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.
The ABS classifies professional occupations as typically requiring a bachelor degree or above or at least five years relevant experience. Yet one-third of graduates in professional jobs and a quarter of their supervisors don’t think that the graduate’s degree is important (although perhaps in some cases a previous degree is important).
By contrast for technicians and trade workers, community and personal service workers, and clerical and administrative workers, which the ABS generally classifies as requiring a vocational diploma or Certificate III/IV qualification, over a third of graduates and more supervisors regard the degree as important.
A further reason for caution in analysing over-qualification is that early career surveys are likely to over-state the long-term problem. As the chart below shows, graduates give more negative answers four months after completing and than they do three years after completing.
It is unrealistic to think that there ever won’t be a substantial minority of graduates whose jobs are mismatched with their education, however we measure it. Even if all students were aiming for a job (and not all are) it’s impossible to predict with any precision where the labour market will be when they graduate, let alone over their 40-plus year careers.
From the perspective of employers and the economy more broadly, an overshoot in graduate numbers is better than a undershoot in which vacancies can’t be filled. For students too, getting a degree may at the time of commencement maximise their opportunities and minimise their risks; just because their employment does not turn out as hoped doesn’t mean that there were clearly better alternatives at the time.
The end of the demand driven system will have complex effects on graduate mismatch. It will reduce the capacity of universities to respond to changes in the labour market, and so make it more likely that skills shortages in graduate occupations will re-emerge. Performance funding linked to graduate outcomes might increase the incentive for universities to help graduates find jobs, but knowing that their competitors can’t profitably expand makes it easier for universities to ignore student interests. But over the long run, significantly fewer graduates would also mean, at least in absolute terms, fewer graduates in jobs that don’t match their education.