A previous post on my new paper on tertiary student finances under COVID-19 showed that, despite two lockdown-caused crashes in employment, students generally did well out of the COVID-affected labour market. This post looks at the student income support system. It too did well in maintaining and increasing student living standards.
Bonus payments for student income support recipients
The base student income support payments are modest. When COVID arrived in Australia in early 2020 the fortnightly Youth Allowance rates were $304.60 a fortnight for 18 year olds living at home, and $462.50 if living away from home. But COVID-19 bonuses significantly increased the financial benefits of being on student income support.
Students receiving YA, Austudy or Abstudy on 12 March 2020 received a $750 economic stimulus payment. From 27 April to 24 September 2020 they received the $550 fortnightly Coronavirus Supplement. This supplement was then phased down, to $225 a fortnight from 25 September 2020 to 31 December 2020, and then $150 a fortnight from 1 January to 31 March 2021. A student continuously on student income support from March 2020 to March 2021 received more than $9,000 in COVID-related bonus payments.
From 1 April 2021 the base student income support rates were permanently increased by $50 a fortnight.
The number of students receiving income support increased
In the major 2020 and 2021 lockdowns tertiary student employment in the 24 years and under age group fell by over 100,000, or 20 per cent of the pre-lockdown total. Yet these losses proved to be temporary. As I discuss in a new paper, student employment rates and earnings recovered to record levels. While the strong Australian labour market is obviously a major factor, the sometimes significantly overlapping employment markets for students and temporary migrants made closed borders beneficial for students as workers.
Tertiary student employment rates
The strength of tertiary student employment is most obvious in employment rates, the percentage of the total student population with a job. Tertiary student employment levels and rates vary during the year, driven by movements in and out of both employment and enrolment. Comparisons of the same month in different years can help distinguish a trend from a normal seasonal change. December is not necessarily the peak month for total student employment, since course completions reduce student numbers. But student employment rates typically reach annual highs in December, as seasonal spikes in retail employment coincide with a summer holiday increase in student capacity to work.
As the chart below shows, employment rates fell sharply in April and May 2020 as lockdowns hit, but by August 2020 student employment rates were back at 2019 levels. In 2021 employment rates were consistently higher than in 2019, despite lockdowns in NSW, Victoria and the ACT causing a significant dip. In early 2022 student employment rates remain 10 percentage points or more above their 2019 levels.
Long overdue data on university staff in 2021 was released yesterday, giving us the most detailed information yet about job losses since COVID-19 hit the higher education sector.
The Department of Education’s staff statistics are mostly based on a 31 March census date. For staff with permanent or fixed term contracts I assume few job losses before 31 March 2020. The full travel ban on incoming international students was less than two weeks old, although some countries – including, importantly, China – had earlier travel restrictions. But retrenchments take time to process so I doubt the impact at 31 March exceeded some new hires abandoned at the last minute. These weren’t enough to prevent a 3.7 per cent headcount increase between 2019 and 2020.
In the next twelve months to 31 March 2021 total permanent or fixed term contract staff fell by 9,050, or 6.9 per cent of the 31 March 2020 total. This is only the third decline in staff numbers since 1989, and by far the largest. Difficult as 2020 was for everyone involved, total staff numbers at 31 March 2021 (121,364) were roughly what they had been on 31 March 2018 (121,718). The higher education sector is still a big employer by its own recent historical standards.
The full-time equivalent fall for permanent or fixed term contract staff was 7,985, or 6.8 per cent. This number, however, needs a caveat. For these staff the FTE is an extrapolation based on work arrangements as at 31 March. Normally this would understate actual FTE, as hours worked by additional staff hired after 31 March will not be counted until the following year. But in 2020 the 31 March estimate would have overstated FTE, by not taking into account net staff reductions during the rest of the year.
For casuals DESE reports actual FTE (ie not an extrapolation) with a lag, so that 2021 actuals will be reported in the next staff data release. Before then DESE publishes university estimates of casual FTEs. With no notice periods or retrenchment payouts required, universities could start reducing casual numbers before 31 March 2020. As the chart below shows, casual estimates were trending down at 31 March 2020 compared to 2019 – a contrast to the increase in permanent and fixed term staff.
The actuals show an even bigger decline, with losses of 4,258 FTE or 17.5 per cent in 2020 compared to 2019 .
In March 2020, as Australians realised that COVID was a major problem, I wrote a pessimistic post about student employment. For a while during 2020 that pessimism was justified. But not in 2021. Tertiary student employment is at an all-time high, driven by more jobs and less labour market competition.
For the ABS Participation, Job Search and Mobility survey the sample is full-time students who have completed Year 12 but have no post-school qualifications. For this group retrenchments were high in 2020. Of the people who were students in February 2021, and had been employed in February 2020, 6.5 per cent had been retrenched over the previous 12 months. This compares to retrenchment rates of about 2 per cent a year in the 2016-2020 period.
