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Australian Work Force 'Over Educated'

March 15, 2013

Politicians and university chiefs in Australia are keen to sell the benefits of ever more degrees, but the labor market isn't buying it, according to a study that shows large numbers of overeducated workers.

Economists Ian Li and Paul Miller found that almost 50 percent of surveyed graduates were doing jobs that did not demand their qualification.

"There's a huge number of graduates who are going into jobs that don't require a high level of education," said Li, from the University of Western Australia.

The paper notes the uncapping of university places, as well as the spread of university degrees from only 3 percent of adults in 1971 to 24 percent in 2006.

"The labour market demand for skilled workers is not keeping up with the rapid expansion in higher education," the authors write in their paper for the Australian Economic Review. Although the survey tracked graduates just four months after completion, an early mismatch of qualifications and employment tended to persist, Li said.

Graduates from the Innovative Research Universities group were more likely to be overeducated than those from the Group of Eight or the Australian Technology Network institutions.

However, the Li-Miller study found little difference between groups in the depressed earnings (about 11 per cent) associated with overeducation.

"This finding might come as a surprise, particularly given the dominance of the Group of Eight universities in quality rankings and the reliance of 'graduate outcomes' in the formulation of some of those rankings," the paper said.

Across institutions, overeducation was more likely in four broad fields: natural and physical sciences, agriculture and environment, society and culture, and creative arts.

Graduates in nursing, medicine and education were less likely to suffer overeducation. If government policy aims for a better match between student numbers and labor market demand, teaching subsidies should target fields with low levels of overeducation, the paper says.

A separate study by the Department of Immigration shows poor labor market outcomes in the onshore skilled migrant category recently dominated by overseas students with Australian university degrees.

They were "far less likely than other skilled migrants to secure full-time employment in a skilled job," the department said.

It said the "payoff from higher education was inconsistent" with Ph.D. and bachelor-qualified skilled migrants enjoying a salary premium. But on average those with master's degrees -- a favored route to a permanent residency visa under the old rules -- "earned no more than those skilled migrants without post-school qualifications."

Universities Australia's chief executive Belinda Robinson said this might have something to do with the nature of the first degree.

"[And] master's students have less time while studying in Australia to familiarize themselves with the labor market compared with those studying bachelors degrees or doctorates," she said.

 

 

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