Employment and earnings data for young graduates will result in more informed decisions

Friday November 01, 2013 Shaun Twaddle

Are the days of hordes of young people enrolling in qualifications that employers don’t want and ending up unemployed numbered?

Government agencies and tertiary education organisations are being pushed to provide employment and income information for graduates of tertiary education. This information was previously unreported or confined to technical research papers and the push for it to be made available to the public is laudable for a variety of reasons.


Hopefully, this information will be used by the Government to quantify and further maximise the benefits of their investment in tertiary education, which as a percentage of all Government spending is the highest in the OCED. This information could also give young people considering entering tertiary study an extra level of information to make informed choices.


Yes, some young people will still make interesting choices – that is the joy of being young. But others will over time increasingly use this information to help influence their choices. This information will hopefully lead to better matching between labour supply and demand which will in turn reduce the number of people who are unemployed or on a benefit and increase economic growth.


Earlier this year, the Government started to use this information to shape how young people make their decision by including it in the ‘Occupational Outlook Reports’, which are designed to provide an assessment of future prospects for each occupation. CareersNZ is also using detailed information on their website. While these are useful first steps, it is going to take some time for relevant agencies to package this information in a way that will reach their intended audience and for this audience to then engage with it.


The information might seem obvious at times – graduates with medical degrees have higher earnings than graduates with a bachelor of arts in French literature, for example. But quantifying some of the obvious for young people is valuable, such as graduates with a bachelor degree in creative arts have the lowest earnings among young Bachelors graduates after five years and they have relatively high rates of benefit receipt.


While it is hard to quantify the overall impact of tertiary study on the rate of benefit receipt due to outward migration, primarily because a number of young people tend to leave NZ to go on their OE or move to Australia, the data does indicate that the benefit receipt rate declines the higher the qualification level. The benefit receipt rate for graduates with certificates at levels 1-3 is around 13 percent, this declines to around 6 percent for diploma graduates and 2 percent for bachelor level graduates.


Students, parents and whānau will not be the only ones using this information to influence their decisions. Government should use this information to guide their investment decisions in specific qualifications. We expect investment in qualifications where graduates have low employment rates will decrease increased investment for qualifications that result in high employment rates and better than average income levels. As is always the case with investment decisions, it is not always this simple and these types of decisions will also need to be balanced out against future employment trends, priority areas for NZ Inc and the like.


Subtle changes in terminology have already started to signal this shift. Over the past year the Tertiary Education Commission, which provides funding to tertiary education organisations and institutes, has shifted from talking about ‘purchasing’ qualifications to ‘investing’ in outcomes.


In all, this is a positive step - creating more transparency through information sharing.