Thursday, September 18, 2014

What's a Degree worth?

Sep 07, 2014

When degrees become the norm, what’s a parent to do?

By Chua Mui Hoong, Opinion Editor

When he was doing his postgraduate studies in England, economist Wilson Wong noticed that many waiters and waitresses were graduates.

As he wrote in an Opinion article published in The Straits Times on Friday: “It is not uncommon for fresh graduates to spend extended periods waiting on tables while clinging on to fading hopes of finding the elusive dream job in keeping with their university education. Currently, an estimated 1.2 million youth (between the ages of 16 and 24) in Britain are in jobs for which they are overqualified.”

Dr Wong’s point: It’s better for Singapore to strengthen vocational skills training to allow young people to climb the career ladder, than to have more university places. Too many uni places can lead to underemployment, he said.

It’s a call his colleague at UniSIM Randolph Tan would agree with. Dr Tan trawled through employment statistics to argue in this article that there are growing concerns about graduate employment.

“In Singapore, the number of unemployed residents with degrees is now higher than for groups of any other educational level,” he said.

To be sure, Singapore doesn’t have a problem with youth unemployment yet. And surveys show that graduates from local universities are able to get good jobs fast.

But many people are going overseas or to private schools for degrees, some of dubious quality. Some graduate with law degrees not recognised back home. Employers also say they often pay less for those with degrees from less-known institutions.

The message here for parents and students is: Don’t rush after a degree at any cost.

That’s one reason why there’s been all this fuss lately about the Aspire committee to improve ITE and polytechnic vocational education so people can advance and improve in their skills. Ministers have weighed in on the issue, as have academics.

Many have asked if the message is that a uni degree is now less relevant.

The answer of course is No.

If anything, one can argue that it’s become more relevant.

Two figures explain the urgency among young people and their parents to aim for a degree.

The first is that one in two young Singapore residents have a university degree. That’s for those aged 25 to 35.

For those in their 60s, it’s just one in five who has a degree.

No wonder every late teen now feels he or she must get a degree - when half your peers are going to get degrees, you want to fall into the right half.

The other figure is that three in four Singapore residents has tertiary education - which means a diploma or a degree.

In other words, for young Singaporeans, a diploma will become the absolute minimum to aim for. And a degree is no longer for the more academically inclined “above average” student. It’s become the norm.

It’s very likely that among those in their teens today, the proportion of degree holders in their cohort - when they reach their mid-20s in 10 years’ time - will hit 55 or even 60 per cent.

The paper chase shows no sign of letting up, and I don’t think this latest push for vocational skills training is going to change things.

One report last week said: “Official statistics show that around one-third of those who got their degrees in Singapore last year had obtained them from private educational institutions.”

But what parents and students must realise is that a degree no longer promises a short cut to a good life.

Degree holders are more likely than diploma holders to be laid off. That’s what our senior education correspondent Sandra Davie said in a commentary on Aug 26.

“When the Singapore economy slowed a few years ago, diploma holders fared better. Official figures for the third quarter of 2009 showed that among those unemployed, about 6 per cent were diploma holders while 22 per cent were degree holders. And fewer polytechnic graduates were laid off than their university peers.”

Smart parents and students will thus be realistic about their options. For the clearly academically inclined, a degree is a natural route. For the technical-minded, a poly or ITE is the right choice.

It’s the median student who faces a dilemma. Struggle through O levels, then junior college, and hope to get into some university?

Retake the A levels as a private candidate and hope to get better grades to get into a local uni?

Or opt for the poly route?

For some median students, a skills-based course might be more sensible. And if they find something that fits - say, process engineering, aircraft maintenance, nursing - there is nothing to stop them from pursuing their skill in future, all the way to a Bachelor or Masters degree.

Sep 05, 2014

Growing concerns over graduate employment

By Randolph Tan For The Straits Times

THE report by the Applied Study in Polytechnics and ITE Review (Aspire) committee has sparked much debate. Some have lamented the apparent reduction in emphasis on the need for a degree. But the committee's main objective was to strengthen vocational and skills training, not decry academic training.

In an ideal world, skills of graduates will perfectly match those required by employers. But some emerging employment trends of graduates are of concern.

For a few years now, there have been increasing signs that the academic training of university graduates has not rendered them immune to the problems facing other workers in the job market. As more from each cohort go to university, it is incumbent upon policymakers to confront the problem at an early stage.

