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Higher education graduates in East Asia: Too few? Too many?

Emmanuel Jimenez's picture
East Asia and Pacific countries have more university graduates than ever, yet employers say they don't find the skills to match their needs.

The number of people with higher education credentials has never been higher in East Asia and the Pacific (EAP), according to a new World Bank website on higher education.   Over the past two decades, the number of university graduates in the region has increased significantly.  In countries like Thailand, Indonesia, and China, the percent of tertiary level graduates in the workforce is now about 20%, double from what it was 15 to 20 years ago. 

At the same time, employers fret that they are not getting the skilled workers they need to compete in a global economy.  Investment climate assessments  report that 20% of employers feel that skills availabilities are a major impediment to business, as much as, if not more than, meeting onerous regulations.

Such employer frustrations must puzzle the many higher education graduates report having trouble getting jobs.   And some who get jobs are the first to lose them during economic downturns, as two of my nephews living on either side of the Pacific Ocean recently found out.  Unemployment rates among tertiary graduates are as high as 10% in countries like Indonesia and The Philippines.  As an unemployed 21-year old newly-minted Vietnamese BA groused in a recent consultation:  “I expected to find a job easily since I have a degree in computers. But, after going to multiple interviews, I found out that firms are hesitant to hire me because despite my degree, they have to train me to meet their work requirements. It is easier for these firms to hire a graduate with a couple of years of experience instead.”

What’s going on?  Getting this puzzle sorted out may not only determine whether low-income countries (LICs) can become middle-income countries (MICs) and MICs, high-income countries (HICs).  They may also affect social stability as young people’s expectations are at an all-time high.  It is thus not surprising that governments are considering investing a great deal of their national wealth on expanding and improving their higher education systems. 

I would like to know what readers think about this puzzle: lots of graduates, not enough skilled workers, high rates of graduate unemployment, frustration all around despite high rates of economic growth.  Let me advance just a few hypotheses (conveniently labeled as “H” to give our discussion a veneer of academic respectability) to get the discussion going:

H1: Despite the higher number of graduates, enrollment rates in most EAP countries are actually low when compared to countries with similar income levels and growth rates.  Enrollment rates are 24% in EAP, much lower than regions such as Latin America and the Caribbean, where it is 35%, and Europe and Central Asia where it is 55%.  So, governments should spend more on access because, even without university degrees, having some years of tertiary education, including in polytechnics or community colleges, pays off.
 
H2:  The high unemployment rate of graduates is due, not to their oversupply, but to the fact that too much of tertiary education in EAP is of low quality and has irrelevant curricula.  Young people are learning the wrong things.  For example, employers are seeking ‘softer skills’ such as team-building and communications and technical skills such as computer familiarity.  This would argue that increased investment should focus on quality rather than just quantity.

H3: High unemployment may be due to the unrealistic expectations of graduates that they are entitled to ‘white collar’ jobs in offices and that ensure lifetime security.  In contrast, in the US, the average college graduate will have had 7 jobs in the first two years after graduation, and many of them in areas that are unrelated to their field of study or in what are seemingly menial jobs but which teach invaluable life skills.  Societies need to prepare the expectations of young people about labor market realities and about the need to get good basic experience early in their careers. 

Do you think these hypotheses are valid?  Do you have any that you’d like to advance yourself?

Comments

Submitted by Ian Tait on
Like most things social and economic, you cannot reduce effect down to a single cause. The phenomena you describe is likely due to multiple reasons which may be different in different regions. In the case of the Laos PDR where I am situated I seem to run into a lot of young restuarant waiters with Bachelor degrees. I also work with a lot of these young graduates that have managed to get a relevant job and I am sensitive to their frustration when they continue to get low pay with little prospect of advancement. My observations include O1 - the GoL has promoted and invested heavily in tertiary education in recent years. The system has grown rapidly in size, but much slower in standard and is just churning out too many poor quality graduates for the job market. I once asked a senior academic why some graduates with pass grades were so poorly skilled. His reply was that they had to make room for new enrollments. Hmmmm!!!!! O2 - Laos (esp. in govt) still has a strong culture of appointment by "connection" rather than on merit. So you have a lot of barely qualified people in senior positions and a lot better qualified and more able people getting very frustrated under them.

