Category Archives: Employment and work

Is the graduate labour market recovering?

Last week’s Graduate Outcome Survey, which looks at employment rates about four months after course completion, showed that full-time employment rates continue to improve. However, the proportion of new graduates looking for full-time work at this time is still high by historical standards, as the chart below shows (many of them have part-time jobs; this is not necessarily unemployment).

At the margins, there are things universities can do to make their graduates more employable. They can offer courses in fields likely to be in labour market demand, and they can offer work-integrated learning to improve graduate employability. Both were happening under the demand driven system.

But unless there is overall job growth graduate employment is unlikely to improve. When the labour market is tight the first thing to go is new entry-level positions, and so this disproportionately affects recent graduates. The effects of downturns are visible in the chart on annual growth in professional occupations and the labour market overall.

The good news is that growth in the professional labour market has fully recovered from the post-GFC crash and the second crash that started in mid-2012.

Read more »

Over-qualification: hard to measure, harder to avoid

This morning The Australian very much delivered in the government’s attempts to use annual data releases to support its case for not paying universities the full funding rate unless they meet various performance indicators. “More than a quarter of the ­nation’s graduates say their ­degrees are close to useless for their jobs” read the opening line of its page one lead story.

Concern about graduates taking jobs that don’t require degrees is very long-standing. The other day I was reading a report from 1972 – when hardly anybody had a degree compared to now – that mentioned the issue. In the past, using the approximate method of looking at what jobs graduates are doing, I estimated that in 1979 about 20 per cent of graduates were in jobs unlikely to require degrees. The equivalent figure now is about 30 per cent.

But the survey that triggered today’s story shows how complex these judgments can be. As the chart below shows, the supervisors of graduates are more likely than the graduates themselves to think that the graduate’s qualification is important.

The other interesting aspect of the chart is the very imperfect match between ABS classifications of occupational skill levels and the views of graduates and their supervisors. Read more »

Graduate early career earnings are trending down

The latest HILDA Statistical Report has some interesting cohort data on graduate earnings in the early years after graduation.

It shows that later cohorts of graduates are, on average, earning less at the same point in their careers than earlier cohorts. Five years after completing a bachelor degree, people who graduated between 2001 and 2005 earned on average $140 more than people who graduated between 2006 and 2009. In turn, the 2006-2009 graduates earned more five years after completion than 2010-11 graduates, by $75 per week.*

In the HILDA data presented, at least two trends contribute to these results. In all years except the year immediately after graduation, the 2006-2009 and 2010-2011 cohorts are more likely to be studying full-time than the 2001-2005 cohort, which means that their employment income is lower and they will have less work experience five years out.

Second, the younger cohorts are more likely to be working part-time even if they are not studying full-time.
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Ideas boom campaign overclaims for science jobs

Science claims:

science3

Science reality:

science employ 4 month

Science job relevance

18 year olds or politicians: who makes the better course choices?

Former Greens higher education adviser Osman Faruqi thinks that it is time to reconsider the demand driven system, in light of the annual ATAR controversy and mediocre employment outcomes. It is the usual story of good intentions turning to not-so-good outcomes:

There was an opportunity for universities to work with policymakers and industry, identify economic trends and skills gaps and use their new-found flexibility to provide students with a rigorous learning environment.

While university managers might have convinced themselves this is what has occurred, the numbers tell a different story. Enrolments shot up across the board — but particularly in relatively profitable courses such as business, commerce and media. As more students with lower ATARs gained entry into university, attrition rates increased alongside them. One in seven students currently drop out by the end of their first year, the highest level in a decade. Graduate unemployment is at its highest level since records began in 1982.

The demand driven review I did with David Kemp is the main analysis of how the system is going, but it is now two years old. It’s worth looking at a few statistics to update trends.

The actual enrolment increases for domestic bachelor degree students are a little different to Osman’s take, and can be used for and against in the debate about different systems. The chart below shows the disciplines with at least 2,000 EFTSL enrolment increases between 2008 and 2014. Law and business are on the list, but not at the top, and below the average in percentage terms.

enrolment increases

Consistent with what Kemp and I generally found two years ago, disciplines related to occupations with skills shortages generally responded with increased places under the demand driven system. Two of the top three growth areas were disciplines in skills shortages at the time (although not now except for some specialised areas). This we saw as one of the system’s strengths compared to the previous system, which had no established process for identifying or responding to skills shortages. Before the demand driven system, it was very ad hoc: if employers screamed loudly enough and there was money in the Budget for extra places then the system responded; otherwise not.

