Too few good jobs for graduates

Three lots of graduate employment data were released this week. For recent graduates, the good news in that unemployment has dropped to 5.5%, though another 12% are in part-time or casual jobs and looking for full-time work. But for graduates overall, the ABS finds that unemployment is only 2.4%. Today’s ABS job search data shows that half of unemployed graduates have been out of work for 8 weeks or less. Just 0.4% of graduates in the labour market have been unemployed for 6 months or more.

But does this mean that Bob Birrell is right that we have too few graduates? The latest ABS graduate employment data again shows that he is wrong. Many graduates are employed in jobs that do not require degrees, such as clerical or sales jobs. Counting them and unemployed graduates together, and we have a ‘reserve’ graduate workforce of more than 460,000 people. That’s equivalent to nearly three years of university completions.

Picking the ‘right’ number of graduates is, however, very difficult. The annual counts of graduates and their occupations in the ABS Education and Work survey conceals large flows of people in and out of the occupations in which degrees are often required – professional, associate professional and managerial. The ABS Labour Mobility survey helps us track this. Between February 2005 and February 2006, nearly 400,000 people entered these occupations, 222,000 who were not working the previous February, and 171,000 who were previously in other occupations. Both these categories could include graduating students, though clearly not all of them were students. There is no 2005 completions data yet, but in 2004 106,650 Australians completed an undergraduate degree.

On the other side, nearly 300,000 people departed these occupations: 97,000 to non-degree jobs, 53,000 to unemployment, and 147,000 to ‘not in labour force’. So a net expansion of jobs in these categories of just under 100,000 for the year conceals the best part of 700,000 people moving in or out.

Another complication is migration (pdf). For 2004-05, 47,000 Australian residents in these occupational groups who had been living overseas for a year or more returned to Australia. Also, 40,000 people in these categories migrated to Australia. Going the other direction, 74,000 people in these occupations left Australia for a year or more. The net effect was to add about 13,000 people to the ‘graduate’ workforce, but more than 160,000 people changed their place of residence. Also, 13,000 overseas students already in Australia were granted permanent residence.

As can be seen from these figures, calculating the ‘correct’ number of graduates each year would be no easy task. Even if we could produce reasonable estimates of employer demands, graduating students are just one part of a dynamic situation. Birrell is correct that some migration is due to too few local graduates, but this is in specific occupations, reflecting a misallocation of students between disciplines rather than too few students overall. But, overall, the graduate labour supply is still stronger than demand for jobs to which graduates usually aspire. In the data I have collected from 1992 to 2006, there have only been two years in which the pool of graduates who are either unemployed or in non-degree requiring occupation has shrunk. In all other years, we have added to the pool of under-utilised graduates. Having a degree is still good insurance against being unemployed, but it is no guarantee of a job that needs the skills supposedly acquired through higher education.

14 Responses to “Too few good jobs for graduates

  • 1
    Rafe
    December 15th, 2006 16:33

    I suspect for the Bob Birrells of the world there will never be enough graduates until we have (say) 100% retention to year 12 and 60% of year 12 completing a university degree.

    I am in favour of a liberal education, but what does that really mean? Do you have to attent a university? For instance people with a serious interest in history can read books and attend WEA classes.

    What sort of jobs are suitable for people who have scraped through the average course in sociology or media/cultural studies?

  • 2
    Bannerman
    December 15th, 2006 16:55

    Poor possums……all those years at Uni and the world won’t beat a path to their doors. Such a shame.

  • 3
    conrad
    December 15th, 2006 19:58

    I think you are being unfair to BB in this post — simply because there is an excess of graduates in some areas doesn’t mean that there is an overall excess, as some of your post suggests. I think a more lenient appraisal is that the places there are are not neccesarily well targeted.

    In addition, I’m not convinced that even those that have degrees but work in jobs that don’t are neccesarily wasting their degrees — it may well be that the high school system is not delivering people with the type of skills (such as literacy) that is adequate for today’s jobs. Thus, simply because a 40 year without a degree can do a job doesn’t mean that an 18 year straight from school can, and getting the type of experience a 40 year old has for an 18 year old may these days require a completely different path (and perhaps the generic skills of an average 18 year old may also be less than the average 18 year old 20 years ago). Thus, a better comparison might be the unemployment rate with non-graduates, in which case you have a measure of how much those that went through high school without learning even basic skills have been helped by university, even if they don’t happen to work in a relevant job.

  • 4
    Rafe
    December 15th, 2006 21:19

    What if we had 100% literacy when kids proceed from primary to high school!!?

    Then the high schools could get serious about learning and take the burden of remedial eduction off the universities. Just a thought.

  • 5
    Andrew Norton
    December 15th, 2006 21:31

    Conrad – It could also be argued that I am being too kind to Birrell (whose work I generally like, incidentally – and even in this case he is asking an interesting question, regardless of whether his answer is right). Some of the literature on overeducation argues that it encourages credentialism among employers in jobs that don’t strictly need degrees, displacing competent but under-credentialed people, who will tend to come from further down the SES pile. So it is a block on social mobility – something Birrell is particularly concerned about in his other work.

    Also, while I have only used labour market data in this post, surveys of workers that ask them if they are using their qualifications get very similar results, with about 20% saying ‘no’.