Submitted by Sue on
I live in Cambodia (and have for several years). Many young people get degrees in 'Management" and believe they will get out and sit behind a desk and do next to nothing and get paid well. We all know that it takes at least a few years of experience before anyone can make it to the managerial level. The reality here is that over half the population is under the age of 25 and employing young graduates (or young people in general) is becoming a big problem. Two solutions I see for Cambodia would be for the government to lead and support 1) a national hospitality school since tourism is the #2 wage earner and 2) a technical school for males to learn proper construction skills. There is a lot of construction taking place especially in Phnom Penh, but I've been told that the primary workers are Vietnamese and the Cambodians are the unskilled guys who lug bags of sand and do other menial tasks. I've also heard that current plumbing, electrical and general construction methods are not safe or are improperly done and will need to be fixed in the future. So, more hands on, technical skills and less "managerial" skills while letting students know about the realities of the job market once they graduate would be a good start.

Submitted by Anonymous on
You have posted a very interesting topic, the puzzle of more university graduates and yet not sufficient skills as demanded by the labor market. The list of hypothesis is rather comprehensive, including still need to expand access, quality, and expectation and I believe they are all valid. I think the key here may be the quality of education, quality not just of tertiary education, but of the entire formal education system. Education system has not been able to keep pace with the fast changing world. Despite advances in technology, communication, transportation, globalized and competitive economic environment, our school curriculum and pedagogy remain largely the same as two decades ago. Teachers pass down facts and students try to memorize them for tests. Such system is difficult to cultivate "soft skills" demanded by today's economy. Education of "soft skills" apppears to be difficult to co-exist with mass education. There is little experience in East Asian countries either on how to improve its curriclum to cultivate "critical thinking", "problem-solving", "team work", etc. Is there also a cultural dimension here?

Submitted by Anonymous on
Why couldn't the reasons the low quality of the Diploma. I was involded in a project aimed to compare, amongh other issues, quality of S&T education in China and India. In that process we found some studies, mainly based on interviews to multinationales CEOs located in Asia, that show the "quality" of the Diplomas in these two countries made very difficult most of the times to find people with adequate human capital, despite holding the Diploma. The latter combined with the high expectations on the graduates side might be an explanation for the high unemployemnt rate. Enrolmment could be low but it is not possible (and useful) to expand under these conditions.

Submitted by Joseph on
This is an old familiar problem of not enough and/or not the right graduates. In part this is caused by in-efficient labor markets. Universities (or rather students) have difficulties matching their programs to the demands of employers. In the olden days this was to be fixed with national skill analysis - determining the skills in the economy and extrapolating demand for skill based on sector growth. However, that did not really work among others because of the rapid changes in technology. These days of globilization and easy capital flows make predicting what skills firm need even more complicated (and impossible). So what is the answer to this labor market issue if there is an answer. The only approach that in my experience showed promise is to demand that universities publish detailed information on the employment of graduates. For each graduating class, the university finds out how many are employed by program/degree/skill, how long it took them to get a job,and what their earning are. This information needs to be published regularly and made available to, in particular, high school graduates (and their parents) who are considering enrolling in university (but do not know which university or what program to apply for). Students and their parents have different criteria for choosing a university or a program. For some immediate employment upon graduation is a must. Others may decided to study literature eventhough getting a job in that field may be difficult or impossible. However, personal choice can be the only efficient way to meet labor market demand. One other aspect of this approach is that universities will want to expand and improve departments where graduates find high paying jobs. They usually do that by among other attracting faculty with high reputations and visibility in those fields. Often those faculty have close relations with firms through research or consulting which enables them to make the curriculum relevant to the skill needs of the firms.

Submitted by Mavee on
H2a:  (variation of H2...it is not due to low quality of irrelevant curricula) High unemployment rate of graduates is due to the unrealistic expectations of employers. In general, the young graduates are receiving the basic solid education coming out of an undergraduate degree. Employers are expecting educational training and experience one would normally expect from a graduate-level student. Employers are not willing to invest the time in training a high-potential "BA/BS/BA" graduate; they are expecting new graduates with the qualifications of someone who has been out a couple of years. This would argue for a joint resolution with universities re-evaluating their curriculums to match the current expectations of industry and companies supporting the universities by offering undergraduate internships to better prepare the new graduates.

