The way young Australians work has transformed over the past three decades. Throughout the 1980s and 1990s hundreds of thousands of teens would leave school and get a full-time job. But the supply of teen full-timers has slowed dramatically. Back in the early 1980s well over half a million 15 to 19-year-olds had a full-time job. Last month the figure was just 154,000, an all-time low.

The main driver of this immense demographic shift is a rapid improvement in high school retention rates. In 1985 more than one in two young people left school before Year 12 but that's fallen to about one in five. A marked rise in the proportion of school-leavers going to university has also eroded the number of young full-timers. The desire to combine work and study means most young people now want a part-time job rather than a full-time one.

As a result Australia's youth workforce has switched from being predominantly full-time to predominantly part-time. This transformation has taken place in a relatively short period – back in 1980 just 20 per cent of workers aged 15 to 19 were part-timers but the proportion is now about 75 per cent. Patterns of youth unemployment also reflect this trend. In mid-1997 – the last time youth unemployment was as high as it is now – the number of young people looking for a full-time job was 50 per cent greater than the number looking for part-time work. Now the number of young people looking for a part-time job is nearly 40 per cent higher than the number of full-time job seekers. Only about one in every 22 of those in the 15-19 year-old age group are looking for a full-time job compared with one in 10 in the mid-1990s

"Youth unemployment figures are telling us something different from what they used to tell us," says economist, Dr Nicholas Gruen.

Even so, the recent spike in the youth unemployment rate to an 18-year high of 20 per cent underscores some big policy challenges. One is the growing "segregation" in the jobs market between those with post-school qualifications and those without.

Dr Damian Oliver from Sydney University's Business School says there will always be a portion of population who will not finish year 12 and new pathways into long-term, quality employment may be needed for that group.

"Time is ripe for a clearer look at non-school options for 15 to 19-year-olds," he said.

Dr Oliver highlights another worrying trend – a rise in long-term unemployment for those aged between 20 and 24. Recent figures show about 30,000 people in that age cohort have been out of work for more than a year – that's about one in five of all unemployed people in that group.

"To have that number growing is a concern," said Dr Oliver. "It may be a sign of a loss of dynamism in the labour market. Employers are just not picking up young people who have been unemployed longer term."

There is some evidence that well-qualified young workers are finding it difficult to break into high-skill jobs. A recent report by the National Centre for Social and Economic Modelling drew attention to the relatively high proportion of 20 to 29-year-olds with degree qualifications working as sales assistants and in hospitality.

"One barrier for young people getting into the workforce is that employers are looking for people with experience, and young people can't get experience in a field without a job. This can mean many young people continue in their part-time university jobs after they've finished studying," the report said.

Dr Gruen believes the sophistication of many jobs required in fast-growing knowledge-based industries may be hindering young people's transition to the workforce. Whereas in the past employers may have been more willing to train young workers, they now favour those with both skills and experience.

"The system seems quite shy of incurring the cost of inducting young workers," he said.