The ABS monthly and quarterly labour market reports do not include retrenchments by student status, but do provide a time series for 15-24 year old workers. About 24 per cent of those workers were full-time tertiary students in 2020. As the chart below shows, retrenchments for 15-24 year olds spiked in the May and August quarters. In the May 2020 quarter they were 31 per cent of all retrenchments. JobKeeper slowed overall job losses from the end of March, but this demographic is relatively high on people not meeting its personal eligibility criteria. Temporary migrants such as an international students were not included in JobKeeper and casuals needed to have been in their job for 12 months.
Employment to population ratio
The main analysis supported by the labour force statistics is full-time tertiary students aged 15-24 years. The chart below shows that just between March and April 2020 the proportion of tertiary students in employment fell significantly, down nearly 9 percentage points. Student employment levels were already coming off their summer peak, with employment rates declining from 65 per cent in December 2019 to 46 per cent in May 2020.
In 2019 I wrote a series of posts on declining participation in formal education and training by people already in employment. Falling enrolments ran counter to claims that technology-driven disruptions to work would make further education more necessary than in the past.
The 2019 blog posts identified nine sources of survey and administrative data that should be trending up if the workforce disruption analysis was right. All seven data sources on individuals were instead trending down, while two employer surveys respectively showed a small increase in informal training and a larger increase in online training.
Informal training is not or is poorly measured in the individual person surveys. If it is increasing while structured learning is decreasing then this may signal a change in how people educate themselves after their initial formal education.
Prompted by this week’s release of new data on one of my trend indicators – ATO self-education expense claims – this post updates my 2019 analysis. Most indicators show signs of recovery but on the latest available data three are still trending down.
Postgraduate coursework education returned to growth in 2019. Commencing on-campus numbers continued to decline but were offset by online commencements. People moving straight from undergraduate to postgraduate study complicate my analysis, as they are trying to start rather than advance their careers. On the publicly available data I cannot distinguish the two groups.
Postgraduate numbers for 2019 remain below their earlier peak, but I expect 2020 and especially 2021 to be growth years. This is partly because I see postgraduate education as counter-cyclical, with COVID labour market disruptions in 2020 encouraging further study. If this hypothesis is right data noise complicates analysis of longer-term trends, but convenient online postgraduate options are attracting students.
COVID-19 has been bad for jobs in higher education. Last October, the NTEU estimated that since March 2020 more than 12,000 jobs had been lost. According to Universities Australia in February 2021 at least 17,300 jobs were lost in 2020. But how many jobs were there to begin with?
This is a surprisingly difficult question to answer. The official DESE staff statistics give us a headcount as at 31 March each year of people employed on an on-going or fixed term contract at public universities and Bond, Notre Dame, University of Divinity and Avondale University College. At the end of March 2020 these institutions had just over 130,000 employees.
But as the chart below shows, the full-time equivalent count is always higher than the on-going or fixed term headcount, because it includes casuals. On a FTE basis, about 18 per cent of all staff are casuals, including nearly a quarter of academic staff. But DESE does not collect headcount data on casuals.
The annual cohort completions statistics published by the Department of Education show that low SES students complete courses as lower rates than medium or high SES students. On the most recent figures 67 per cent of low SES commencing students had completed a degree by nine years after commencement. The equivalent figures were 72 per cent for medium SES students and 78 per cent for high SES students.
Their analysis suggests, as seen in the chart below, that receipt of Youth Allowance or Austudy is associated with increases in completion at the six-year point for students in all but the most advantaged areas, with the largest effects for students living in areas with the greatest levels of economic disadvantage.*
The analysis of the results is quite brief, making it hard to fully understand the effects of student income support. If I understand them correctly, they have controlled for full- or part-time study status. However, I would see getting students to study full-time as a major benefit of student income support. In the Grattan Institute dropping out analysis, studying part-time is the single biggest completion risk, and this is supported by the Department’s analysis, which includes additional variables Grattan did not have.
As the policy name ‘Job-ready Graduates’ suggests, the main stated reason for changes to student contributions is to promote graduate employment outcomes. Or as the JRG discussion paper puts it ‘incentives in the current funding system could encourage sub-optimal choices for students and institutions, leading to poorer labour market outcomes and returns on investment in higher education.’ The assumption is that if arts becomes more expensive students will instead choose a course with lower student contributions and better employment prospects.
Employment outcomes can be measured in many ways, but every method shows that graduates in fields typically taught in Arts faculties are at an elevated risk of disappointing outcomes.
Whatever the reasons for 1970s educational trends, in the 1980s rates of school completion rapidly increased, as the chart below shows. According to Simon Marginson’s book Educating Australia, increasing the proportion of students completing Year 12 was a deliberate policy goal, supported by state governments and the Commonwealth.
With these older teenagers, in the 1980s compulsion was not a politically acceptable policy tool for increasing school retention. As recently as 2007 in Victoria and 2009 in NSW the school leaving age was still only fifteen. Incentives were needed. According to Marginson, the Commonwealth significantly extended income support for secondary school students, with recipient numbers increasing six-fold between 1982 and 1990.
Despite its title, Mandler’s book does not neatly belong to either educational merit genre; it neither bemoans the excessive influence of academic ability in allocating social and economic goods, nor laments the decline of academic standards in schools and universities. Instead, its core theme is how changing attitudes, aspirations and expectations drove up British educational participation and attainment after WW2. There are many interesting parallels with Australia.