Submitted by Markos on
Obviously this topic can be considered from a variety of angles and varies greatly across the region. I can only speak from personal experience in China, to say that one of the main problems is a lack of any kind of work experience on the part of many fresh university graduates. Due to the heavy level of segmentation of labor in the PRC, most people who go to university are not going to have had to do part-time jobs in McDonalds or what have you because there are less-educated people far down the value chain who are going to be doing those jobs, with internship opportunities also scarce, so as a result most students just don't have the experience working right out of the box when they graduate.

The recents posts have all enriched the discussion. Really fascinating experiences and suggestions for countries. In the interests of keeping the posts short, I will only comment on one issue now and get back to others later on. A couple of blogs expressed concerns about university students or graduates doing work for which they may be "overqualified". Ian writes about young waiters with bachelors degrees in Lao PDR; Markos worried about Chinese students doing part-time jobs at McDonalds. My question is: is this necessarily a bad thing? I know at least one graduate who is very closely related to me (if I reveal any more about who she is there may be civil war in my family) who is waiting on restaurant tables, not in a developing country, but in New York City. Her degree is from one of the top-ranked universities in North America. Waitressing allows her earn a living while she pursues her (non-paying) passion, art (she's a very good painter). But it also has developed life skills that surely must be of value. She shows up to work on time, is very much more organized, has developed memory skills, works well on a team, honed foreign languages and dispenses knowledgeable advice on food, drink and, occasionally, love life. So, perhaps, there is more than one way to acquire skills and that university training may not be inconsistent with starting off with what are seemingly menial jobs -- as long as they eventually lead to better ones later on. Economists would say that the age-earnings profile may start off low but should be steeper for the university trained than for those who are not. But if graduates expect their earnings to start high, they may be disappointed.

It's really interesting how diverse views are on this topic, just based on the comments so far. Some think that more 'hands on' technical skills are key for East Asia's growing economies. Others think that what is really needed is 'critical thinking' or 'problem solving' -- what some call 'soft skills'. The answer of course is that all of these are probably needed. But what should the priorities be? They obviously differ across countries...but in today's global economy, there may be some common needs. Experts like Harvard's Professor Richard Murnane have long argued that routine manual and cognitive tasks like filing and bookkeeping have become less important in the past 25-35 years as computers have taken them over. People are needed more on tasks that need "expert thinking" (knowing about relationships and patterns instead of facts) and "complex communications" (observation, listening and interpretation). See this site for more: http://go.worldbank.org/GXEOQJQ2T0

Submitted by Mario Ferro on
As a recent graduate student (from London) interested in the asian job market I find this conversation very stimulating. Looking at the problem with the lenses of my experience I do suspect that asian job market share some similarities with its western counterpart and that both employers and undergraduates are like snipers shooting too high. In particular, employers look for people with technical skills, managerial competencies, leadership etc....potential CEOs basically, already for entry positions. This is probably an unrealistic expectation for ordinary graduates. On the other hand, fresh graduates, especially those from top schools or with high grades, might believe that the "world is their oyster" since day one and look for jobs above their possibilities. What I am talking about is basically a combination of the hypotheses H2a (by Mavee) and H3. Emmanuel is right when he says that being a waiter in NYC can teach, even to a high level graduate, skills that no university has on its curriculum. These skills are of absolute value on the job market and most of them CAN NOT be thought of as part of a university curriculum, simply because they are not academic skills. This in a way supports H2, but does not offer high margin of improvements. I would conclude, that the solution needs to tackle both sides of the equation and both employers and students should open their eyes to hit the target. Asian employees might want to offer training schemes for fresh graduates to teach them non-academic skills. This is already common practice in many western countries (UK), but not in all of them (Italy). On the other side students should be long sighted enough to understand their limitation and those of their academic background, consequently looking for smart ways to compensate their skills gap (yes, including waiting!). I had to learn these lessons myself, but I did learn them faster than some of my colleagues. After some months of (supposedly) low qualified job, I am now ready for the dream contract coming in a few weeks time.

