Thursday, October 23, 2014

Graduate employment: Degrees of relevance

 Oct 23, 2014

RACHAEL BOON

A degree is no longer a guarantee of a good job as more graduates face underemployment, working in jobs that pay less well or require lower-level skills than their qualification prepares them for.

By Rachael Boon



A university degree used to be seen as a golden ticket to job security and career success, but some of the shine is coming off that path.

More graduates here are experiencing underemployment, which the Ministry of Manpower (MOM) defines as workers who clock at most 35 hours of work a week, even though they want and are available to work more hours.

Some 15,100 degree holders were underemployed last year, up from 13,000 in 2012.

This works out to 2.3 per cent of all employed graduates last year, inching up from 2.2 per cent the year before.

While the increase is slight, it comes amid a tight job market and falling underemployment rates for all other types of school leavers, from secondary school dropouts to diploma holders.

Some also fear underemployment figures for graduates may be understated.

MOM's numbers track only workers who are working fewer hours than they want, not those in jobs lower-skilled than what they are qualified for.

The lack of hard data for the latter group worries Mr Patrick Tay, NTUC assistant secretary-general, who has been speaking about underemployment since he became an MP in 2011.

He cites anecdotal evidence of graduates taking jobs that do not require a degree but says it will be hard to gather data, "as it will involve looking at each job" and measuring it against the skills of the worker employed.

Still, the anecdotes paint a picture of a job market that may have become less friendly for graduate workers, who usually land jobs as professionals, managers, executives and technicians (PMETs).

This is the group most likely to lose their jobs, an MOM report in April showed. They made up more than half of those laid off last year, up from one-third in 2010.

In March, Manpower Minister Tan Chuan-Jin warned of a graduate glut that could result in "over-educated and underemployed" workers, an emerging trend in South Korea or Taiwan.

After The Straits Times ran an article on underemployment last week, Mr Tan posted on Facebook that "the situation still remains rather positive" but "we should still look out for those affected".

The Government is trying to help with schemes such as those conducted by the Workforce Development Agency, and the national Jobs Bank portal that opened in July. As of last month, more than 80 per cent of the 62,100 average "live" vacancies on the portal were suitable for PMETs, MOM told The Straits Times.

But to ensure graduate underemployment doesn't become a bigger problem, it is important to understand what is driving it.

Structural changes
WHILE underemployment is not as dire as actual unemployment, it signals a misallocation of resources - such as people paying for a pricey university degree they don't use - and a waste of human capital. In some extreme cases in the United States, degree holders work minimum-wage jobs.

Experts point to two main reasons behind Singapore's graduate underemployment.

The first is structural unemployment, caused by rapid changes in Singapore's economy, including multinationals moving out of the country after decades here.

This has led to a mismatch between the skills possessed by workers whose industries have shrunk and the abilities sought in new growth industries.

Dr Tan Guan Hong, whose work as programme director at A*Star's Institute for Infocomm Research includes managing programmes for older workers, said many laid-off PMETs have spent decades rising to become team leaders. But when their jobs are made redundant, they find their skills not useful in other sectors.

While PMET jobs are still being created, many require skills that retrenched job-seekers need time to learn. Even if retrenched workers are willing to acquire new knowledge to enter another industry, they would be competing for lower-level jobs with younger rivals and "must be prepared for a pay cut", said Mr Erman Tan, president of the Singapore Human Resources Institute (SHRI).

Because PMETs have a good education, they can usually find another job, though it may be part-time, lower-level or lower-paying than their previous position. Human resource experts consider this underemployment.

They say part of the problem is that many displaced PMETs have stayed in the same company or industry for a long time, which leads to a false sense of job security or an over-reliance on their company to take care of their training and career development.

"Out of 10 executives I coach, eight do not realise the world has morphed a lot since the last time they looked," said Mr Paul Heng, managing director of NeXT Career Consulting Group.

He added: "They focus on doing a good job... (When) they are told their services are no longer required, they freeze and simply do not know what to do."

Degrees are common
AS ECONOMIES like Singapore's advance and business costs rise, SHRI's Mr Tan noted that a trend of job polarisation also tends to take place - the second driver of graduate underemployment.

Companies seek to cut costs by automating some job functions or outsourcing them to specialist firms or cheaper countries.

These jobs tend to be the well-paying, middle-level jobs held by PMETs.

Most jobs that remain are either well-paid, high-skilled top posts, or jobs right at the bottom, where unskilled workers are still the cheapest option.

"The PMETs with skills not relevant to the jobs at the top will have to find work lower down the rungs, thus contributing to the growing ranks of underemployment," Mr Tan said.

Making things worse is that university degrees are more common now, both at home and elsewhere.

MOM has said the rise in underemployed degree holders "largely reflects the rising number and share of degree holders in the workforce".

