Thursday, October 23, 2014

Graduate employment: Degrees of relevance

 Oct 23, 2014


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

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