Submitted by A.S on
Well I'm from S.Korea and we seem to have a very similar problem. I myself have been educated in Australia during my adolescence. Due to private reasons I had to return to Korea. Upon entering a university here (less competitive one, I must confess.) I've seen lots of students who are concerned with their future career and low job acceptance rate. My ideas are soley based on my experiences here at Korea. Its no wonder that employers believe that they're not getting skilled university graduate employees. Korean students tend to focus on having excellent specs - A collection of state approved licenses, TOEFL, TOEIC and many other 'legitimate tests' approved by well known institutions. Along with this the education system strongly prioritizes memorization instead of creative and logical thinking. As for specs, I know that you cannot just criticize koreans' spec oriented attitude as guys in US or Australia care about their records too. However it is in my humble opinion that these attitudes for specs are quite obsessive and taken to extreme levels. Especially when you see guys who achieved over 110 in TOEFL IBT and 900s in TOEIC and yet cannot even have a small talk with a foreigner. The memorization based education system contributes the most to your puzzle. I've seen people who literally memorize the textbooks and ends up with A+. Whats even more depressing is that most of the tests are composed of short answer questions instead of questions which require one to analyze or express personal opinions based on data or facts. The classrooms are rarely discussion based regardless of its size. To encapsulate, the system rarely makes you think on your own. (I'm not sure if it would make sense but this sort of resembles H2) Other points supporting your puzzle may be things like; 1) Koreans will usually work anywhere if given good pay, thus only a few pursue their passion. Therefore they will still take jobs which are out of their interests or jobs which do not fit their personality. (This goes with H3) 2) The students around me (I will not say koreans because thats a way too extreme classification) believe that, to some extent, firms should take social responsibility, which can be either good or bad depending on your view. But I do not think that firms should bear the social responsibilities and I think some of the managers may agree with me on this. Firms should pursue for profits. To summarize, I do not know what the situation is like at firms as I'm just a student. However as someone who was raised up in Australia, I believe that I can see this issue with 3rd person view as I'm currently trying to transfer to US, meaning I would prefer not to be educated under this system. I thought of sharing my possibly immaturely biased observation. PLEASE BE ADVISED THAT my points are soley based on my own values and stereotypes. I'm just an 18yr old guy doing economics.

Submitted by JC on
I taught at a state university in Viet Nam for an academic year. The comments so far all have merit, and most of them hit on parts of the problem. I would mention a few more: in many countries university academic staff are very poorly paid, so two things happen: they hold multiple jobs and can't do a good job at any of them (except when they must to keep the appointment), and they are open to the possibility of corruption. 'Gilded youth' can sometimes buy there way through much of their university career, or obtain fraudulent but apparently legitimate credentials, but are likely to have the connections to land decent jobs so hurt the good students without the connections. Curricula are often somewhat outdated and ordinary students often cannot afford up-to-date books or internet access. Entrance to and progress through the university depends largely on exam performance, and exams are unimaginative and emphasize rote learning. In some countries, students still progress in cohorts following a rigid curriculum for the entire career, so must just soldier on even if they are clearly in the wrong field -- and they are unlikely to be truly competent graduates. Lastly, in some countries political issues can intrude on what is taught or who can graduate. In Viet Nam, improvement will require major reform of the internal organization and administrative structures of the universities, as well as finance, and effective quality control external to the individual institution. I regret I see little likelihood of it happening, despite the widespread agreement on its necessity by those who have seen how things are done elsewhere.

Submitted by Ejaz Ghani on
Nice article. Do graduate students in East Asia have more trouble finding jobs compared to other regions? Or to put it differently, is the rate of return to an additional year of schooling in East Asia lower or higher compared to, say, South Asia and more advanced countries? Does manufacturing-led-growth (manufacturing is less skill intensive) compared to service-led-growth (services are more skill intensive)matter for rates of return to education. Data on return to education can be accessed from Barro and Lee (2010. Data on growth strategies can be accessed from our South Asia Service revolution report (2010.