In Singapore, the number of unemployed residents with degrees is now higher than for groups of any other educational level. For last year, the reported figures show 18,600 degree holders unemployed, making up close to a third of the overall 59,800. The numerical gap has been widening, with the figure overtaking those of the groups with secondary and below-secondary qualifications in 2010 and 2011 respectively.

One reason for the increase in numbers is that there are more degree holders, and they make up an increasing share of the workforce. But even after accounting for that, degree holders still have a cause for concern. Their unemployment rate used to be the lowest before 2012, but has since overtaken those of groups of other qualification levels. Last year, it was 2.8 per cent, compared with 2.7 per cent for the group with diploma and professional qualifications and 2.4 per cent for the below-secondary group.

To worsen matters, the long- term unemployed number and corresponding unemployment rate of resident degree holders display the same worsening trends. Last year, there were 5,100 degree holders among the long-term unemployed, translating to a rate of 0.8 per cent.

The group with the second- largest number - diploma and professional qualifications - was way behind at 2,500, with a rate of 0.6 per cent. The post-secondary group had the second-highest long-term unemployment rate, at 0.7 per cent.

The evidence on unemployment rates tells only part of the story. The other part comes from the fact that the increase in the number of economically inactive residents possessing a degree exceeded the rate at which degree holders increased in the population over the last decade.

In other words, the ranks of non-working graduates are growing faster than the rate at which new graduates are being minted. This suggests that some degrees are not being converted into employment.

But, fortunately, Singapore does not have high youth unemployment. Last year, the unemployment rate for residents aged below 30 was 5.2 per cent, which is not high by developed countries' standards, where double- digit rates are common.

The age profile of unemployed graduates is also interesting: Among graduates aged below 30, 7.9 per cent are unemployed. The figure falls to 1.9 per cent for those in their 30s, but rises to 2.5 per cent for those in their 40s and further to 3.1 per cent when they hit their 50s. This suggests that for some degree holders at least, the return on investment in a varsity education may fall after the first decade, or that graduates are finding it difficult to keep up with the demands of the labour market when they hit their 40s and 50s. This suggests a need to boost in-employment training, not just pre-employment training.

While the overall number of economically inactive residents rose a mere 8 per cent, the number of economically inactive degree holders surged 124 per cent over the last decade to last year.

Since economically inactive people are those who chose not to work - including housewives - there is a paradox here in that degree holders should not only be more employable, but they would presumably also avoid not working because of the higher opportunity cost involved. Yet the numbers show disproportionately more of them being economically inactive. This raises the question why more people are earning degrees, if the frequency of not converting them to employment has risen.

Hence, rather than ramp up university places, it makes sense to develop more pathways to allow students to deepen skills relevant to employers. In this respect, the Aspire committee's recommendation for a place-and-train scheme is a good one. This allows students graduating from polytechnics and the Institute of Technical Education to be attached to firms that pay them and send them on work-study stints.

The writer is deputy director, Centre for Applied Research, SIM University.

Singapore Higher Education: What’s a Degree Worth?

Jude Chan 

April 26, 2013

If you don’t have a university degree, you’re soon likely to be part of a dying breed in Singapore.

According to the Singapore Department of Statistics, 74 per cent of Singapore’s resident non-student population aged 24 to 34 years have completed at least tertiary education in 2012, which includes polytechnic diplomas, professional qualifications, and university degrees, up from 49.6 per cent in 2002.

And this figure is set to rise even further by 2020, when Singapore will have six universities offering full-time degree programmes. At the National Day Rally in August 2012, Prime Minister Lee Hsien Loong announced that some 40 per cent of each school cohort will be allocated places at government-funded universities here, up from the current 27 per cent per cent cohort participation rate.

“Singaporeans have very high aspirations. Every parent wants his or her son to do as well as possible, go to university,” PM Lee said in his address. “Many ITE (Institute of Technical Education) students hope to go on to the poly, and most poly students aspire to get a degree. One way or another, they want to get there.”

Indeed, the trend towards the pursuit of higher education has been evident.

In 2012, some 25.7 per cent of Singaporeans and Permanent Residents aged 25 years and over had attained a university degree, up from 14.7 per cent in 2002, according to the Department of Statistics. Another 13.9 per cent possessed a polytechnic diploma or professional qualification, up from 8.9 per cent in 2002.

But it is cross-sectional data by age group that displays vividly a marked shift in the demand for tertiary-level education.

But what is a university degree really worth?

