The rise of a factoid

Early this month, Labor MP Craig Emerson released some ABS data collated by the Parliamentary Library, using it to argue that

two-thirds of the jobs created under the Howard government have needed a university degree as a prerequisite.

Blogger Tim Dunlop was quick to describe it as a ‘telling statistic’. Victorian Skills Minister Jacinta Allan thinks it is telling too, using it in her complaints that Victoria gets too few university places to match demand for graduates in the labour market, a line repeated in today’s front-page lead story in The Age and on page three of the AFR. (Update: And it replicates itself again in Tuesday’s Age editorial.)

But how good is this number? The Parliamentary Library used these assumptions in arriving at their figure:

Level of qualification has been derived on the basis of the occupations in which people are employed. Hence, persons with degree qualifications or higher are assumed to be either ‘managers and administrators’, ‘professionals’ or ‘associate professionals’; persons with other tertiary qualifications are assumed to be either ‘tradespersons and related workers’ or ‘advanced clerical and service workers’; and persons with school level qualifications are assumed to be persons employed in any of the other occupations.

But when we look at the definitions of these ‘degree qualification’ occupations in the ABS classification of occupations this assumption does not look so sound. For ‘managers and administrators’ the ABS states that most occupations in this group

have a level of skill commensurate with a bachelor degree or higher qualification or at least five years relevant experience (my emphasis)

For professionals, too, the emphasis is on skills commensurate with holding a bachelor degree or above. But for ‘associate professionals’ the assumption is weakest:

have a level of skill commensurate with an AQF [Australian Qualifications Framework, usually taught in the vocational education sector] Diploma or higher qualification or at least 3 years relevant experience.

Indeed, this ‘associate professional’ category isn’t very satisfactory and the new system of occupational classifications developed with the NZ statistics people is discontinuing it, with those previously in it being dispersed to other categories including ‘Technicians and trade workers’, ‘Clerical and administrative workers’ and ‘Community and personal service workers’.

The weakness of the assumption can be seen if we examine the actual qualifications of people in these occupations, which we can do through the annual supplement to the ABS labour market survey reported in Education and Work.

In 2006, nearly 80% of workers classified as ‘associate professional’ did not have a university degree. Among managers, over 60% did not have a degree. Only the professions were principally the preserve of degree-holders, with 70% having a university qualification. Even the overall trend is quite modest. 42% of all workers in these occupations were degree-holders in 1996, and 49% in 2006. So many of the jobs for which we supposedly need degree-holders are in fact filled by people who don’t have one, and probably most of the ‘associate professionals’ and some of the other groups would not necessarily benefit greatly from having one.

I don’t expect my pedantry will do much good in the face of a politically-convenient factoid. You will hear this statistic again and again – but do some mental discounting when it happens. On my calculations, just under half of jobs created in that decade were for degree-holders. As I argued last month working out how many graduates we need is a very complex task, but on my analysis our main problem is the wrong mix of graduates, rather than too few overall.

12 thoughts on “The rise of a factoid

  1. You are quite correct, Andrew, when you describe such blogging as pedantry. Anyone with an ounce of rationality knows full well that statistics based on assumptions, which you clearly, and somewhat foolishly highlight this Parliamentary Library and ABS research to be based upon, aren’t worth a tinker’s cuss. Bannerman knows hundreds of finance industry bods with degrees in economics and/or commerce. None are managerial or even remotely approaching same.

    Emerson’s tack, like your own, is simplistic political opportunism.


  2. Russell -I don’t recall seeing a breakdown by age, but I think it is reasonable to assume that given there are more credential barriers to young workers than there were to older workers when they entered the workforce that the balance will shift over time, though as the associate professional category is being abolished it will largely be seen in the ‘professional’ and ‘managerial’ numbers. In the associate professional category the proportion of graduates actually shrank between 1996 and 2006, because some small-scale managers were moved in and registered nurses moved out.


  3. Statistics aside, people who are in the workforce know that a degree isn’t everything, and in some instances is actually a hindrance.

    Just because a job is marked as requiring a degree doesn’t mean that it’s actually needed, or wanted.


  4. I think you’ll find a lack of a degree can be a barrier for many young people entering the workforce, in that credentials are used as a way of screening candidates in the job application process. When there are quite a few applications, it is common that the person with the degree will be more competitive due to the significations of the qualifications, which can only be trumped with substanital experience (something most young people trying to get a foot in the door usually don’t possess). Whether a degree is required or not can be immaterial if there is competition for jobs employers are going to establish some criteria that they think is going to get them the best candidate.


  5. It depends on the situation Stephen. Yes, if you are going for a more senior position, or one which requires a work history or actually requires a degree, then sure.

    Considering workplace expectations: If you expect, as a young person, to just walk into a high paying job, then yes, you’d better have a degree as a starting point.

    However, expecting to just walk into a medium to high paying job as a young’n isn’t really very realistic. Plenty of people (myself included) started at the bottom and worked their way up, which is a perfectly valid strategy, and perfectly achieveable.

    And young people have a distinct advantage in the IT industry, where the increased computer literacy of that age group is a really positive trait. And if you can’t make a squillion dollars in IT, with or without a degree, then theres something wrong…


  6. Given the average level of numeracy/literacy of the first year university students I see, I couldn’t blame employers for using a degree as a screening process — and actually, I can only see the problem of credentialism getting worse as the value of a 3 year degree declines, and I see this as pretty likely.

    I’m not sure what other people’s experience is, but if an employer was to ask me what level of qualification people need so they could be assured of getting someone literature and numerate enough from a liberal arts course, then my answer would be someone with an honors degree — we graduate heaps of 3rd years who still can’t even write a small document properly — and so the simple solution for employers trying to avoid these guys is to get people with 4 year degrees.


  7. This is a strange argument for the ALP to be running. I recall yesteryear they were arguing that the Howard government was generating (as if a government generates jobs) low-skilled part-time positions, now we hear the government is generating high-skilled positions.

    The Victorian state government is a bit silly on the uni entry numbers – there is nothing stopping them from investing any of the GST windfall money in HE places.


  8. Leaving pedantry aside, like Sinclair I’m puzzled by the point of all this. Surely if most of the jobs we fill are skilled this is a Good Thing – it shows the labour force is becoming more skilled. Conversely, if most growth had been in unskilled jobs then people would be complaining about the concomitant low GDP growth, stagnant wage growth and a “low wage equilibrium”.

    Don’t forget employment growth requires growth in labour supply as well as demand. If most new jobs that are filled are for skilled people, this indicates there are more skilled people.


  9. Beware of the classification “manager”, there are many people in jobs like “credit manager” or “complaints manager” which are simply clerical.


  10. This is all just crazy isn’t it? The last bastian of central planning – and in such a crucial sector. Instead of the stupid baby bonus, the government could just hand over a $20k cheque to every 18 year old in the country, to be used for study, training, travel, starting a business, buying a house or whatever, and let the market sort out the right number and type of graduates, apprentices, artists, etc.


  11. a piece of paper doesn’t mean you can do the job. It merely means you – supposedly – understand the theory. Between theory & practice lies a yawning chasm called experience.


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