With overall unemployment creeping up to 6%, unemployment among 15 to 24 year olds, which tends to be naturally higher anyway and ends up even higher when the economy slows, has increased to over 15% and has re-emerged as a significant policy issue (e.g. see this Brotherhood of St Laurence report). While much of the recent increase in youth unemployment is cyclical, there are a range of regulations that limit employment opportunities for young people. These regulations impede the efficient operation of markets and prevent the realisation of substantial gains from trade, at a cost of forgone GDP, household incomes and jobs. Reforms to these regulations could result in a signficant boost to employment opportunities for young people. Let’s consider three examples: penalty rates, retail trading hours and taxi licensing.
I’ve previously posted on the impact of penalty rates on the hospitality and tourism sectors:
It’s possible there could be signficant employment gains among young people if penalty rates were reformed and there was greater scope for them to be negotiated away as part of enterprise agreements. Let’s hope the current review of modern Awards makes some bold recommendations on reform.
Another area of potential reform is retail trading hours, as I’ve posted on many times – e.g.:
Obviously, longer opening hours for shops could boost employment opportunities for young people.
On taxi licensing, I’d note that current licensing arrangements restrict the number of taxis on the road, raising prices and generating economic rents (i.e. super, above-normal profits) for owners of the licences, which are valued at around $500,000 each (see the Black & White Cabs website). If the taxi industry were largely deregulated, so any number of new licences could be purchased from the Government at a nominal fee, there would be a huge increase in taxis on the road, a significant reduction in fares (see the analysis in the Productivity Commission’s research paper Regulation of the Taxi Industry), and greater employment opportunities, many of which could be taken up by young people. There would still need to be some regulation, of course, around safety, but restricting the number of taxi licenses isn’t necessary to ensure public safety. (Hat tip to Brad Rogers for getting me excited about the potential economic gains from taxi deregulation.)