Acting Manpower Minister Tan Chuan-Jin in April revealed that the government will be raising the minimum salary requirement of foreign professionals, managers and executives in an effort to move wages for young Singaporeans in the right direction. Pointing to data from graduate employment surveys by tertiary institutes, Mr Tan said entry-level salaries for Singaporean graduates have been stagnant over the past five years, after adjusting for inflation.

Singapore has seen average inflation rates of close to four per cent since 2008.

According to data from Ministry of Manpower statistics in its most recent wage report published in June 2012, median monthly gross starting salary of graduates in full-time permanent employment has grown marginally over the years.

In 2011, median entry-level salaries for graduates rose to S$3,000 (US$2,427), up S$250 (US$202) from a corresponding figure of S$2,750 (US$2,225) in 2007. The compound annual growth rate (CAGR) of 2.2% per annum for fresh graduate wages falls short of the rise in tuition fees undergraduates pay in universities here.

According to data from global management consultancy Hay Group, which published a series of reports based on fresh graduate salary surveys over the last five years, average entry-level salary for fresh graduates in engineering rose to S$2,777 (US$2,246) in 2012, a total increase of S$152 (US$123) from wages of S$2,625 (US$2,123) in 2008: a negligible increase of 1.42 per cent per annum.

In contrast, tuition fees at public universities have increased at 3.76 per cent per annum from 2007 to 2013.

From 2007, fees for general degree programmes at National University of Singapore (NUS) and Nanyang Technological University (NTU) have increased more than 20 per cent. Singaporean undergraduates admitted in the 2013-2014 academic year will pay S$7,650 (US$6,188) each year after government subsidies.

Some degree programmes at the universities have seen even greater increment in tuition fees. Fees for the NUS law programme, for example, have increased an average of 8 per cent per annum since 2008, to the current S$10,800 (US$8,736). The business and accountancy programmes at NTU cost S$8,600 (US$6,957) a year for 2013/2014 admissions: an average 6.2 per cent increase per annum since 2007.

With undergraduate tuition fees increasing almost twice as quickly as entry-level salaries for graduates, does it still make sense for Singaporeans to pursue university degrees?

In 2007, it would have taken a graduate approximately 6.67 months of their gross starting salary to pay off three years’ worth of government-subsidised tuition fees. In 2011, it would take approximately 7.17 months. (This is assuming all the salary goes to paying off the capital sum invested in their degree.)

Students at private universities have an even longer payback period. At the PSB academy, for example, total programme fees comes up to S$38,160 (US$30,868) for a three-year Bachelor of Commerce (Finance) degree awarded by the University of Wollongong, Australia. Graduates would take almost 12.72 months to pay back the fees.

On the surface of it, something is not adding up: after all, if university degrees are providing less bang for the buck, why would Singaporeans continue to hanker after that piece of paper?

It is in comparing these figures alongside non-graduate wages that one starts to appreciate the worth of a university degree or tertiary education in Singapore.

From graduate employment surveys conducted by various institutions of higher learning, the median monthly gross starting salary of fresh polytechnic graduates increased an average 2.14 per cent per annum, from S$1,700 (US$1,375) in 2007 to S$1,850 (US$1,496) in 2011 – falling below the 2.2 per cent per annum growth rate for degree graduates’ entry-level wages.

Entry-level salaries for fresh graduates from the Institute of Technical Education (ITE), categorised in official reports under “post-secondary, non-tertiary education”, rose to S$1,300 (US$1,052) in 2011 from S$1,217 (US$984) in 2007, a mere 1.66 per cent increase per annum.

The Hay Group study in 2012 found that employers in Singapore place a premium of 48.7 per cent in average for degree holders over diploma holders in terms of starting salaries. Average entry-level salary for a diploma graduate in engineering in 2012 was S$1,882 (US$1,522) : approximately 32 per cent less than that of a degree holder.

According to the graduate employment survey cited in the Manpower Ministry’s Report of Wages in Singapore 2011, university graduates’ expected median month gross starting salary in 2011 was 62.2 per cent and 130.8 per cent higher than their diploma and non-tertiary counterparts, respectively.

In fact, the gap appears to be widening over the years: university graduates earned 61.8 per cent more than polytechnic graduates and 126 per cent more than ITE graduates in 2007. Tertiary education in Singapore is still paying of for degree holders.

So while the value of a university degree is decreasing in absolute terms certainly at the start of a graduate’s career, relatively, it continues to make economic sense for an individual to pursue a degree. Higher or tertiary education in Singapore is still very much in demand.

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