Of course, in theory it would be possible for the government to more actively steer the system. But should we trust them to make good judgments? The several science-related disciplines in the top half of the fast-growing discipline list suggests not. That was a response to cutting science and maths student contributions in 2009 and campaigning for STEM, with the former Chief Scientist being a major advocate for study in these fields. It was bad analysis all along, and has predictably led to very poor employment outcomes.

Have our political leaders learned their lesson from this? Labor’s plan to pour even more money down the STEM drain suggests not, and the STEM evangelism of the current government (fortunately without any extra student spending), also suggests not.

While student course choices are structured by their interests and aptitudes, precisely which courses they choose is influenced by what they hear and observe. We can see publicised ups and downs of the labour market flowing through into applications and enrolments ups and downs. But government campaigns also make a difference, and not always for the better.

Yes, demand driven funding is leading to more growth in some disciplines than the labour market warrants. But on the historical evidence, I am not convinced that it is worse than the realistic alternatives. Our much-maligned 18 year olds spot and respond quickly to real skills shortages; the old system did neither in a reliable way. Some young people’s course choices look to be misjudgments, as least if they are looking for work. But on that they have been misled by the actions and words of politicians and officials, the very people who would have to run a non-market system of distributing student places.

Graduate employment improves a little – but still the second worst outcome ever

The latest graduate employment data supports what ABS data suggested a few weeks ago: that the worst of the graduate employment downturn might be behind us. Early this year, the proportion of new graduates seeking full-time work but without work or only working part-time was fractionally lower than it had been at the same time in 2014. As the chart below shows, though, it is still at historically high levels.

GDS major trend

The discipline-level data shows, unsurprisingly, a less tidy picture. There has been a rebound in construction related occupations, and small improvements in outcomes for big fields such as education and commerce. Mining engineering employment, unsurprisingly, is still heading down and there was an on-going decline in nursing and law. All of these declining fields still have above average levels of graduate employment, but negative trends.

I have been pointing out for many years that, contrary to continuing pro-STEM rhetoric, science is not a good employment option. For the second year running, life science graduates are only narrowly avoiding having the worst employment outcomes of any discipline (visual and performing arts graduates reliably come last in looking for jobs). While outcomes this year were slightly better than last year, 51% of life science graduates were still looking for work 4 months after graduation. Maths, chemistry and physics all trended down, although with small numbers of respondents.

Another STEM discipline, computer science, did slightly worse than the overall average, with 33% un- or under-employment. Of the STEM disciplines, only engineering produces employment outcomes that are significantly better than average, with most improving on 2014.

Graduate employment up, but fastest growth in less-skilled occupations

Today’s release of the annual ABS Education and Work publication has some good news on graduate employment. After a couple of years in which the total number of graduates with jobs stagnated, in 2005 compared to 2014 they were up by 7.5%. Growth in the number of graduates with managerial and professional jobs, the jobs the ABS classifies as requiring bachelor degrees or above, was lower at 5.3% – but that was still much better than in the two preceding years.

Converted to a percentages of the graduate population the improvement is harder to see. This is because the total number of graduates keeps increasing, up by 287,000 in a year according to this survey (completions according to the Department were 215,000 domestic students and 104,000 internationals – but the total number in the population is affected by migration in and out).

In 2015 the proportion of graduates in work with managerial or professional jobs was about 71%, while the proportion of all graduates with professional or managerial jobs was about 57%. While the time series is complicated by definition changes these are probably the lowest figures yet recorded, as seen in the chart below. However, the numbers are not as bad as recent graduate employment figures might suggest. This is partly because employment numbers improve over time, and partly because it takes time for new cohorts of graduates to significantly influence the total survey. Even with recent big graduating classes, the new entrants to the graduate pool are only about 6% of all graduates.

Ed and Work

Three year out graduate labour market stable

There has been much comment this year (including from me) on the bad and getting worse employment outcomes for recent graduates. This is based on a four months after completion survey, so some of the result is slower rather than non-transitions into full-time employment.

The latest Beyond Graduation survey looks at graduates three years after completing their degree. It uses a sub-sample of respondents to the original four month out survey three years previously. The sub-sample does have at least one bias, in that its respondents report higher employment rates at four months than did the sample as a whole. But hopefully this does not affect the trend information.

As the chart below shows, full-time employment rates (of all in the sample) seem to have stabilised for the 2010 cohort compared to people who finished the year before. The chart shows that in early 2011 when the 2010 completing cohort was looking for work 55 per cent had a full time job. Three years later in 2014 that had increased to 70 per cent. Not everyone who does not have a full-time job is un- or under-employed, but I report it this way to try to minimise any effects of people who are doing something other than working because they have given up looking for a job.

