Category Archives: Employment and work

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 than 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.

—–
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.

Is this graduate employment downturn different to the early 1990s recession?

The experience of graduates from the early 1990s recession suggests that a slow career start isn’t necessarily fatal to long-term prospects. Employers seem willing to consider graduates who haven’t managed to quickly find employment. But this doesn’t rule out more pessimistic interpretations of recent graduate employment surveys.

There are several reasons why this might be the case. There could be some structural changes in the economy that reduce the quantity of or slow growth in professional jobs, to which graduates typically aspire. For example, there could be greater automation of tasks previously done by professionals, or more outsourcing to countries with lower labour costs. Or professional job growth could stay around its long-term trend, but the number of graduates increases more quickly.

The slide below shows the long-term trend in the number of jobs classed as professional. Annual growth is volatile, but I can’t see a structural slowdown. 2013 showed relatively low growth, which might help explain why that was a bad year for graduate outcomes compared to the immediately preceding years. But 2014 was a good mid-range result, with an estimated 85,000 additional professional jobs.

Prof employment
Source: ABS.

Completion numbers show less volatile growth than job numbers, but multi-year comparisons suggest that they are not (to date) growing at a much stronger rate than professional employment. However, new graduates are not the only flow into the graduate labour market. Existing graduates move in and out of the labour force, and there is migration, both from new migrants and expatriates returning to Australia. Permanent skilled migration in recent times has included 32,000 to 39,000 professionals a year, although there are larger numbers here on temporary visas.

From the ABS Education and Work survey and its predecessors we can construct a time series of graduates in professional and managerial jobs, both as a percentage of all graduates and of graduates with jobs. The slide is below. The trend is affected by occupational definitions, and is most meaningful within the periods in which a reasonably consistent classification system was used. Unfortunately Education and Work 2014 has some results that are hard to believe. I think they have over-sampled people with postgraduate qualifications and under-sampled people with bachelor degrees, and as a result the employment result is biased upwards. But the bias would not be large enough to turn the slight decline in graduate managerial and professional employment shown in the slide into a large decline.

managerial and professional jonbs
Sources: ABS here and here.

The way Education and Work is conducted means that it would not show any fast consequences of a deteriorating new graduate labour market. The number of new bachelor-degree completions in 2013 was only about 5 per cent of the stock of professional jobs. Also, Education and Work is done as part of the broader labour force survey. Respondents to that survey are on an eight month cycle, with an eighth leaving the survey and being replaced each month. As Education and Work is conducted in May, only some of the people being captured as un- or under-employed in March or April by the Graduate Destination Survey could have been included.

Another issue is whether the Graduate Destination Survey, in investigating the employment situation of graduates so soon after completion, has always painted an overly-pessimistic picture of outcomes. Although many employers have graduate intakes structured around the cycle of university completions, normal economic growth isn’t going to to produce a sudden burst of professional jobs over December to April. It’s more likely that graduates will gradually be absorbed into the workforce.

One way of investigating this is the Beyond Graduation Survey, which looks at graduates three years out. It uses a sub-sample of the original Graduate Destination Survey. The respondents to the Beyond Graduation Survey report better employment outcomes four months out than did the full GDS sample, so the results are likely to biased upwards somewhat. What the slide shows is that full-time employment outcomes are trending downwards three years out for the cohorts that had bad outcomes four months out, for those who were new graduates in early 2009 and early 2010. The drop is about 4.5 percentage points on the peak year, but only 2 percentage points below what new graduates from early 2006 experienced three years out.

Beyond Graduation

The BGS survey also lets us look at job quality. Of those who have full-time jobs, there is only a very small decline in the share of people who have managerial or professional jobs. There is a larger decline in people with full-time managerial or professional jobs as a proportion of all graduates. There has been a shift to full-time study and job searching.

BGS job quality

The Beyond Graduation Survey is the clearest evidence of negative trends beyond the short-term employment outcomes, but the fairly small full-time employment declines the BGS finds are not disastrous. Taken in the context of the other ABS employment data reported in this post there is not yet enough evidence to say that there are major structural issues with graduate employment, although the relevant trend data needs to be watched carefully. The slowing growth in domestic undergraduate commencing student numbers is desirable. But it is still possible that the bad initial employment outcomes of recent years will end up being like the bad job figures of the early 1990s: slow career starts, but not career killers.

Does graduating into a recession affect long-term job quality?

