The world of work is being transformed by a complex and interdependent set of forces – including technology, changes in workplace organisation and employment relationships, environmental and demographic challenges, and more. No group of workers will confront the reality of constant change more directly than young workers. As new entrants to the labour market, they cannot count on the protection of previous structures or practices to insulate them from coming changes. They immediately face the challenges of an increasingly precarious job market – one in which less than half of all employed Australians now fill a traditional “standard” job (full-time, permanent, paid work offering normal entitlements like paid leave and superannuation).

Holding a university degree is still a vital and valuable asset for young workers entering this challenging and unstable milieu for the first time. Individuals with university degrees are more likely to be employed, to have more stable jobs, and to be paid more. But despite this relative advantage enjoyed by university graduates, employment conditions have become much more challenging even for graduates. Rates of graduate employment in full-time work are down significantly over the past decade, and there is evidence of a growing mismatch and underutilisation of university graduates in positions that do not fully or even partly utilise their hard-won knowledge and skills. At the same time, employer complaints about supposed skills shortages and the dearth of “job-ready” graduates are as loud as ever; the report documents that those complaints need to be interpreted with considerable scepticism.

Australia’s higher education system could do a much better job at anticipating the needs for highly-skilled workers in the future, evolving their program offerings in light of those needs, and then assisting students as they traverse their university educations and find meaningful, relevant work.

This comprehensive new report from the Centre for Future Work, developed in conjunction with Graduate Careers Australia (an association that has worked to gather data and make recommendations regarding university graduate employment issues) provides an overview of the prospects and challenges faced by future university graduates. The report confirms that university education makes a vital, essential, and valuable contribution to Australians’ prosperity: both at an individual level for those who have attained higher education, and at the macroeconomic and social level. But it catalogues gaps and failures in crucial education-to-jobs transitions, considers the most likely factors contributing to those gaps and failures (while dispensing with some commonly-cited but unconvincing myths and stereotypes), and makes several concrete recommendations for policy change and innovation.

Key findings of the report include:

• Employment outcomes for university graduates have deteriorated notably since the GFC. Full-time work placements have deteriorated (from 85% in 2008 to 73% in 2018, measured by full-time employment 4 months after graduation). Many graduates report being underemployed: both quantitatively (working fewer hours than they want) and qualitatively (in jobs that do not fully or even partially use their hard-won expensive skills), and insecure work has become a big problem for graduates (like for others in the labour market).
• Employers continue to complain about pressing “skills shortages” hampering their growth opportunities. But careful empirical data suggests this claim is questionable. Reported skills shortages in most occupations have in fact eased considerably since the GFC.
• Another stereotype not backed up by hard data is the common assumption that STEM and technical skills are in the most short supply, and that STEM graduates will have the best employment outcomes. For example, math grads have one of the worst full-time employment placement rates of any discipline. Employers report they especially seek applicants with verbal, social, problem-solving, and communication skills.
• Vocational degrees (tied to specific occupations, often regulated – like health care, engineering or teaching) have the best employment placement rates.
• Therefore, the solution to graduate employment challenges must include better strategies for directly linking degrees to jobs: for example, through paid placements, occupational licensing, and accreditation.
• Australia’s system for planning skills / higher education / job placement functions is fragmented, and often contradictory. We could learn a lot from other countries (especially in Europe) which have taken a more hands-on and direct approach to forecasting future skill requirements, planning higher education offerings accordingly, and channeling graduates directly into relevant career opportunities.
• The report makes 9 specific recommendations to improve university-to-work transitions for future graduates, including establishing a national higher education planning capacity, and creating a timely and high-quality labour force information system.
• An overarching recommendation in the report is a call for a new social compact for universities as major actors in Australia’s skills system. This includes increased public funding for universities attached to requirements for national policy coordination among universities, expanded employment-to-jobs programming, and stronger mechanisms connecting public research to the development of an innovation-intensive, high-value export-oriented industry policy.

Download the full report, The Future of Work for Australian Graduates: The Changing Landscape of University-Employment Transitions in Australia, by Alison Pennington and Dr. Jim Stanford. There is also a 12-page summary report available for download. The report was commissioned by Graduate Careers Australia.