Meanwhile, in Australia a discussion is going on about the supply and demand of graduates. Are there enough university graduates or too few, or maybe even too many? And if there is a gap between supply and demand, how can this gap be filled by changing the supply? Or is there simply no such thing as an oversupply of high quality graduates in the knowledge economy?

Bob Birrell, Daniel Edwards and Ian Dobson from Monash University published a paper emphasizing the widening gap between demand for and supply of university graduates. I don’t have access to this paper yet, but there’s an article in the Sydney Morning Herald. The summary of the paper states:

“The rapid growth in demand for university-trained personnel over recent years has mainly been filled by growth in the skilled migration program. The authors argue that more domestic students should be trained. The Coalition Government does not agree. It claims that ‘unmet demand’ from prospective university students has been met and, anyway, that additional subsidised places are to be created. This article scrutinises these claims and concludes that they are not correct.”

The Australian reports on another recent paper relating to the issue. In this paper, Global setting, national policy and higher education in 2007 (pdf), Simon Marginson (University of Melbourne) seems to share the worry of an Australia, ill-prepared for the global knowledge economy. Marginson places the problem in a broader perspective and mainly criticizes the federal government’s lack of a consistent policy for the knowledge economy.

One of the 8 policy problems that he identifies is the faltering domestic participation, both in quantity and in quality. In terms of quantity, he sees the issue of graduate underemployment as fairly irrelevant since “in the global knowledge economy any and every improvement in educational levels is desirable.”

At the other side is Andrew Norton who wrote a recent paper on the issue: Mismatch: Australia’s Graduates and the Job Market (pdf). Today, he comments on Birrell’s paper in his blog. According to Norton, Australia is far from confronting the ‘crisis’ in university-qualified personnel claimed by Birrell and his colleagues.

He finds that the chronic shortages in graduates occurs only in a limited number of occupations, especially the health related ones. In many other occupations many graduates fill positions in non-graduate jobs. In general therefore, there is not so much a shortage in graduates, but a mismatch between supply and demand of the right graduates. And that problem needs to be tackled:

“Some way needs to be found to avoid chronic labour force shortages. But with more than 800,000 graduates out of the workforce, unemployed, or in jobs that under-utilise their qualifications, expanding total student numbers should not be the first priority. A better system for matching graduates and jobs is the more important next step.”

Anyone reading Norton’s blog will know that he prefers to look for such measures in the market rather than in government interference. He makes a good point when he says that the future is simply too complex for the government to predict and for them to allocate the number of student places accordingly. A system where universities set the number of places and student fees would do a better job, he claims.

I tend to agree with Norton, but at the same time don’t have as much faith in market mechanisms as he does. For many professions there is a function for the government to allocate them, again that is especially in the health sector. Indeed, reality shows they haven’t done a good job in that. But whether Australia would have been better off with market mechanisms allocating these places remains to be seen.

One thing that is overlooked here in my opinion is that graduates not just fill the labour market, but they also shape the labour market. This will especially be the case in occupations relating to engineering, financial services, media and new technologies, etc. All people may need nurses and doctors, whether they are rich or poor, low or high skilled. But the amount of accountants, managers, programmers and engineers needed is dependent on the overall level of education and income of a society.

In Norton’s analysis, the labour market may not be static but it is seen as an exogenous variable. However, the nature of graduate supply also shapes the future labour demand. I think this links to Marginson’s argument that every improvement in employment level is desirable, that is, if Australia’s future lies in a knowledge based economy. The current occupying of non-graduate jobs by graduates might contradict this, but this is where the relevance of quality comes in.

This article has 1 comments

  1. Jobs In Pakistan

    Nice and more informative articles,Under the topic fo Australian labor market.

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