    Even if it is the case that school leavers are less well prepared for jobs than in the past, the policy solution is not spending at least 3 years at university. It is short courses targeted at their particular problem or problems, a far quicker and cheaper fix.

  • 6
    Boris
    December 16th, 2006 00:13

    Conrad has raised this point before, and I think it’s a fair point that some people use university to remedy their poor school education. For many jobs university degree is not a requirement, but literacy is, and for some studnets the only way to get it is through university degree.

    However I wonder if this is the right remedy. It is a pretty expesive one, surely. Maybe we need to address this at source, ie. at school level.

  • 7
    Boris
    December 16th, 2006 00:13

    Sorry just saw Andrew saying just that (in part).

  • 8
    conrad
    December 16th, 2006 06:31

    I’m not a demographer, but I always find Birrell (and for that matter Hugo’s work) interesting also. I think Australia is lucky to have them. On this matter, I’m open to the argument that employers will simply chose the person with the highest level qualification they get, even if they don’t need it for the job. Alternatively, I wouldn’t believe people that say they are not using their qualifications without further evidence (like actual measurements). I’m sure a lot of people wouldn’t realize all of what they have learnt at university, including things not directly related to their job.

    On this matter, I’m also not sure to what extent short courses would help some of the people who go to university. There are certainly people who need to do a 3 year course to learn basic skills like writing — its hard to imagine being able to remedy this with short course (and I presume the same is true for numeracy) since its hard enough to solve the problem in 3 years. I guess to some extent it depends on how literature/numerate you want the average person to be, and how efficient university versus short courses are in getting people there. You might argue that university is an inefficient way of doing this (which is probably true), but if you want to lift the overall level of a population on some of these measures, its hard to imagine other ways to get them to learn these things — Australia is not exactly a cultural paradise for people willing to learn things themselves.

  • 9
    Yobbo
    December 16th, 2006 10:17

    I argued this exact same thing on Andrew Leigh’s blog and was shouted down.

  • 10
    Andrew Norton
    December 16th, 2006 10:50

    Conrad – A university degree provides no guarantee of literacy. Many disciplines involve little writing, and those that do like Arts can encourage bad habits. Read the essays of English students and weep at what they have done to kids who enrolled in the course because they love words.

  • 11
    Rajat Sood
    December 18th, 2006 12:31

    Regarding the credibility of conrad’s argument, a key question is how many people with poor literacy realise their problem and consider going to university to be the solution. No employer will tell an illiterate job applicant that he needs to ‘go to university’ to speak or write better. It’s more likely that the employer will obfuscate or say that the applicant’s spelling/grammar/pronouciation needs to improve. That’s not to say that young peoples’ literacy won’t improve by going to uni, just that it doesn’t seem like a credible motivation for people actually deciding to go. I think it’s more likely that people decide to go to university to develop more specific skills and then many don’t end up learning/using/remembering/needing them.

  • 12
    Korgmeister
    December 24th, 2006 00:21

    Hmm, I can certainly relate to what is being talked about in this post. Despite graduating from a double degree in Business and Japanese, I spent more than a year unemployed because I found there was no clear career path from getting a degree in human resources and actually entering the workforce in that area. (Admittedly, it does not help that I’m terrible at job interviews.)

    Eventually, I figured out that HR is not a young man’s game so I’ve gone back to TAFE to pick up some more immediately useful skills. I went and did a basic business administration course so I could give temp companies the confidence that they could place me in admin roles and I’d know what I was actually doing.

    Although there’s still a huge amount of competition for admin, since the skills are common. So I’m doing some more TAFE to pick up some skills that in more short supply, namely electronics repair. (Household gear gets junked when it stops working, but industry grade stuff is still worth repairing.)

    Ironically, if I’d wanted to just maximise my chances of getting a job, any job then I would have gone and done postgraduate study. Most of my professors had me earmarked as a potential career academic and I had no shortage of offers to mentor me on such a path. However, a life of intra-faculty bitching and pretending to be extremely left-wing didn’t sound appealing. So I decided to try my luck in the private sector nonetheless.

  • 13
    John
    October 8th, 2008 13:12

    Guys, you do not know what life is all about!
    It is not a univ. degree or good writting and reading!
    Some time you gonna do what you have todo so that you may have the end meal…
    I am speaking by experience, how can I tell you that i have a BA in MA in social sciences,. I spended 7 month without a job, when i moved to the states… and i have to find a sales low paying jobs with a gaz station….
    To be honest with you I did not tell the manager that I hade Masters because he could not hire me…. later I spoke to my manager and she gave me the infos i need and i was promoted to general manager…;Isn’t a blessing to be humble?!
    But you know what God has blessed me with a low pay I had with a very good team of fellows and beautful customers!!
    Every 3 months I performed my job and got a salary increase and i also i learned to respect everyone rerdless education level or social background… for the rest you all need to put down all yourt arrogance and see every work as an opportunity and improve what you are already doing.

  • 14
    John
    October 8th, 2008 13:15

    basically, I am a french origin, and I could not even speak or writte English in the last 5 years..I had to learn everything…Mostlly from fellow collegues and customers… later i had to go to local commun. college for ESL?!!