Recently, the CSO released data on immigration and emigration in the year to the end of April 2016. For the first time since 2009, Ireland has registered net immigration. Much of the press coverage has tracked the changes of net migration by nationality, i.e. Irish nationals or non-Irish nationals, or by economic status, i.e. at work or unemployed.
These were all useful, yet the CSO database could allow more detailed analysis.
During a recent coffee break, a colleague at the Irish Universities Association mentioned that someone could examine the number of immigrants or emigrants by their education attainment. This was something that was of interest to me, of course.
In Figures 1 and 2 above, I show the number of immigrants to and emigrants from Ireland by education attainment between 2011 and 2016. At a high level, those with third level degrees made up the majority of migrants, suggesting the following two things. On the one hand, it might reflect a broader picture of the expansion of higher education in both Ireland and many other countries. On the other hand, it implies that educated workers tend to be more mobile than those with lower levels of education experience.
If we exclude those immigrants or emigrants who did not specify their education attainment, we can examine in more detail the flow of people in to and out of Ireland.
The number of immigrants with third level degrees increased significantly from 22,400 to 38,200, while the number of immigrants with higher secondary certificate and below slightly grew from 17,300 to 18,600. It could be argued that the Irish labour market was attractive to those university degree holders. Indeed, nearly 60% of total immigrants coming to Ireland held third level degrees.
On the contrary, the number of emigrants with any type of education attainment declined during the period. In particular, the number of emigrants with third level degrees fell from 30,100 to 25,100, while the number of emigrants with higher secondary certificate and below also declined from 6,200 to 4,500. It may be a result of the strong economic performance of Ireland in the last few years, with more jobs being provided in the workforce.
Combining the number of immigrants and emigrants together, Figure 3 shows the net migration during the same period. Interestingly, those with third level degrees were the only group with net immigration. Net emigration was found for those with lower levels of education experience.
Although the reasons for people moving in to and out of Ireland could vary, the reality is that the workforce in Ireland has become one which increasingly requires higher levels of education experience. It highlights again the meaning of education in the Irish context, especially as the economy continues to grow, there will be more need for educated workers. A possible side effect, though, could be those with no or low levels of education experience may face more challenges or be crowded out.
In line with what is shown in Foley and Brinkley (2015), in this blog I search for empirical evidence in an attempt to answer the question of over-supply of graduates in Ireland. As stated in the previous blog, there would be a couple of likely consequences if there exists an over-supply of graduates. These consequences, or scenarios, are examined in much detail one by one as follows.
1. An increase in rates of graduate unemployment
Data on graduate unemployment rate is not readily available in the case of Ireland, as far as I am aware. The ONS in the UK has been releasing ‘Graduates in the UK Labour Market’ reports for a long period which enable the analysis of graduate employability. Instead, I compare unemployment rates of the labour force by level of education in Ireland between 2002 and 2012. As there seem slight changes in the way third level degrees are identified in early 2009, I present the results in two periods respectively. Nonetheless, the changes are small, and the overall trend remains.
It is obvious from these two figures that unemployment rates of persons with third level education are consistently lower than those of persons without. This finding is in line with international evidence.
Since 2008 there have been increases of unemployment rates across all groups, which is not surprising due to the challenging economic conditions. Even though unemployment rates of persons with third level education increased after the economic crisis, it does not suffice to argue it is resulted by an over-supply of graduates. As Foley and Brinkley (2015) similarly argued that the situation could be ‘in fact more a function of wider labour market conditions’.
As Figure 2 clearly shows, while unemployment rates of persons with third level education more or less stabilised since 2009 although they did not decline significantly either (which was the case in the UK). However, it could be claimed that unemployment rates of persons without third level education continued to worsen after the economic crisis, suggesting that graduates were still in a relatively better place than the others in the workforce.
2. A decrease in the graduate wage premium
Generally, the graduate wage premium refers to the average increase in earnings graduates can expect when compared to their non-graduate counterparts. Foley and Brinkley (2015) suggested that, ‘Oversupply of graduates would lead to a reduction in this figure, as graduates were forced down the rungs of the labour market.’
As Figure 3 shows, relative earnings of tertiary-educated workers across the OECD countries are impressive, with Ireland ranked amongst the countries with the highest graduate wage premium. In Ireland, persons with tertiary education earned nearly 1.8 times of what earned by persons without university degrees.
