Mapping Australian higher education

The first signs that massification of HE in Australia is starting to take its toll on graduate salaries can be found in the 2018 edition of Mapping Australian Higher Education, released today.

In a special chapter, authors Andrew Norton and Ittima Cherastidtham from think tank the Grattan Institute compared 2016 graduate outcomes against a decade ago.

With predictions of credentialism, plunging employment and poorer salary outcomes stemming from an overcrowded graduate jobs market, Norton and Cherastidtham confirm the first signs of weakening graduate outcomes are starting to be seen.

“We’ve seen a number of years of poor graduate outcomes with some students not making a successful transition into the graduate employment market. But after a few years and some experience in the workplace, the outlook is still generally good,” Norton tells Wonkhe.

“We can speculate on those who are not benefitting from their education and they are most likely low-ATAR males who would have been better off making other choices after leaving school.”

Not all bad news

But, it’s not all bad news and, amazingly for once, women are doing (relatively speaking) better than men – a result of long-overdue improvements to maternity leave provisions resulting in rising workplace participation rates.

“Early-career male graduates earned less income in 2016 than 2006. While early-career female graduates earned more over the decade, earnings growth was greater for females with only Year 12. The growth was driven by women with children. Male and female graduates without children became more likely to work part-time and work in jobs that only require a Year 12 education,” the report says.

That last sentence seems portentous – a sign that the impact of the gig economy and automation are starting to play out in the graduate market perhaps.

But it’s a rare thing indeed to be able to read the words “women generally did better than men in the bachelor degree graduate labour market”, but here they are in black and white. And while female graduates were still expected to earn significantly less than men, the earnings gap fell from 30% to 27% between 2006 and 2016, largely due to only 40% of women participating full time in the labour market in the crucial mid-career period. Because of this, men earn a whopping $750,000 (£413,000) more than women during their careers.

All this sounds like bad news, right, but stick with me. In 2016, a female graduate would earn $2m (£1.1m) more in her lifetime than a woman who just finished Year 12 – and that is 6% more in real terms in lifetime earnings than her equivalent in 2006. For men, the increase was just 3%.

Serendipitously, 50% of women hold their degree in four disciplines – education, nursing, engineering and medicine – the precise same disciplines that enjoyed the best wage growth (even though most women are clustered two disciplines – nursing and education – which to not command large relative salaries). Creative arts and science (again) were at the bottom of the list of income returns.

Fracturing

A mind-boggling 27 years of constant economic growth in Australia is obviously a major contributor to the ongoing returns for graduates, although signs of a fracturing of the secure full-time job market appear in the Grattan report.

So while 28% of recent graduates are still seeking full-time work four months after finishing, it’s lower than the peak of 31% in 2014 (post GFC), but higher than the 15% in 2008 (pre-GFC). However, three years after graduation, just 11% of graduates are in still in search of full-time work.

As Norton and Cherastidtham point out, booming enrolments, competition from international students (and there’s a lot of them) on post-study work rights and a migration program that prioritises high-level skills is making the workplace means that many more people are chasing a the same jobs.

That said, the two authors boldly state that “employment trends among recent graduates suggest that outcomes will get better” – a reflection, again, of a healthy economy, even if wages remain static. Call me a pessimist, but I’m not so sure. I come back to that sentence about child-free graduates more likely to be employed in jobs that are part-time or only require Year 12.

And then there’s the revelation that one third of graduates can be expected to earn no graduate premium or even less than a Year 12 school leaver – a figure that rises to 40% for humanities graduates. Hang on! Didn’t last week’s OECD Education at a Glance report point out that Australian graduates have among the highest private costs associated with HE. Is Australia on the cusp of a massive graduate debt hangover with increasing numbers unlikely to fully or partially repay their HECS debt? Goodness, even 20% of law graduates earn less than a Year 12 school leaver.

It’s a complex picture which one hopes policymakers are paying attention to. After all, in 2016, over 40% of Australian 19 year olds were enrolled in HE, while the federal government’s investment in tuition subsidies has started to decline in real terms. Crunch time is approaching.

Leave a Reply