The discussion of why graduates, including East Asians, are finding it hard to find work, even when employers complain about how hard it is to find skills, continues to be very stimulating. Thanks to all for participating. Some refinements to the hypotheses I posed include the need to align the expectations, not only of students and employers too (as suggested by Mavee and others). Others suggested that low quality and irrelevance may be more at fault and this could be partly due to the poor motivation and training of teaching staff, resulting in the low quality of instruction (as mentioned by JC and AS). To the extent that low quality and relevance are to blame, what can be done? JC, for example, suggests that better motivation for higher pay for professors is the way to go. But that would only work if higher pay is a reward for better performance. Any examples of that? What do you students think? If your professors were paid more, would they do a better job? Maybe it’s not the professors as much as it is poor infrastructure. Upgrading ill-equipped labs or computer equipment could go a long way. Or perhaps it’s how universities are financed and governed. As Ian suggests, some institutions have every incentive to maximize quantity by getting as many graduates through as possible, regardless of quality, simply because that is what generates revenue. Much like fast food restaurants do with their diners, some institutions may want to get as many students in and out as quickly as possible. No wonder some graduates end up working at MacDonald’s…they may have graduated from a university that followed its business model. What do you think? As you ponder, you may be interested in a few references. Jamil Salmi’s recent book on World Class universities (http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTEDUCATION/0,,contentMDK:22103637~menuPK:617592~pagePK:148956~piPK:216618~theSitePK:282386~isCURL:Y,00.html) says that there is no one model for getting to the top. Countries must pick their own strategies but those that succeed have universities that have “high concentrations of talent, abundance of resources, and flexible governance arrangements. “ And most important, they must be part of a system that also caters to the non-elite. For more ideas that are specific to East Asia and the Pacific Region, have a look at some of the country case studies on the Higher Education website. http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIFICEXT/0,,contentMDK:22535968~pagePK:146736~piPK:226340~theSitePK:226301,00.html

Submitted by Anonymous on
We must first assume the education is the lever through which we acquire skills and knowledge to become better human beings and contributing members to society. A desire for lifelong learning should be part of our human development DNA. Universities, polytechnics and other educational institutions therefore play a critical role in structuring the learning process. Rather than asking the question of whether we are churning too many graduates for too few jobs or not enough graduates for too many jobs, we must first ask ourselves what higher education means for us. To me, personally, education means the enlightenment of minds which goes beyond numbers and trying to balance demand-and-supply of whether too many or too few graduates are being churned out for the job market. The answer from my perspective will therefore be that 'There's never enough graduates who are qualified enough'. Educational institutions all over the world are offering graduate level programs to give people the opportunities to acquire the necessary skills not just to work but to socialise and to think more critically (even though in the asia context, learning is largely done through rote-learning, it is still a skill that needs to be practised and acquired). These institutions have adopted curricula and pedagogies that reflect the unique culture and contexts in which they have been situated - whether they have been affected by resource, economic, political factors etc. We know there are centres of excellence that we aspire to become - the Harvards, MITs, Stanfords, Cambridges but let us not overly emphasise these and thus lose focus that we are standing on the shoulders of local giants who have gone on before us. Being an Asian, I think we have under-played our capabilities and thus limit ourselves in terms of what we have achieved and can potentially achieve. I like to suggest a simple solution if we need to strike a balance between the demand and supply of graduates for the job market (as I mentioned earlier, the question of striking a balance for demand and supply may be onerous because higher education is supposed to be a given and not bounded by economics). So if we need to have a solution at all, I like to suggest the creation of a marketplace for employers, training instiutes and jobseekers to meet together and interact on employment-related matters. Such a platform should be kept robust & expansive to engage as many organisations and people as possible (much like our local marketplace) so that everyone is kept abreast about the latest in the labour market. In Singapore where I am situated, we have an organisation called the Employment and Employability Institute www.e2i.com.sg where the the pulse of the job market beats. A centralised platform as such will help us have a better idea what the situtation is like real-time in local / national context, rather than grasping at straws trying to establish what is lacking and drawing comparisions across the globe which may be helpful in certain contexts but not in others. Perhaps then, we could sharpen our definition about the problem we are trying to tackle.