Graduating into a recession may not affect overall employment levels, but could it affect job quality? The theory here is similar to the employment scarring effect. By graduating into a recession, a proportion of graduates don’t acquire jobs that allow them to maintain or develop their skills. This harms their CV, and employers will continue to overlook them as they age, stalling their careers.

In this analysis, I will take professional and managerial employment as a proxy for a quality job. I realise that this is imperfect. Broad job categories can under- or over-state the skills actually required in particular jobs. Job categories are also known not to always match with subjective perceptions of skills use or job satisfaction. But this is the best I can do with readily available data from the census.

As can be seen from the slide below, with dots in the line for the group of most interest, it is hard to see evidence of a scarring effect. It looks like the early 1990s recession cohort are continuing their career climb – not shown, but there is a shift from jobs classified as ‘professional’ to those classified as ‘managerial’, as people move into more senior jobs.

prof and manager 2011

Another test of graduate outcomes is income. Unfortunately the census uses a category of $2,000 a week or more for all higher income earners. But taking this cut-off again we see little evidence (dotted part of the line) that our assumed recession graduates are significantly off-course in their careers. However, by dividing the group into undergraduate degree only and postgraduate we can see one reason why postgraduate study has boomed in recent years.

income 2011

Of course, we can’t rule out that there is some salary penalty hidden in the broad $2,000 a week or more category. But it is hard to argue based on this evidence that there is a significant cohort from the early 1990s who are still doing it tough in 2011.

None of the data sources I have been able to use in analysing this issue are fully adequate. But overall the results I have incline me against the scarring hypothesis. Based on this 1990s recession evidence, employers typically don’t write prospective employees off just because their careers get off to a slow start.

Does graduating into a recession reduce long-term employment levels?

Poor recent graduate employment outcomes inevitably raise questions about whether this shows just a slow period of labour market adjustment, or whether it is a sign of something more serious. One theory is that early periods of unemployment or low-skill employment have a scarring effect on future employment. The basic theory is that during unemployment existing skills deteriorate and new skills that come with work experience are not developed. Either or both of these things happening or employers assuming from CVs that they may have happened compound the original employment problem. What could be a temporary setback is turned into a long-term disadvantage.

For graduates, the early 1990s recession provides an opportunity to look at potential scarring effects. There were three years of more than 25 per cent un- or under-employment from 1992-94, and 20 per cent plus for 1991 and 1995.

The ABS Learning and Work survey* has a question on when the respondent graduated. On a question asking what impact their qualification had in their working life in their first six months, those completing between 1990 and 1994 had the highest rate of saying ‘no impact’, 26 per cent. The next worst result was 23 per cent for those completed between 2000 and 2004. Unfortunately, the labour force results are hard to interpret due to sample size issues. The ABS says the margins of error are too high on all the unemployment results for them to be reliable. The not in the labour force results are higher for 1990-94 graduates than either 1985-1989 or 1995-99 graduates. However this is almost certainly due to women absent from the workforce for family reasons (if I break the results into male and female I get the expected outcome, but with the ABS again warning that the margins of error are too high).

Another option is to use the census, which has problems with people not answering all the questions but still has many respondents. While the census has no question on exactly when degrees were completed, as most students start bachelor degrees in their late teens we should be able to see any obvious scarring effects. My theory here is that people aged 39 to 41 years at the time of the 2011 census were likely to have graduated into the early 1990s recession. If there is a scarring effect, they should have worse outcomes than people who are a little younger or older. The slide below shows the results for being in work, for male bachelor degree holders only, as the female not in labour force results are too ambiguous.

census unemployed

What surprised me about this is how employment drops for men in their forties. While there is a slight increase in unemployment for the target 39-41 years group compared to younger men this looks like a life cycle effect. The same phenomenon is evident in the 2006 census. So overall I would say there is no strong evidence of a scarring effect on overall employment levels of graduating into the early 1990s recession.

Update 9 January: After yesterday’s post seemed more interesting for the activities of men in their forties than for employment scarring, I wondered if the issue might at least partly be residualisation of the bachelor-degree group. In other words, the more successful men go on to postgraduate study leaving the men with bachelor degrees who have given up looking for work as a larger share of the remaining people who say a bachelor degree is their highest qualification. As men get older, they do become slightly more likely to give a postgraduate qualification as their highest qualification (slide below).

highest ed level

However, this is only a partial explanation. When I separate the analysis into education levels, men with postgraduate qualifications also start leaving the labour force in their 40s, although at a lower rate (slide below).

uni ed not in albour force

I’ve had a quick look at some of the other characteristics of men with bachelor degrees who are not in the labour force. The affluent retired hypothesis has some truth but far from explains it. About 10 per cent of this group report a personal income of $1,500 a week or more, compared to more than 60 per cent of all men at this age and education level.