In 2011, 28 per cent of employed residents were graduates; last year, it was 32 per cent.

This is partly because privately-run degree programmes at schools such as Singapore Institute of Management and the Management Development Institute of Singapore are churning out more graduates, NTUC's Mr Tay noted.

Meanwhile, more people are earning degrees in lower-income countries, increasing the competition for mid-level jobs even as the number of such jobs declines.

Having a degree alone is no longer enough to command higher pay, argue social economists Phillip Brown, Hugh Lauder and David Ashton in their book, The Global Auction: The Broken Promises Of Education, Jobs And Incomes.

They say companies can now cast a wider net for the cheapest workers with the skills they need, turning the contest for mid-level jobs into a "global auction".

The way forward
UNDEREMPLOYMENT has yet to become a huge concern for Singapore, where the unemployment rate is still near record lows.

But if the economy and job market take a turn for the worse, underemployment could quickly turn into outright unemployment.

Each of the two drivers of underemployment needs a different solution. To some extent, structural unemployment can be mitigated by more mid-career training, which Singapore is addressing with its Continuing Education and Training (CET) 2020 plan.

This will help mid-level PMETs stay relevant in their current jobs, or move quickly up the learning curve in a new industry.

To maximise a company's limited training budget, firms could use co-payment schemes where workers take some responsibility for their education, said Mr Heng.

The other reason for graduate underemployment - job polarisation - is harder to tackle, and will require a combination of efforts.

The Government must shift priorities away from an expensive paper chase and towards cultivating in-demand abilities. Recent proposals to improve Institute of Technical Education (ITE) and polytechnic vocational education are a step in the right direction.

Companies should also realise that with an ageing population, their best bet may be to tap the "human capital resource" already invested in middle-aged PMETs, rather than keep looking for the cheapest worker, said Dr Tan.

Most of all, workers need to develop deep skill sets and hard-to- replicate expertise - such as overseas work stints, foreign languages and secondary subject-matter abilities - rather than rest on the laurels of their university degree.

These solutions will take time. But graduates can start helping themselves now by refreshing their skills or picking up new ones. It's never too early to guard against complacency



Tuesday, October 21, 2014

Singapore is ‘normalising as a democracy’: Analysts

By IMELDA SAAD

December 24 2013


SINGAPORE — Observers said navigating Singapore’s future political landscape will be much more of a challenge as they looked back at major events which shaped the country in 2013.

As one political watcher puts it, Singapore is “normalising as a democracy”, and with it comes a new way of governance.

2013 marked the end of the year-long Our Singapore Conversation, an exercise to get Singaporeans thinking about the kind of future they want.

It set the stage for the prime minister to announce a “significant shift” in the government’s approach towards nation building during the National Day Rally.

It was described as a “new way forward”, as the country grapples with new challenges externally, and domestically.

Prime Minister Lee Hsien Loong said: “Singaporeans sense correctly that the country is at a turning point.”

Facts are sacred, comment is free - and fact-based comment most precious of all

Oct 19, 2014


By Chua Mui Hoong, Opinion Editor

In 1921, C.P. Snow wrote an essay on journalism for The Guardian newspaper to mark its centenary and his 50th year as editor.

In it, he coined the words that by now have become famous: “Comment is free, but facts are sacred.” It was a call to newspapers to remember their base: news gathering.

I got to recalling CP Snow’s dictum about comment and facts this week, as Hong Kong protests draw ever more hyperbolic commentary from the glitterati media. Many western commentaries tend to view the protests through ideological-tinted glasses as youth movements clamouring for democracy and human rights.

But in The Straits Times, we have tended to run commentaries that are less ideological in nature, from people who know Hong Kong and its Basic Law.

This week, we ran a useful piece by Lim Chin Leng, who is Professor of Law at the University of Hong Kong, and a member of Hong Kong's Committee on Pacific Economic Cooperation. In this article, he reminds our readers that Hong Kong has an existing framework for constitutional debate and political reform.

Challenge for PAP to retain same dominance as in the past: Ho Kwon Ping

CHANNELNEWSASIA

By Sharon See

20 Oct 2014


History has not been encouraging to founding political parties after three or four generations, pointed out the Executive Chairman of Banyan Tree Holdings in his first IPS-Nathan Lecture.


SINGAPORE: The People's Action Party will face a challenge to retain the same degree of control over Parliament as it has had in the past, said Mr Ho Kwon Ping in his first lecture as S R Nathan Fellow for the Study of Singapore.

Speaking at the University Cultural Centre, Mr Ho said history has not been encouraging to founding political parties after three or four generations. He said historical trends elsewhere point towards a possible election loss by the PAP in the second half of the next 50 years.

The most likely reason could be a freak election, followed by a split within the ruling party and a massive loss of political legitimacy, said Mr Ho.