More relevantly, we would like to know how this figure changes across years. In the following table, I use the OECD data to compare the trends in relative earning of tertiary-educated workers in Ireland with those in the OECD countries and the EU-21 countries between 2005 and 2013.
Table 1: Trends in relative earnings of tertiary-education workers (2005, 2010-2013)
Note: 25-64 year-olds with income from employment; upper secondary education and post-secondary non-tertiary = 100.
In the EU-21 countries, relative earnings decreased slightly during the period, while thost in the OECD countries only increased by a margin. By contrast, the figure in Ireland increased significantly, with relative earnings of graduates increasing from 177 in 2005 to 190 in 2013. This clearly indicates that graduate wage premium has become more prominent in the Irish context, which is against the suggestion that there is an over-supply of graduates in Ireland.
3. What about graduate emigration?
For the analysis of Ireland, emigration is a factor that cannot be overlooked. On the national level, around 480,000 people left Ireland between April 2008 and April 2014, while a total of 338,000 came to Ireland as immigrants over the same period, suggesting that there are 141,000 net migrants who left the country in the six-year period.
It is not hard to assume that graduates in Ireland are probably more likely than the others to emigrate, given that tertiary-educated workers are in general more mobile than those without university degrees.
In 2013, the Higher Education Authority (HEA) released a publication on the destination of graduates, which shows that, “Of those graduates in employment those gaining employment overseas doubled over the last five years from 5% of the 2008 graduates to 10% of the 2012 graduates reflecting the continued need for graduates to pursue opportunities overseas, a trend that is likely due to the current economic climate in Ireland.”
Surely, the figures shown in the 1st and 2nd parts will change if these graduates would have remained in the Irish labour market, but an accurate estimation is impossible to get. In 2011/12, there were a total of 60,000 graduates from all subjects in all HEA-funded HEIs. Of these 60,000 graduates, just under 50% of them were in employment after graduation (as the rest chose to pursue further studies), which gives us 30,000 graduates in the workforce. If 10% of them emigrated from Ireland, the number would be 3,000.
Therefore, a simple question would be, if these 3,000 graduates have stayed in Ireland to seek employment, how would the whole picture change? To answer this question, we definitely need a lot more data, such as the demand from industries and the employability of graduates, which are currently missing.
Although I agree that it is likely the unemployment rates of graduates could rise up if there are more graduates entering the labour market than it is (if we think the demand of industry is stable at a certain point of time), the majority of existing data tend to argue that there is not an over-supply of graduates in Ireland.
The debate on if there is an over-supply of graduates in Ireland has been ongoing for some time. I remember myself attending an event last year, in which a number of speakers addressed this issue, analysing from different perspectives and coming to different conclusions. If we consider the complexity of the issue, e.g. the number of factors at play and the limitations of research approaches used, the disagreement is not surprising.
On the one hand, the article referenced the results of studies by ESRI researchers which show that “Ireland emerged as having the highest rate of ‘overeducation’ in Europe”, with one of the authors suggesting part of the reason is that, “It could be there are too many graduates”.
On the other hand, the article cited Tom Boland, the chief executive of the HEA, who said: “Once you talk about overeducation then you are into how many are you going to educate, and then you are into a quota. And if you are going to come up with a ceiling on numbers then you might exclude someone who is going to come up with the cure for cancer; you just don’t know.”
Put simply, I think these two arguments are made from different points of view, both have some supportive evidence, but, it seems to me, one cannot be used to reject the other.
The concept of overeducation adopted by ESRI researchers is usually tested through questionnaires sent to either employees or employers, who then indicate if a specific job requires graduate knowledge or skills and if the person who is doing this job has a graduate education or not. When a graduate takes up a job which is considered, either by this graduate himself or her/his employer, not to require graduate knowledge or skills, it is concluded that this graduate is overeducated, as he ends up with a ‘non-graduate’ job. Nonetheless, the reason put forward by Tom Boland is not from this approach but based on the “who should or who should not attend higher education” debate. It is a hard question to answer, definitely if one wants to have a concrete numeric answer.