About 40 per cent report doing childcare, although this does not mean that they are the principal carers for their children. About a third have no live-in partner, so they are not obviously relying on someone else to pay the household bills.

Around 10 per cent of male bachelor degree holders who are not in the workforce report a ‘need for assistance with core activities’ compared to 0.2 per cent for those working full time. The cumulative effects of accidents and ill health are starting to show in this demographic.

* The results reported here are not available for free on the ABS website.

Fewer new graduates will start repaying their HELP debt

In the mid-year Budget update, the government predicts that repayments of HELP debt will slow down. Unsurprisingly given recent posts on graduate employment, I think that’s right. Fewer graduates have any significant source of income.

What I have not written about so far is what graduates are paid if they have a full-time job. What the latest graduate employment outcomes data shows is that median starting salaries were essentially the same in 2014 as in 2013, at $52,500 a year (for graduates aged less than 25 in their first full-time job). That means that graduate salaries are going backwards in real terms. The HELP thresholds, however, keep being indexed according to average weekly earnings, which are still going up.

Unless there is a surprising surge in salaries paid to new graduates, this means that the median graduate who completed at the end of 2014 will not make a HELP repayment even if he or she has a full-time job. The slide below has the trends in starting salaries and initial HELP repayment thresholds.

starting salary and threshol

An implication of this is that, at least for younger graduates (older graduates are more likely to already have jobs, or employment histories that get them better-paying jobs*), is that few of them will begin HELP repayments in the months after graduation. Overall, only 42 per cent of the graduating cohort from 2013 have a full-time job, down from 56 per cent in 2007 and 2008. If the median starting salary slips below the initial HELP repayment threshold, fewer than half of that group will make a repayment. This suggests that around one in five new graduates will earn enough to start repaying their HELP debt.

Presumably these trends informed the 2014 Budget decision to lower the initial HELP repayment threshold to $50,638, which would require many more new graduates to start repaying, at the rate of 2 per cent of their income. But it is not clear why the Budget went for a once-off cut to the initial threshold, rather than changing the indexation system from average weekly earnings to the consumer price index. The government proposed this change for much more politically sensitive welfare payments.

Originally, the HECS thresholds were indexed to CPI, but were changed to AWE in 1994. Which it is has major implications for repayment levels. In our doubtful debt report, we showed that if the initial threshold had been indexed to the CPI rather than AWE it would have been $44,836 in 2013-14, rather than its actual figure of $51,309. Although we did not model the other thresholds, using CPI rather than AWE could significantly speed up repayments by bringing people into higher repayment categories earlier in their careers.

* In 2013, graduates aged above 25 or above with previous full-time employment experience had a median salary of $58,000.

What’s going on in the new graduate labour market?

Late last year the mainstream media picked up on the graduate un/under-employment story. At Grattan we have been doing a bit more work to see what is going on.

One of the things we wanted to look at whether the poor employment outcomes were driven by more graduates, as the 2009 and onwards enrolment boom students finish their courses, or a declining labour market, or both.

We have published completions data, but there is no published time series of the number of recent graduates with jobs. What we’ve done is taken the proportion of recent graduates with full-time jobs in the Graduate Destination Survey as a share of the completions number. To the extent that the GDS is an imperfect sample our numbers are likely to be a little wrong, but I doubt this will affect the trend.

As can be seen in the slide below, both supply and demand factors are affecting outcomes. The graduate labour market peaked in 2007, when nearly 61,000 new bachelor graduates found (or already had) full-time jobs. In 2013 and 2014, just over 52,000 new bachelor graduates had full time jobs about four months after completing their degrees.

recent grad employ and complete

There seem to be two shocks to the employment market. The first was the onset of the global financial crisis, with was felt most strongly for the 2008 completing students, with a decline of 7 per cent in the number of graduate jobs on the previous year. Perhaps surprisingly, there was a slightly bigger shock in 2013, with a 7.6 per cent decline on the number of jobs in 2012. One reason it was worse in 2013 is that big health fields which had been little affected by the 2009 downturn declined significantly. This is consistent with fewer health occupations appearing on the skills shortage list (p. 68).

While graduate employment opportunities have trended down, the number of domestic bachelor degree completions has trended up, by 17 per cent between 2008 and 2014. Given there are still some big student cohorts enrolled in our universities, the number of completions will only increase in the next few years. Unfortunately, we cannot have the same confidence about full-time jobs for recent graduates.