FT employ BGS

Conditional on having a full-time job, the rate of professional and managerial employment also seems stable at 84 per cent, which is little-changed over the life of the Beyond Graduation survey.

Prof employ BGS

While the trends in recent graduate employment are concerning, most commentators (including myself) have been cautious about saying that this is necessarily a major long-term problem. It could be, but there is not enough evidence to say that yet. These reasonably good results from the Beyond Graduation Survey support that caution.

No need to spend more than $2 billion promoting STEM subjects

Unfortunately Labor’s promise to write-off the HELP debt of 100,000 science, technology, engineering and maths graduates suggests that they have learned little from their previous mistakes in this area. Following a 2007 election promise, to boost science and maths they cut student contributions and introduced a HECS-HELP benefit, under which around $1,700 a year of HELP debt is written off if graduates work in specified occupations related to their degree.

The cut in student contributions was strongly promoted, and there has been on-going advocacy for STEM disciplines from the Chief Scientist, Professor Ian Chubb. There has been a big increase in science demand and domestic undergraduate enrolments – up 35 per cent between 2008 and 2013, or more than 21,000 full-time equivalent places. By far the largest increase has been in the biological sciences, which made up nearly 40 per cent of the total. Engineering, which did not have a cut in student contributions, increased by 32 per cent over the same period, with more than 8,000 additional full-time equivalent places. Science demand kept growing in 2013 and 2014, despite student contributions being put back up again.

As I have long argued, there has never been any evidence that we need a significant boost in bachelor-level science graduates. The latest employment data confirms that the surge of completions in science is only leading to serious un- and under-employment among science graduates, who have been hit especially hard in the general graduate employment downturn. So it is hard to argue that there is any general problem to solve in the first place.

sci take 3

Possibly there are still some niche employment issues in say secondary maths and science teachers – although they have fallen off the skills shortage list. But a promise to write off a few tens of thousands of dollars in student debt is unlikely to change how many people see a teaching career. Even for financially motivated students, the cost of university is not high relative to career earnings for full-time professionals. Perhaps the main thing that will drive graduates to teaching is that they may have few other options, thanks to the over-supply of graduates.

Course and career choices are primarily about interests and aptitudes, with long-term earnings a factor. These can be influenced – people have multiple interests and are not necessarily aware of all the suitable course and career opportunities. But this influence can be achieved without writing off more than $2 billion in student debt (we get similar numbers to the government). A few million dollars in marketing expenditure would probably have the same effect, if this was a desirable outcome – which it is not. Labor’s latest policy is, unfortunately, only likely to to encourage people to make choices that put them at high employment risk.

The graduate numbers behind gender equality for government appointments

At the weekend, Victorian Premier Daniel Andrews pledged equal male-female representation for state government public board and legal appointments. The Liberal Party similarly announced that it would increase female representation among its MPs.

The task of more equal representation in senior jobs has become easier over time as women’s educational levels first matched and then exceeded men’s. Women have made up a majority of university students since 1987, and in the census it is now only in the 60+ age group that men outnumber women as graduates.

Despite this educational success, full-time labour force participation rates differ significantly between men and women, something we have given a lot of attention due to its implications for HELP debt repayment. The chart below shows how female full-time workforce participation declines as women enter their thirties. It goes up again in their forties, but never to their previous levels or men’s rate of full-time work.

male female FT
Source: Census 2011

People can have successful careers working part-time. But prolonged periods of part-time work inevitably mean significantly less experience. Any many senior jobs just cannot be done on a part-time basis, and indeed cannot be routinely done within ‘normal’ working hours.

This has obvious implications as to how many people with the relevant level of experience are in the pool of potential applicants for senior positions. However, the differences are not quite as dramatic as the slide above might suggest, because more women had the appropriate initial educational qualifications in the first place. The chart below shows absolute numbers of graduates by gender working in full-time managerial or professional positions. Women are around 40% of the pool in the aged 40+ group most likely to get the top jobs.

man prof
Source: Census 2011

For judicial appointments, only about a third of full-time legal professionals in their 40s are women, and the share is less than 30 per cent for people over 50 (chart below). Perhaps the very long hours typical in the law make it harder to maintain a pool of highly experienced female lawyers.

legal prof
Source: Census 2011

In absolute terms, there are enough women to fill the relatively small number of board and judicial appointments. But with an open recruitment approach, there will be many more male than female contenders with the qualifications and experience for senior positions.

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Note: The absolute numbers in the census will be too low. It has a problem with people not answering all the questions. Males are less likely than females to respond to other surveys, so there may be an undercount of men.