Growing concerns over graduate employment

Students at National University of Singapore (NUS). A report by the Applied Study in Polytechnics and ITE Review (Aspire) committee has sparked much debate. --STPHOTO: DESMOND WEE
Students at National University of Singapore (NUS). A report by the Applied Study in Polytechnics and ITE Review (Aspire) committee has sparked much debate. --STPHOTO: DESMOND WEE

THE report by the Applied Study in Polytechnics and ITE Review (Aspire) committee has sparked much debate. Some have lamented the apparent reduction in emphasis on the need for a degree. But the committee's main objective was to strengthen vocational and skills training, not decry academic training.

In an ideal world, skills of graduates will perfectly match those required by employers. But some emerging employment trends of graduates are of concern.

For a few years now, there have been increasing signs that the academic training of university graduates has not rendered them immune to the problems facing other workers in the job market. As more from each cohort go to university, it is incumbent upon policymakers to confront the problem at an early stage.

In Singapore, the number of unemployed residents with degrees is now higher than for groups of any other educational level. For last year, the reported figures show 18,600 degree holders unemployed, making up close to a third of the overall 59,800. The numerical gap has been widening, with the figure overtaking those of the groups with secondary and below-secondary qualifications in 2010 and 2011 respectively.

One reason for the increase in numbers is that there are more degree holders, and they make up an increasing share of the workforce. But even after accounting for that, degree holders still have a cause for concern. Their unemployment rate used to be the lowest before 2012, but has since overtaken those of groups of other qualification levels. Last year, it was 2.8 per cent, compared with 2.7 per cent for the group with diploma and professional qualifications and 2.4 per cent for the below-secondary group.

To worsen matters, the long- term unemployed number and corresponding unemployment rate of resident degree holders display the same worsening trends. Last year, there were 5,100 degree holders among the long-term unemployed, translating to a rate of 0.8 per cent.

The group with the second- largest number - diploma and professional qualifications - was way behind at 2,500, with a rate of 0.6 per cent. The post-secondary group had the second-highest long-term unemployment rate, at 0.7 per cent.

The evidence on unemployment rates tells only part of the story. The other part comes from the fact that the increase in the number of economically inactive residents possessing a degree exceeded the rate at which degree holders increased in the population over the last decade.

In other words, the ranks of non-working graduates are growing faster than the rate at which new graduates are being minted. This suggests that some degrees are not being converted into employment.

But, fortunately, Singapore does not have high youth unemployment. Last year, the unemployment rate for residents aged below 30 was 5.2 per cent, which is not high by developed countries' standards, where double- digit rates are common.

The age profile of unemployed graduates is also interesting: Among graduates aged below 30, 7.9 per cent are unemployed. The figure falls to 1.9 per cent for those in their 30s, but rises to 2.5 per cent for those in their 40s and further to 3.1 per cent when they hit their 50s. This suggests that for some degree holders at least, the return on investment in a varsity education may fall after the first decade, or that graduates are finding it difficult to keep up with the demands of the labour market when they hit their 40s and 50s. This suggests a need to boost in-employment training, not just pre-employment training.

While the overall number of economically inactive residents rose a mere 8 per cent, the number of economically inactive degree holders surged 124 per cent over the last decade to last year.

Since economically inactive people are those who chose not to work - including housewives - there is a paradox here in that degree holders should not only be more employable, but they would presumably also avoid not working because of the higher opportunity cost involved. Yet the numbers show disproportionately more of them being economically inactive. This raises the question why more people are earning degrees, if the frequency of not converting them to employment has risen.

Hence, rather than ramp up university places, it makes sense to develop more pathways to allow students to deepen skills relevant to employers. In this respect, the Aspire committee's recommendation for a place-and-train scheme is a good one. This allows students graduating from polytechnics and the Institute of Technical Education to be attached to firms that pay them and send them on work-study stints.

The writer is deputy director, Centre for Applied Research, SIM University.