Do you need a university degree in the first place?
The unfortunate reality is that young people with a career goal do not always know with certainty how to achieve it.
A survey commissioned for the 2018-19 Joyce review of vocational education asked 17 to 22-year-olds about their 10-year job aspirations and compared them to the highest level of education they had already completed, were currently doing, or planned to take in the next three years. (Joyce Review, 2019)
The survey results suggested many students’ career aspirations were not aligned with their educational plan, as shown in the table below.
This could leave young people over-qualified (for example, the 45% intending to complete a bachelor level degree, when they need a certificate) or under-qualified (for example, the 33% intending to pursue a Vocational, Education and Training (VET) pathway when they needed a bachelor’s degree).
Lower-income growth
The extra time spent in education may be a factor driving relatively lower income growth for young people and wealth accumulation.
This misalignment is more pronounced for those interested in Vocational Education and Training (VET) careers as opposed to higher education. This suggests that students are not, in practice, able to access the information they need to make good decisions.
The impact of this can be considerable, resulting in unnecessary investment in education by individuals, poor use of taxpayer dollars in course subsidies, and weaker matching of skills with job market demand.
More learning is expected but not required
Over 90% of new jobs over the next five years will need education beyond school and some jobs will need more training than they used to.
Many professional and service roles demand university or Vocational Education and Training (VET) qualifications.
Therefore, it is not surprising that there is a 10% projected increase for job seekers with a “bachelor’s degree or higher qualification”.
Under-utilisation of graduate skills
In Australia, the proportion of graduates reporting that they are not utilising their skills or education in their current job is an important indicator of the under-utilisation of graduate skills.
Immediately following graduation, 41.9% of employed undergraduates reported that their skills and qualifications were not fully utilised. This declined to 27.1% three years after graduation in 2019, as shown in the diagram below. This is a slight improvement in medium-term outcomes from 27.2% in 2018, 28.6% in 2017, and 28.1% in 2016. (Graduates Outcomes Survey – Longitudinal, 2019)
Of those who were employed full-time, 22.4% felt that they were not fully using their skills or education in their current positions three years after graduation in 2019, down slightly from 22.6% in 2018, 23.6% in 2017 and 23.2% in 2016.
Reasons for not fully utilising their skills and education – 19.1% said this was because there were no suitable jobs in their area of expertise. A further 13.6% found no suitable jobs in their local area.
What’s interesting is that 16.6% were engaged in further full-time study. Not sure whether they do so voluntarily or involuntarily due to lack of job opportunities.
University degrees do not guarantee better salaries
People who spend three or more years completing a university degree may not expect to earn significantly more in the early years after graduation than people who spent the same time gaining work experience. (Grattan, 2019)
However, a university degree may still be the best way to earn more money in Australia in the long-run – but the impact is still greater for men than women. (Business Insider, 2018)
Looking at a whole working life, the small gap between people with vocational education training (VET) qualifications and people with year 12 qualifications does not change over a career. (The Australian Financial Review, 2018)
It really depends on the course and industry
In Australia, those who scored lower Australian Tertiary Admission Rank (ATAR) at school and undertaking vocational qualifications in engineering, construction and commerce can obtain higher average earnings than those with degree qualifications. (Grattan Institute, 2019)
In the U.S., college graduates still earn more than non-college graduates in every state, according to data from the 2017 American Consumer Survey. (Business Insider, 2019)
Apprenticeship in Australia
An apprenticeship vacancy index (AVI) has been developed to showcase job vacancies and increase awareness around apprenticeships in Australia.
This tool will be regularly updated to show overall job vacancies at a glance and allow users to look at numbers nationally and state by state or sector.
Economic Complexity Index
The Economic Complexity Index (ECI) shows that Australia is ranked 93rd and has the fastest decline in the complexity rankings over the past decade, as shown in the diagram below.
This measure of economic complexity using the diversity and sophistication of a country’s know-how can explain differences in country incomes. For example, poor countries produce few things that everyone knows how to produce, while rich countries should be producing many things. Growth is then being driven by a process of diversification and production.
Despite Australia’s relative wealth, it is projected that its economy will be growing slowly together with a lack of income growth.
This is because Australia is less complex than what is expected to be for its high income level. It has added just seven new export products since 2002 compared to 17 for New Zealand.
This global ranking and the index do contextualise Australia’s workforce performance and productivity against other countries. It gives a different perspective as we compare Australia’s competitiveness with others. This has implications on the role of the higher education systems in supporting the country’s future growth and performance.
In fact, this is worrying trend as Australia has fallen 23 places between 2007 and 2017. Australia may have more educated people, but it is not intentionally producing enough to generate the growth required to be competitive with other countries.
Without increased growth and production, there will not be enought jobs available for our young people to work in.
Global Competitiveness Report
Australia’s lack of competitiveness and future growth is confirmed by The Global Competitiveness Report 2019, which showed Australia’s global ranking dropped two places to 16, as shown in the diagram below.
While Australia held strong in the categories of macroeconomic stability, skills and financial system development, and the report claimed the country is largely in line with the OECD average, its weakest ratings were found in infrastructure and ICT adoption, where it came 29th in both categories.