Issue Brief 12 / 1996

Relative educational status

One of the major labour market disadvantages experienced by Indigenous people is their relatively low levels of education. In the 1991 Census, Indigenous people were more than ten times less likely to have a degree and tertiary qualification than other Australians (See figure below). There are similarly low levels of education for both males and females in most post-secondary qualification categories.

Source: 1991 Census.

Given that having a post-secondary qualification improves a person's chance of employment, increasing the general level of education will improve the overall employment status of Indigenous population. Indeed, a substantial portion of the relatively poor employment prospects of Indigenous Australians is explained by differences in educational attainment. If Indigenous people had the same level of qualification observed in the rest of the community, then the employment/population ratio would increase from 45.4 to 59.6 per cent, for males, and from 29.5 to 42.8 per cent for females. Given that the equivalent employment ratios for other Australians are 65.1 and 46.9 per cent respectively, education alone can explain the vast majority of the different employment outcomes of Indigenous and other Australians. Clearly, labour force statistics that compare Indigenous and non-Indigenous outcomes should be adjusted to account for the large differences in educational attainment.

The major determinants of Indigenous employment

The recent Centre for Aboriginal Economic Policy Research (CAEPR)/Australian Bureau Statistics (ABS) publication Employment Outcomes for Indigenous People (ABS cat. no. 4199.0) uses 1994 National Aboriginal and Torres Strait Islander Survey (NATSIS) data to analyse the relationships between employment and several social factors, like recent arrest and health, as well as quantifying the effect of the major determinants of employment, including education, training, demography and geography (ABS 1996).

Statistical techniques such as regression analysis allow the quantification of the strength of the relationship between these various factors and employment after controlling for all other relevant factors. The regression analysis of NATSIS data highlights:

Access to education

Large potential gains to Indigenous employment can accrue through improved access to education.

• Completing school to year 10 or year 11 increases a person's chance of being in employment relative to a person without any education by around 40 per cent.
• Completing year 12 further improves the chance of being in employment by nearly 13 per cent for females.
• Having a post-secondary qualification increases the chances of employment by between 13 and 23 per cent.

Females and the size of the family

The presence of children tends to reduce the employment prospects of females who bear the major responsibility for child-rearing.

• Probability of female employment decreases as the number of children increases.

Social factors

The links between social factors and employment are extremely complex and it is therefore difficult to make any definitive statement as to the direction of causality. Notwithstanding this qualification, social factors, particularly the experience of arrest in the previous five years, are likely to play an important role in determining Indigenous employment outcomes.

• Recent arrest is related to a reduction in the chances of employment by 20 and 18 per cent for males and females respectively.

Other demographic and geographic factors

The remote location of many Indigenous communities is an important labour market disadvantage. The CDEP scheme plays a major role in ameliorating the effect of this disadvantage.

Conclusion

The results indicate that the poor employment outcomes of Indigenous people are both deep-rooted and extremely complex. While the multi-dimensional nature of Indigenous socioeconomic disadvantage means that there are no easy solutions to the problem, the improvement of Indigenous educational attainment, relative to other Australians, is an necessary, if not sufficient, condition for long-term improvement to occur.

B. Hunter.

This Issue Brief summarised CAEPR Discussion Paper No. 115, 'The determinants of Indigenous employment outcomes: the importance of education and training' by B. Hunter published in October 1996. It was prepared by Boyd Hunter, assisted by Linda Roach and Melissa Lucashenko, and edited by Maureen MacKenzie-Taylor.