Monday, October 20, 2014

China must be wary of capital-market liberalisation

BLOOMBERG

BY
JOSÉ ANTONIO OCAMPO AND KEVIN P. GALLAGHER

OCTOBER 17, 2014

As China’s economy starts to slow, following decades of spectacular growth, the government will increasingly be exposed to the siren song of capital-account liberalisation. This option might initially appear attractive, particularly given the Chinese government’s desire to internationalise the renminbi. But appearances can deceive.

A new report argues that the Chinese authorities should be sceptical about capital-account liberalisation. Drawing lessons from the recent experiences of other emerging countries, the report concludes that China should adopt a carefully sequenced and cautious approach when exposing its economy to the caprices of global capital flows.

The common thread to be found in the recent history of emerging economies — beginning in Latin America and running through East Asia and Central and Eastern Europe — is that capital flows are strongly pro-cyclical, and are the biggest single cause of financial instability.

Domestic financial instability, associated with liberalisation, also has a large impact on economic performance, as does the lack of control over non-bank financial intermediaries — an issue that China is now starting to face as the shadow banking sector’s contribution to credit growth becomes more pronounced.

London's great, but have you seen Britain?

EYE ON THE WORLD

OCT 20, 2014


BY JONATHAN EYAL, EUROPE CORRESPONDENT IN LONDON

CONSIDER this for a contradiction. According to a recent survey, London is the world's most coveted place; the British capital's dynamism and welcoming approach to foreigners makes it the destination of choice for the largest number of people seeking a job abroad.

Yet at the same time, Britain is gripped by a powerful backlash against immigrants: if general elections took place today, up to one in five of all Britons could be voting for a party whose only political platform consists of a pledge to seal the country's borders against all incoming foreigners.

How can one explain this gap between a welcoming city and a hostile nation?

Saturday, October 18, 2014

Suggestions on CPF changes raised at LKYSPP conference

ChannelNewsAsia

By Olivia Siong

17 Oct 2014 22:36


Raising the CPF income contribution ceiling for employees and adopting social principles rather than commercial ones were some of the suggestions offered at a session on inequality and social security reforms.



SINGAPORE: Raise the CPF income contribution ceiling for employees - that was one suggestion raised by an economist at a session on inequality and social security reforms that was part of the Lee Kuan Yew School of Public Policy (LKYSPP) 10th Anniversary Conference held on Friday (Oct 17).

During the session, LKYSPP’s Associate Professor Hui Weng Tat said to help improve retirement adequacy, in particular for the middle-income group, the issue should be addressed early and when people are working.

"The amount of contribution that they are putting into CPF accounts is decreasing in real terms. That has to do with the fact that the income contribution ceiling has not kept in step with inflation. It has remained at S$5,000,” he said.

He pointed out that between the 1980s and 2011, "the real value of the income ceiling has actually been halved. As a result, our real contribution to CPF for those who had exceeded the ceiling has actually been declining over time. What is needed is an increase in the income ceiling, especially for those who are contributing on the employee side.


[Should we worry about the high-middle income (or whatever social strata those earning over $5000 are) earners? These income earners have other ways of ensuring their retirement adequacy. And no, it has not "remained" at $5000 from the 80s to 2011. It was $6000 prior to 2004, and was reduced to $4500 in 2006, before being re-adjusted to $5000 in Sep 2011. The rationale was explained here. The CPF is targeted at the 10th and 80th percentile income earners. Hence the ceiling. Why isn't this Assoc Prof who has commented on the CPF frequently, not au fait with the policies relating to the CPF? Even if he has a point, shouldn't he addressed the original intent of the policy?]
"In other words, we can raise the income ceiling for the employee contribution, not necessarily the employer contribution, so that it does not add to the employer's cost. For the employee, it is just increased savings which they can therefore use in retirement, and that will ensure an improvement in their retirement adequacy."

[Because a) CPF members already prefer not to put their money in CPF (despite the better rates), and b) Higher income earners should not have to depend solely on the CPF to meet their retirement needs, and c) there is already the SRS - not exactly the same, but it provides tax relief, and SRS savers can use the funds for investment to gain better returns perhaps than CPF.]

Another speaker, Professorial Fellow Mukul Asher, also noted that currently, schemes like CPF Life and MediShield adopt commercial principles - for example, with premiums varying by age and sex. He said this has not helped with ensuring retirement adequacy, and social principles should be adopted instead.

He noted: "Women live longer than men, so women are going to have to pay higher premiums or accept lower CPF Life amounts for a given capital sum. But women have a lower labour force participation rate than men. They also, as a group, on average, earn less than men. But they live longer, so they need more.

"So what we are doing with the commercial principles is making it very difficult for half of the population to have adequate retirement."

[Bravo! Thank you for making this point. This is very true and very correct. Social principles, and looking out for women, are two very important points.]