In the Graduate Pathways Survey report, authors Hamish Coates and Daniel Edwards say:
…some commentators on graduate supply and workforce projections argue that the solutions to filling the skills gaps are not in boosting the training effort in Australia, but instead making sure all those who have university qualifications are utilising their skills sufficiently. Research by Norton (2007) indicates that a large number of graduates in Australia are not currently employed in ‘graduate occupations’. Norton argues that if these people’s skills were utilised, there would be no shortfall in highly skilled workers in most occupations in Australia. While this argument relating to the ‘over-qualification’ of the Australian population is not well supported generally, it is an issue of relevance that is addressed in this research project. (emphasis added)
If by ‘not well supported’ they mean that not many other people argue this they are right, but this is mainly because there is little overlap between the labour market literature and the higher education policy literature. Unfortunately, I pretty much have the issue of how we allocate university places between disciplines to myself. The only two other positions in the debate are what happens politically – ad hoc allocations of new places if employers scream loudly enough – and the position adopted by Bob Birrell and the Bradley report, which is to flood the labour market with graduates and hope that the sheer numbers make skills shortages unlikely.
To be fair to this position, it has avoided skills shortages for most graduate-level occupations. Only in the health professions do we observe large-scale and persistent failure of workforce supply, though there are occasional and mostly cyclical shortages in other fields. But the implicit assumption is that the costs of skills mismatch should be paid by taxpayers and workers, who invest more money and time in education than is necessary from a labour force perspective (yes, I know that education is not just about jobs, but we are talking about jobs here), rather than by employers in suffering from boomtime labour shortages and/or having to pay higher salaries.
However, so far as I am aware there is no Western country labour market research which does not find that significant numbers of graduates are ‘over-qualified’ for their jobs (some of the literature is cited in this Melbourne Institute paper). From that point of view, my argument is very well-supported. The Graduate Pathways Survey itself is no exception to this. It finds that five years after completion more than a third of graduates are in occupations that do not typically require university-level qualifications.
Over-education undoubtedly exists, but there are real debates about why and to the extent to which anything can sensibly be done about it.
The Graduate Pathways Survey reports a number of findings relevant to the ‘why’ question. Positive factors for education and occupation matching include: having a degree in education, having higher grades, having a parent in a professional occupation, attending primary school in a metropolitan area, and having worked while studying. Having a degree in management or commerce was a significant negative. More analysis of these findings would be useful.
My position on this is, I think, a cautious and sensible one that is more in line with the overall labour market literature than Bob Birrell’s. It involves the following propositions:
1. Over-education/qualification/skilling is a normal aspect of the labour market, observed in all Western countries, and inevitable to some extent due to the dynamic nature of the labour market, the inherent complexities in skill forecasting, search problems in finding appropriate employer-employee matches, and the fact that employers value many other attributes other than qualifications and skills. If someone is unreliable, a poor communicator, or has a difficult personality they will experience labour market difficulties, regardless of their education or skill levels. Some individuals will also choose to work in lower-skill occupations. However, in the absence of any widespread shortages of graduates in the labour force there is no need for governments to encourage people to attend university.
2. The labour market shortages we observe – mainly in health professions – are due to government constraining supply of places in these fields, not to a shortage of graduates overall. A market system would have produced better results (we know that demand was there from applications data, and we know that supply capacity was at least to some extent there, because overseas students were offered places).
3. If we are to deal with shortages, direct policy measures aimed at specific in-demand occupations are cheaper and more reliable than across-the-board increases in student numbers. This is true whether you prefer central control or market mechanisms to allocate places.
What we need is more research to see if we can identify systematic factors behind poor labour market outcomes, and if these can be found to include them in the advice provided to prospective students. Perhaps this could be the next report to come out of the Graduate Pathways Survey?