Columns

Student degree choices and the labour market

Franklin JOHNSTON

Friday, January 10, 2014    

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HABITS die hard and we persist in behaviours long after reality changes. We still want to have a certain career even though we know jobs are not available and, like lemmings, we will go over the cliff. Things must get harder if we are to pay our debts, yet we are surprised goods get dearer, jobs fewer and prices increase -- strange? The news screams some non sequitur as "wages buy little", but is this not par for the course? Did we think the story of profligacy ends "and they lived happily ever after"? Cabinet knows we borrowed money, ate, drank, and SUV'd ourselves, now it's pay-back time! Some aver we are past the worst, but Greece is febrile for 6 years. How can we be resurrected when we have not started to work?

The International Monetary Fund (IMF) is good for our labour market if it helps students face reality. We need graduates in science, technology, energy, mining (STEM), and vocations, but student choices are not in sync with this reality. A glut

of guidance counsellors, lawyers, teachers, liberal arts degree holders, yet students are unresponsive to the market. Who's to blame when they can't get jobs?

Degree vending bodies are not blameless as they are supply driven and distort the labour market. They sell what they have staff to teach or respond to student likes, not to labour market needs. Most students prefer what is easy, popular with peers, or on TV -- not the best way to choose your degree. Because of a proper profit motive a degree factory targets the employed who can pay for a degree to get by at work. Young students need scholarship -- Oedipus, Salkey, Walcott, Don Drummond, or DaVinci and a skill to get a job. A post-slave society needs educated youth who love learning, explore, but have a competence and innovate. A degree is now a bauble, a trophy, and few care what they read. Students used to examine institutions; which has the reputation, good labs, cited professors? Now they are just grateful to be accepted. This is not a healthy degree or job market.

Degrees are valued differently in business and the public sector. Government pays for degrees; business pays for performance. A man told me he was more qualified than his boss so he took a government job as he would earn more with his degrees -- no word of performance. As the largest employer, the public service set a low bar. You can get a job and increments with any degree -- unreal. This goes back to the "one campus" days when few had degrees. Today with 40 degree bodies and a glut of degrees the incentives are the same. Those who set the rules are also beneficiaries -- why change? Public workers have more degrees yet productivity is lower than in business. Yet as the PwC study avers many public sector workers are better compensated -- pay, benefits, leave, pension, medical, travelling, etc than private -- a paradox? Public sector policy distorts the labour market, student choices and feeds degree devaluation. Young people reading a first degree to get a first job must compete with public servants who need more degrees to claim entitled leave and increments. This policy sends false positives to campuses causing unwarranted expansion, turbidity in the labour market. Poor targeting of study incentives by the State produces many theology, literature, guidance, and business studies degrees, and few in the STEM subjects. This policy must change.

Degree devaluation is a reality. In the last decades degrees have grown beyond absorbtive capacity. Jobs usually for secondary school leavers are taken by graduates. The degree adds no greater value and displaces youth. As the "gold standard," the Rhodes Scholarship, once the prize to a brilliant secondary schoolboy, now attracts candidates with two first class degrees. Degrees have devalued as our dollar. Two forces contend, one is ideology and the other market forces. The British targeted 50 per cent of their cohort with degrees -- ideology so the market "blowback" is acute. Access to degrees at public expense is laudable, and the uptake fantastic, but they lose value when supply exceeds demand. Who will tell the poor their degrees have gone the way of the dollar? Only a good teachers' union spares teachers the consequences of ill-advised career choices. Many compete for jobs which need no degree and the market moderates by a fall in pay. Imagine 30 degreed applicants for a salon receptionist job? The state distorts the low-end labour market with a minimum wage. It uses the opposite tactic for the dollar -- free fall! Will it curb supply and degree devaluation by a high-end minimum wage or allow labour market forces to find the equilibrium? Each option has consequences. Growth is the answer.

Let us move forward. The IMF is a force for modernisation. When it speaks to employing qualified people it means do as businesses do; pay the price for trained workers, don't employ the untrained and squander money, time and targets. A few years ago a ministry spent bags on employee training and some $50m was just the hotel bill. We have many degree bodies -- residential, distance, weekend, evening -- so the concessions of 30 years ago are poorly targeted and counterproductive. A government job is now a prize. You can't be fired — almost — and they can't move you even if you have nothing to do. All incentives, loans, scholarships must be skewed in favour of skills the economy needs. Can you find a chief accounting officer in the civil service with an ACCA and a management record? Why are STEM teachers hard to find? The private sector employs some 90 per cent of all students; who consults them? Tertiary students opt for the path of least resistance — water runs downhill — so they and the economy suffer. The public service incentivises poor student choices and skews the labour market. This is not a new deficit, but thanks to the IMF our undies are showing and change must be ahead.

We must now help students make good degree choices. They should talk to successful people in their intended field, JTEC should produce the league tables of campuses so the mantra "Registered by the MOE" is not used to mislead students. The State must produce labour market, job intelligence and job projections so students may make informed degree choices. The State must skew scholarships and loans to STEM subjects, finance and accounting, and give priority to youth who are reading their first degree. The civil service must revise its study policies and stop distorting campus plans, demand profiles and the labour market. This is tantamout to the State shooting itself in the foot. Students must do due diligence, assess faculty and degree assets. Like our dollar most degrees don't revalue, but you can get value. Check the courses, job adverts, peers in jobs; talk with employers, read the news. Be assertive, keep an ongoing check, you may have to make a job to avoid joining the jobless. Stay conscious, my friend!

Dr Franklin Johnston is a strategist, project manager and advises the minister of education. franklinjohnstontoo@gmail.com

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