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

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?