Too many graduates, or too few?

by Mansoor Iqbal, Education Writer

Competition for jobs may be intense, but the vital role played by graduates in economic growth and recovery means that some voices believe the world needs more, not fewer.

It has recently been reported that no less than 83 applicants apply for every graduate level role in the UK. The total number of graduate jobs is expected to rise by 2.6% in 2011, and it should be remembered that graduates can often be pretty indiscriminate when applying for a first job, but the figure is still pretty daunting. It is no wonder, then, that one proposal in the recent white paper presented to the government by the UK’s Minister for Universities, David Willetts, was that universities publish data on how many of their graduates are able to find work – this is one of the primary concerns of students in the 21st century (as reflected in the methodology of the QS World University Rankings®, which takes into account the prestige afforded to universities by graduate employers).

Graduate unemployment figures inevitably add to these concerns. While the UK is used as an example here, the problems are certainly not limited to that particular nation – graduates in countries as prosperous as the US and China are also facing stiff competition for jobs (though it should be noted that graduates are generally less likely to be unemployed that non-graduates). The almost inevitable consequence of this is voices calling for the number of students in higher education to be greatly reduced, particularly while we are still living in the shadow of the financial crisis that occurred at the end of the last decade.

‘The Undereducated American’

But is this really the right way to deal with the problems that the world is currently facing today? The answer is not simple, but for one pair of US researchers at least, the answer is a resounding ‘no’. Anthony P. Carnevale and Stephen J. Rose of Georgetown University’s Centre of Education and the Workforce have released a report, entitled ‘The Undereducated American’, which argues that in the American case, at the very least, the problem is exactly the opposite.

They warn that instinctive reactions like reducing the number of graduates risk focusing on the short at the expense of the long-term. In the US, the rise in the number of graduates has long been smaller than the increase in number of skilled jobs. This has created a massive increase in inequality for one thing, as graduate salaries rise in comparison to those who haven’t had any kind of tertiary education. The fact that graduate salaries have continued to rise in comparison to non-graduates’ is hardly indicative of an oversaturated market.

Looking to the long-term, they observe that an increase in the number of graduates has always been beneficial to the economy. In the case of the US, this is best exemplified by periods where the US has been a world leader in higher education coinciding with its greatest periods of growth. If the number of graduates increased in line with the demand for them, Carnevale and Rose predict the US’ GDP would increase exponentially – thus also working towards solving the problem of graduate unemployment, as jobs would certainly be created a consequence of a growing economy.

The researchers even take the sting out of the tail of the argument that many graduates are in jobs that do not require such a high level of attainment. They do this by showing that even in the same job areas, graduates in general earn a lot more – suggesting that they have valuable and unique skills that allow them to reach the upper echelons of whatever profession they end up in, or simply to enjoy greater levels of success in the same position. This explains the existence of graduate level jobs, such as insurance agents, which do not necessarily require degrees. Employers, they conclude, would not strictly hire graduates for certain positions if there was not some proven benefit.

A worldwide issue

The need for more highly skilled people is not restricted to the US by any means. One only needs to look to the developing world to identify where else there is a need for increased numbers of graduates. Take Brazil, which, along with India, China and Russia, has been earmarked for global dominance in forthcoming years.

In order to perpetuate the rapid growth of recent years, a large investment has been made in science and technology. However, at present only a tiny proportion of the nation’s massive population attend university, leading to a skills shortage that could potentially hamper further growth. Similar problems exist across South America, though, as a consequence of less strident growth, demand for graduates is not yet as vociferous as in the continent’s economic frontrunner.

Even highly developed nations like Germany are not immune to shortfalls in graduates. The country’s two leading industrial organizations , the Confederation of German Industry and the Confederation of German Employers have identified a shortfall in graduates in STEM (science, technology, engineering and mathematics) subjects which could go so far as to threaten the country’s current industrial boom. It is estimated that there is a shortfall of around 150,000 graduates in these fields.

Ireland has also identified a similar deficit in these areas, and graduate levels in Australia have left many industries wanting. In the case of the latter, a report by Deloitte Access Economics has pointed out that a downturn in the numbers of international students will lead to a shortage of skilled labour, precisely when high commodity prices will lead to increased demand for it. The cost to the Australian economy, it predicts, will be A$6.2 billion – a worrying quantification of the issue.

These problems are area specific, as the proposed solutions are likely to be. However, it is clear that, around the world, there is a high demand for graduates; whether it’s in established powers aiming to retain their dominance, or in emerging powers looking to consolidate recently acquired footholds in the global economy. Though short-term competition for graduate jobs might be demoralizing, it seems quite likely that the jobs market of the near future will require more, and not fewer, graduates.

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