A recently published work by the Work Foundation in the UK – titled “Unemployed and overqualified? Graduates in the UK labour market” – provides some insightful evidence on this debate in the context of the UK.
In particular, the authors provided the following thinking: “If the overall supply of graduates was indeed outstripping aggregate demand, there would be several likely consequences. The first would be an increase in rates of graduate unemployment, especially amongst the more recent cohorts entering the labour market. The second would be some displacement of less skilled employees, as graduates struggling to enter the labour market were prepared to look for work outside of ‘graduate’ roles. This, in turn, would lead to a reduction in the additional ‘wage premium’ that graduates can expect to earn over the course of their working lives.”
The authors then continued to assess the evidence to assess the merits of the claim over the course of two decades between 1992 and 2011. In short, the response to the question that if there is an over-supply problem in the UK was no. The rise in graduate unemployment in most OECD economies, the UK included, is almost to do with cyclical factors and has very little if anything to do with an over-supply of highly qualified labour. Also, while supply has continued to expand at a rapid rate in the UK, it has not resulted in a significant change in relative wages: the graduate premium is significant in all OECD economies and has not declined over the last decade.
Although the authors cautiously pointed that this does not necessarily mean that the higher education sector functions fully effectively, there is no evidence to suggest the existence of an over-supply of graduates in the UK.
Then, for us, the question is, what is the evidence in Ireland? Whether or not the situation here is different from its UK counterpart on this issue? In the next blog, I will present more details of data analysis.
The 4th HEA Forward-Look Forum, which will be held on November 11, looks closely at the relationships between skills and employability of university graduates. This topic, no doubt, is of great importance for any country, including Ireland, which is recovering itself from the hard-hit economic crisis in 2008. In Ireland, the Government is keen to focus on the labour market, especially the employment and unemployment rates. Creating more jobs and reducing the unemployment rate have become one of the main tasks of a large number of Government Departments and Agencies. For instance, the Action Plan for Jobs, the Government’s key instrument to support job creation, was introduced in 2012 and labelled as a whole-of-Government initiative.
Within this context, the Forum is timely to bring up discussion and debate about the role of higher education in meeting the demand of the labour market for educated and skilled graduates. It is obviously crucial to understand what kinds of skills are required in the labour market for graduates to be better prepared and trained to be competent in what they will work on. The landscape of higher education has been changing dramatically during the last few decades, with expectations from them shifting, activities by them adding, and missions for them expanding. In 2009, John Goddard argued that now is the time to re-invent the notion of broadly based civic university, and claimed that civic engagement has to be an institution wide-commitment. To engage with the employers is an important part of this process.
A commonly used way to gather information about the importance of different types of skills is through questionnaires sent to employers themselves. In most OECD countries, there are national surveys on employers’ perception of graduate employability, in which employers are in general asked to indicate whether the sector-specific skills of graduates are those that they want. Although it seems sensible to gather such information directly from employers, there are some potential problems with this approach which are worth explaining. An example explaining the risk of relying on employers’ views is given in a recently published OECD paper entitled ‘Higher education labour market relevance and outcomes: Elements of an analytical framework’.
The example given in the OECD paper is based on two surveys in Norway: one is the Business Survey (which is carried out twice a year and asks more than 12000 enterprises about their labour needs) and the other one is the Graduate Survey (which collects data from fresh graduates in the May-June session and asks about their labour market situation in November around 5-6 months). These two surveys in 2011 showed great differences between the claimed demand for certain graduates and the labour market outcome of those graduates.
On the one hand, the 2011 Business Survey indicated that “16000 additional engineers and ICT workers were needed and in May 2012, the category of engineers and ICT-workers was the single largest unmet demand for labour, with 8000 places that could not be filled”. On the other hand, the November 2011 Graduate Survey for those with Masters degree showed good transitions to the labour market overall, “but extremely poor outcomes for ICT graduates, of whom 13% were unemployed six months after graduation”.
The OECD paper continues to state that: “This coexistence of employer claims of significant skills shortages and graduates with qualifications in the same field facing significant difficulty in finding jobs is difficult to explains, but at the very least it suggests that employer surveys should be interpreted with caution.”
Although the example is based on data from Norway, it has useful implications for countries such as Ireland to consider a better way to come up with a framework of measuring graduate skills.