed but not in full-time education often matches the total unemployment rate – as indeed it does right now:

Youth unemployment should always be a concern. It is often the canary in the mine – when it starts rising it’s often an indicator that things are about to turn ugly.

But it shouldn’t be used as reason to change industrial relations laws – especially when Australia’s youth unemployment is in no way out of step with other advance economies; is where you would expect it to be given overall unemployment; and there is nothing to suggest the current youth unemployment rate has anything to do with a lack of flexibility in the labour market.