Few disciplines escape the graduate employment downturn

As reported yesterday, Australia has recorded its worst ever employment outcomes for recent bachelor-degree graduates. The employment pain is widely spread, with only four of the forty disciplines monitored by Graduate Careers Australia escaping an employment downturn between 2013 and 2014. They are social work, medicine, veterinary science and allied health.

The largest deterioration in employment outcomes was experienced by engineering graduates, showing yet again that this is a boom and bust field of education, with periods of very low unemployment quickly followed by periods of high unemployment.

engineering

There have been many media stories about the declining job market for law graduates, and this is supported by the GCA data. Law graduates managed reasonably well in the early 1990s recession, but now there is a clear negative trend. The upside is that their un-/under-employment is still lower than the average.

law

I have been saying for years that there is nothing in the graduate employment data that justified claims of too few science graduates, and this year’s numbers again support my argument. Un-/under-employment rates for life science graduates now exceeds 50 per cent, second worst only to perpetual employment wooden spoon winners, graduates in the visual and performing arts. The full list of graduate un-under-employment rates is beneath the fold.

————-
Read more »

Worst ever new graduate employment outcomes

The latest graduate employment statistics bring bad but not unexpected news: the proportion of graduates looking for full time work four months after completion has reached a record 32 per cent. This replaces the previous worst result of 29 per cent in the early 1990s recession – but without a major recession. For graduates aged under 25 years, 35 per cent were still looking for work four months after completion.

Grad unemploy
Source: Graduate Careers Australia, as above and here.

Of those looking for full-time work in early 2014, 20 per cent were working in a part-time or casual job, and 12 per cent were unemployed.

Oddly, there was little sign of this employment misery in the latest ABS Education and Work survey, which was released recently. Overall graduate unemployment remained a little over 3 per cent, the proportion of working graduates with jobs classified as professional or managerial increased, from 73 per cent to 76 per cent. I think these results should be treated sceptically. The survey is reporting increases in postgraduates that seem unlikely, being way in excess of the completions reported by the Department of Education (migration can affect the results, but not on the scale observed). The sample size means that the true result could be a fairly wide range for these sub-categories. I think they have erred on the high side.

The persistence of health and education students

I recently received some new data on completion and attrition rates by ATAR, a surprisingly under-examined topic in Australian higher education. My Mapping Australian higher education publication summarises research suggesting a weak relationship between ATAR and average marks. However, data on 2005 commencing students shows a quite strong relationship beween ATAR and completion – the higher the ATAR, the higher the chance of completion. The whole cohort data is in this article.

We also have the data by field of education. Most disciplines have the same general pattern. But two, health and education, have higher persistence at lower ATARs, as can be seen below.

health ed atar completion
Source: DIICCSRTE

The same two broad fields of study also have graduates with high rates of retention in jobs related to their field of study, as seen in the chart below.

Degree job relevance

I’m inclined to think that the main reason is that people who choose these degrees have a relatively high degree of commitment to the end occupation from day one. A colleague notes that this may in part be because students in these fields don’t necessarily have many attractive alternatives. For people with lowish ATARs who don’t want to do voc ed, teaching and nursing have been paths to relatively secure and reasonably paid careers.

How well do agriculture graduates do?

A reader of my article on science graduates surplus to labour market requirements took exception to a figure showing poor job relevance of agriculture degrees. He points out (correctly) that this ABS category is ‘Agriculture, Environmental and Related Studies’, and argues that the poor outcomes are due to the environmental rather than agricultural element.

Unfortunately, the survey I was using in the figure does not report at sub-field level. However, the census does and we can see that although environmental studies is the biggest sub-field (the numbers in brackets) the more traditional agricultural areas don’t do especially well in leading to professional or managerial employment, the occupations the ABS deems to require bachelor-degree level skills.

agriculture
Note: Only includes people reporting a bachelor degree as their highest qualification. Those not working and those currently studying have been excluded.

On a quick glance there looked to be unusually large numbers in jobs classified by the ABS as ‘technicians and tradespersons’. Adding them in takes most disciplines up to 70-76% employment.

The numbers for recent agriculture graduates may be compromised by the inclusion of environmental graduates (they use a different disciplinary classification to the ABS; I am not sure what is included in agriculture). But their employment rates are slightly below average.

I am aware that employers in the agricultural sector report recruiting difficulties. But overall these figures suggest that agriculture is a relatively high employment risk course choice.