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.
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.
In a surprise move, Labor has agreed to back abolition of the 10% discount for paying student contributions upfront and the 5% ‘bonus’ for voluntary repayments of HELP debt.
For reasons we don’t fully understand, the proportion of people paying upfront has been in decline for a long time, as the chart below shows. Halving the discount in 2012 accelerated a long-term trend but was not a major turning point. The government will hope that the latest change will not dramatically affect the numbers, as borrowing has costs and risks for them.
Previous research has suggested that many of the upfront payments are from parents wanting their kids to be debt free, so perhaps the final abolition won’t make much of a further difference. Indeed, discount abolition may already be partly evident in the data, as anecdotal evidence suggests many people believe it has already been abolished, following on from the original publicity in 2013 when Labor first proposed it (to pay for Gonski; they later reversed their support saying the Coalition was not meeting Gonski commitments, before going back to their original position today).
Source: Department of Education Student liability statistics, various years
Any further decline may be due in part due to expanded eligibility for HELP loans. Currently New Zealanders and permanent residents are entitled to a subsidised place have to pay student contributions upfront, but soon some long-term NZ residents will be able to take out HELP loans.
Abolition of the 5% bonus for voluntary repayments is a sensible move. Previous ATO data suggested that it was mostly used by people towards the end of their repayments anyway, when the government would be better off just waiting a little longer and getting the full face value of the loan.
Removing the bonus will also weaken an incentive to borrow under FEE-HELP. Some students can borrow unnecessarily and then repay ‘early’ (ie pay the full amount much later than they could have) and use the bonus to pay less than the face value of the loan. I did this a few years ago to draw attention to this rort. I’m glad it is finally going to be abolished.
Hopefully this signals that Labor is taking HELP’s costs seriously. There is plenty more to do.