University quantitative easing drives-up trade skills shortages

By Leith van Onselen

Back in October, Australia’s TAFE sector hit out at universities for delivering Australians higher debts and weakening jobs prospects:

TAFE has taken a swipe at universities and their ability to make students job-ready, telling careers advisors that 30 per cent of students at one of its Sydney campuses already have degrees…

“Why is it that every Uber driver I speak to has a communications, business or law degree?” Mr Black asks.

“Just this week the Productivity Commission released a report which shows that university students are struggling to find employment relevant to their studies.

“[So] would you rather finish with a $4,000 debt or a $30,0000 debt?

“With strong job prospects or weak job prospects?”

TAFE is currently in a state of regrouping after years of budget cuts, fee increases, closures and competition with the private sector…

“The engine room of our economy comes from people that have skill, that can practically deliver work in the workplace.”

Now, Victorian Skills commissioner, Neil Coulson, has delivered a damning report arguing that the proliferation of students studying at university has driven-up shortages in the trades. From The ABC:

The Rebalance and Relaunch report, prepared by Victorian Skills commissioner Neil Coulson, warns parents and schools are “over-valuing” university degrees.

This, combined with an ageing workforce and negativity around the future of trade jobs, is leading to concern about a potential labour skills shortage in the future.

“We have societal expectations driving and propelling more and more young people to take up university options,” Mr Coulson said.

“Despite current levels of youth unemployment and the good prospects that a trade offers, it’s a challenge to attract capable apprentices into many industries.”

The report found there had been a slight decrease in apprenticeship commencements in Victoria in the past few years, while traineeships had plummeted from more than 100,000 in 2011 to about 50,000 in 2016.

“Aggressive marketing by universities has fuelled an unprecedented boom in higher education enrolments,” the report reads.

It cited a Victorian study that found 54 per cent of high school graduates in 2016 enrolled in a bachelor degree, while only 8 per cent entered into an apprenticeship or traineeship.

The commissioner’s report comes on the heels of new Federal Government data that revealed 30 per cent of university students were failing to gain work within four months of graduating.

I’m with Coulson on this one.

Sadly, a university degree in Australia isn’t what it used to be. The uncapping of university places by the Gillard Government has led to an explosion of students, which has devalued their worth – a form of educational ‘quantitative easing’.

Basically, Australia’s universities have turned into ‘degree factories’, whereby they teach as many students as possible to accumulate Commonwealth government funding through HELP/HECS debts. At the same time, quality of teaching, and students’ ability to secure subsequent employment, remain distant priorities.

This view is evidenced by the escalation of total outstanding HELP loans, much of which will never be repaid, putting increasing pressures on the federal Budget:

As well as the dramatic lowering of university entrance scores, suggesting that just about anyone can now enroll for a degree.

Indeed, the latest 2016-17 Department of Employment skills shortages report showed there were one million domestic students enrolled with a higher education provider in 2015, including nearly 750,000 enrolled in a bachelor degree:

However, bachelor degree graduate employment outcomes are poor:

The Productivity Commission’s latest report also showed that employment outcomes for full-time graduates “have been getting worse”:

For those who do complete their degrees, post graduation outcomes have been getting worse. Full-time employment rates for recent graduates have been declining, even as the Australian economy has continued to grow (figure 3.3). Many of those who do not work full-time are not in that position by choice, with the underemployment ratio among graduates at 20.5 per cent in 2016, compared with about 9 per cent in 2008. Graduate starting salaries have also been growing slower than wages across the broader economy (declining from nearly 90 per cent of average weekly earnings in 1989 to about 75 per cent in 2015)…

Further, over a quarter of recent graduates believed they were employed full-time in roles unrelated to their studies, to which their degree added no value. To the extent that someone without a costly university education could have undertaken these roles, this can then have cascading employment and income effects down the skills ladder.

Many employers are also not satisfied with the quality of recent graduates, with about one in six supervisors saying that they were unlikely to consider or would be indifferent to graduates from the same university…

University students are also not satisfied with the teaching in their courses…

So what is a better option for young people than going to university? Like Coulson, my advice is to study a trade instead.

The Department of Employment’s latest skills shortages report showed that “skills shortages” are far more widespread for technicians and tradespeople than professionals:

Because they are experiencing relatively few commencements and completions:

And employment outcomes are much stronger:

Therefore, if you want to improve your job prospects, as well as avoid sinking tens-of-thousands of dollars into a worthless degree, look at taking on an apprenticeship or going to trade school.

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