Dubious ideas submitted to the higher education funding review, part 1

With submissions to the higher education base funding review due on Thursday, some organisations are starting to put their ideas out into the media. I thought I would start an occasional series on dubious proposals made to the review (though I suppose this is just a more specific version of what this blog has been about since it started).

Behind the AFR‘s paywall is a story about the Australian Technology Network’s submission. They are suggesting that graduates who work in areas of skills shortage get a discount on their HELP debt repayments.

But generally where there are skills shortages the market deals with financial incentives: the pay goes up. And why should taxpayers rather than employers fork out when staff get more expensive?

The only example given is a rather sexist one, that female engineers should be given an added incentive to stay in the profession. The Beyond Graduation survey, of graduates three years out, found that engineering graduates were already earning good money (median salary $75,000) and had the second highest rate of income growth since their first job (63%). If there is a problem with women in engineering, I doubt it is money. A female engineering graduate isn’t likely to earn more doing something else. Continue reading “Dubious ideas submitted to the higher education funding review, part 1”

No progress to graduate target

The latest issue of ABS Education and Work suggests that maybe we have headed slightly backwards on our way to the government’s target of 40% of 25-34 year olds having degrees. From 34.6% last year the ABS finds 34.2% this year. But the differences aren’t statistically significant.

On the other hand, there is one factor that might slow growth a little. In 2003, the government announced that it was going to penalise universities that ‘over-enrolled’ too much. This flowed through to slightly lower commencements in subsequent years, and a small drop in completions 2006-2008. Combine that with a slight increase in the size of the relevant age cohorts and it’s likely that we have some slightly less educated birth years now reaching the 25-34 age group (assuming they did not take advantage of renewed growth in places later).

Against this migration would be pushing the numbers up – due to migration criteria permanent migrants aged 25-34 are more educated than Australian-born people of the same age.

Education and Work also shows essentially no change in graduate over-qualification from 2009 – 27.4% last year, 27% this year. Graduate unemployment fell from 3.4% to 2.5%.

Over-qualification and migrants

An AMP-NATSEM report on migration released today included this figure on a long-term theme of mine, the employment outcomes of graduates:

In response to my claims that over-qualification is significant among graduates, Bob Birrell has said that the figures are distorted by the large number of over-qualified migrants. The numbers in this figure shows that this is a factor for migrants from non-English speaking countries. Continue reading “Over-qualification and migrants”

Skills matching for recent graduates

Andrew Carr asks if I can compare the skills mismatch of international and local students. To re-cap, a study of former overseas student migrants in 2006 found that:

18 months after their arrival found the skills match for former overseas students at the following levels: accounting 35%, business/commerce 5%, education 31%, engineering 23%, IT 35%, law 50%, nursing 90%.

I can’t get a direct matching comparison but there are surveys relating to this issue.

The Graduate Destinations Survey (summary results are free), which surveys graduates about four months after completion, now has a question which asks about the link between the graduate’s qualification and their main paid job (it’s only asked of those in full-time work, so I will put in brackets the percentage still looking for full-time work). The answers combine those who answered either a ‘formal requirement’ or ‘important’: Continue reading “Skills matching for recent graduates”

Should the government change migration laws to suit universities?

Australia’s universities are in a bit of a panic. With international student applications down, and much bigger drops in the ‘feeder’ colleges, the next few years are looking particularly grim.

While issues such as the high dollar, student safety and more intense competition for even-more broke universities in the UK and US are affecting the international student market, changes to skilled migration rules are also causing grief.

Most university courses that were being used as backdoor routes to permanent migration are still on the skilled occupations list used by the immigration department (the vocational education sector has not been so lucky), but the number of visas available in this category has dropped significantly. The emphasis has shifted to employer-sponsored migrants. So international students now need to find an employer to support them, creating much more uncertainty.

Yesterday the Group of Eight lobby group joined other university groups in calling on the government to ‘fix’ the problems. Continue reading “Should the government change migration laws to suit universities?”

Australia’s still surprisingly secure workers

The ABS released their labour mobility survey yesterday, and as I predicted two years ago Labor’s legislated job security provisions, which took effect about five months into the survey, did not stop retrenchments going up.

3.7% of workers who were employed in the year to February 2010 were retrenched, compared to 1.8% under WorkChoices in the year to February 2008. Retrenchment levels have more to do with business conditions than legislation.

While the 2010 result confirms that as a general point, the longer term trends on this in the figure below are quite intriguing. As measured by people being retrenched, the common belief that job security is declining over time is not correct. 2010 was the first negative trend in nearly 20 years. Maybe the long boom has saved more employers from the difficult decision to let people go. Or maybe there are other things going on that make dismissal a less common form of labour market adjustment.

Graduates three years on

Graduate Careers Australia has released Beyond Graduation 2009, a follow-up survey three years on of graduates they first surveyed in 2006.

A few points of interest on topics of particular interest to me:

* The proportion of their sample who were overseas had doubled from 3.2% to 6.8%, which means that they will not be repaying their HELP debt. People with qualifications in ‘architecture and building’ are most likely to be overseas (12%).

* The graduates in non-graduate jobs generally don’t want to be there, though this is is more true of ‘sales workers’ than ‘clerical and administrative workers’. The second most frequent reason (‘to earn a living’ had a majority response for all occupations) for taking a clerical job was ‘to develop general skills’, but only 7% of sales worker respondents gave that reason. By contrast, 47% of sales workers say they took their job because it was the only one they were offered, compared to 23% of clerical workers. Continue reading “Graduates three years on”

The financial benefits of higher education

The ABS has an interesting new publication out today on the financial benefits of higher education.

ABS anlayst Hui Wei uses data from the 1981, 1986, 1991, 1996, 2001 and 2006 censuses to provide estimates of rates of return for investment in higher education. In the figure below, the rates are based on post-tax earnings of graduates compared to someone who finished their education at year 12 (say a Year 12 completer earned $800 a week and a graduate $1,200 a week – the graduate premium would be $400). The graduates are aged through the census of the stated year (eg it assumes that a 1996 graduate would at age 40 earn what a 40 year old graduate earned in 1996).

The costs are assumed to be the opportunity cost of four years out of the workforce with no earnings in that time, plus direct costs such as HECS.

Continue reading “The financial benefits of higher education”

Is there a higher education ‘market failure’ in engineering?

An article in yesterday’s AFR education supplement (not online, sorry) reported mining industry representatives criticising Labor’s proposed demand-driven higher education system.

Chris Walton of APESMA said

Engineering is the pin-up to demonstrate that a demand-driven system will be a disaster for this country. … It’s the classic example of market failure and the consequences of that market failure for this country are very concerning.

In reality ‘market failure’ – or at least, other than a failure of markets to exist – is not likely to be a major issue here. In a paper I wrote for NCVER a couple of years ago I showed that university applications do respond to labour market shortages. Objective evidence of shortages of engineers emerged over 2003-04, and with a lag of a year demand for engineering courses grew from 2006 (from applications that would mostly have been made in 2005).

Figure: Engineering applications and offers

Source: DEEWR. Continue reading “Is there a higher education ‘market failure’ in engineering?”