Submitted by Catherine Wang on
I work for a national education research institution based in Bejing. I appreciate your point: "while many higher education graduates report having trouble getting jobs, employers just fret that they are not getting the skilled workers they need to compete in a global economy". As I observed, this is exactly what's happening in China. I would add three more hypothesis to the puzzle: 1. The higher education students are lowly motivated to learning since their curiosity and passion had been killed by 12-year long examination driven education system where they're pressed to work terribly hard for success in highly competitive university entrance examination. In the end they turned to be much less interested in learning any more and they don't learn much really in universities. 2. It might help if there’re better quality career orientation and career preparation learning programs integrated into the higher education cycle, as I observed in university in other countries. The students were basically less connected to the community for being preoccupied by college examination preparation in primary and secondary schools. The students need to learn a lot more knowledge and skills to get ready for employment ranging from dinner etiquette, to socialization and to career planning than their peers in other countries. It is even more challenging for them to get better employment when quality career orientation was not in place. 3. The low quality of post-graduate education. An important part of the post-graduate education is about research methodologies, either qualitative or quantitative. Oftentimes one might find that the students here, even in key higher education universities base their research on secondary data and approach to data analysis is not satisfyingly justifiable. They spent most of their time working on their supervisors’ projects during their post-graduate study. It is doubtable if they really master methodologies on data collection and data analysis and theorization at the end of their study, even those Ph.D. graduates. These are based on my observations and discussion with collegues in and outside China. Look forward to learn more about the real contributing factors behind the puzzle.

The last two comments, one sent anonymously and one by Catherine, are really thought-provoking. Among other things, they raise the point that perhaps a big gap in universities is career placement. I looked at the Singaporean Employment and Employability website that our anonymous contributor suggested and was impressed. There was a shared site for both employers and graduates to exchange information and ideas leading to 'fairs' to match people with jobs. Catherine similarly suggests less emphasis on exams and more on placement for a life beyond academia. In many campuses in North America there are active career placement centers. I 'googled' the words "career placement in universities" and was immediately pointed to the sites of placement centers of major universities which seemed to have a lot of activities. My question is to what extent East Asian universities have similar placement centers. And how effective are they? I know of no assessments of such centers and it would really be useful if others did...or shared their experiences with working through them.

Another possible reason why some university graduates are unable to obtain the expected high returns to education may be that their family background may disadvantage them. In a recent background paper for the World Bank's Higher Education Flagship, Professor Chris Sakellariou of Singapore's Nanyang University finds that "graduates with higher socioeconomic background derive greater benefits in the job market...Clear evidence is found that the marginal 'return' on schooling increases by both family income and the father’s education. In other words, individuals from less privileged backgrounds benefit much less from more education." That is, the rich get richer. The link to this study is found here: http://siteresources.worldbank.org/INTEASTASIAPACIFIC/Resources/EastAsia-LaborMarketOutcomesofHE.pdf Part of this phenomenon may be because those from disadvantaged backgrounds are unable to access higher quality (and more expensive) institutions. If so, part of the solution is to provide more scholarships that are targeted to the poor. There are some needs-based scholarship programs in East Asia but they are limited in number and scope. Even when they are available, they are often not enough to cover the costs for the disadvantaged. Many East Asian countries are beginning to address this, according to the studies in the World Bank’s Flagship website, but there is still a long way to go. In the region, merit-based scholarships tend to be more common. Another possibility is that, even if those from disadvantaged backgrounds get to quality institutions, they may face difficulties in entering the labor market. University graduates from lower-income families tend to lack the connections that are often useful to obtaining a job, especially the first one. Or some from different socio-economic strata may face discrimination. This can happen even in developed countries. In a famous study in the U.S., researchers Marianne Bertand and Sendhil Mullainathan conducted an experiment in which they sent out nearly 5,000 resumes for 1,300 job openings advertised in Chicago and Boston. These resumes were fabricated and the researchers randomly assigned common black and white names to them. Disturbingly, the applicants with ‘white-sounding’ names were 50 percent more likely to be contacted for job interviews than those whose names were ‘black-sounding.’ For more details, see their paper in: http://www.economics.harvard.edu/faculty/mullainathan/files/emilygreg.pdf In this case, policies need to address anomalies in the labor market rather than in the education system.

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