Competition in the training market Editors Tom Karmel Francesca Beddie Susan Dawe
The record of the higher education sector in meeting skills needs
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The record of the higher education sector in meeting skills needsAs in the vocational sector, in the mid-2000s the publicly funded higher education sector did respond to labour market movements. Table 4 shows the movements in enrolment shares over the period 2001–07. In the 2005–07 period, approximately 4000 commencing places in health fields were allocated to universities.xxvi With the ‘pipeline’ effect—students continuing on after first year—around 7000 of the 10 000 additional health places added over the period 2005–07 can be attributed to active steering of the system from the centre. The other 3000 appear to have come from institutional decisions. Perhaps fortunately, collapsing demand for information technology courses freed up places in the same funding cluster as allied health. Universities must either reallocate places internally or return them to the central pool.xxvii Table 4 Distribution of Commonwealth-supported places (CSPs) between fields of study, 2001–07 (%)
Notes: HECS-liable places 2001–04, CSPs 2005–07. Minor fields of study removed. Society and culture combined with Creative arts to enable comparison with applications statistics. Source: Adapted from Department of Education, Science and Training and Department of Education, Employment and Workplace Relations, Students: Selected higher education statistics, various years. Although it is less obvious from table 4, there was also an eventual response to shortages of engineers. Starting with modest increases in 2005 and 2006, more than 500 new places were offered for each of 2007 and 2008.xxviii The rising enrolment share of engineering in 2006 and 2007 shows the new places starting to have an effect. While health and engineering were the only major areas of skill need relating to higher education in this time period, in all fields of study except the natural and physical sciences there were enrolment shifts in the same direction as the application shifts in table 3. This reaction to labour market shortages, however, was not from a system designed to produce a response. There are no institutions within the higher education bureaucracy dedicated to ensuring that the system as a whole responds to employer needs. Instead, it was the result of a fortunate but ad hoc change of policy. Up until 2004, labour market considerations were a secondary concern in allocating new student places. The top priority was the equalisation of higher education participation rates between the states (Department of Education, Science and Training 2003).xxix In more recent application rounds for new places, the ‘present and future skills needs of the nation, employment opportunities, and employer needs’ were the top priorities.xxx There is no legislative requirement that this be the case; it is a ministerial decision and so very much dependent on the minister’s policy views. Since the federal government rarely steers via reallocating existing places, even an in-principle policy of giving priority in new places to disciplines related to labour market shortages will be meaningless unless there are new places to allocate. In the second half of the 1990s, the federal government reduced the number of ‘fully funded’ Higher Education Contribution Scheme (HECS) places to bring the federal budget back into balance. Between 1997 and 2000, the number of fully funded HECS places fell by nearly 5000.xxxi Postgraduate non-research places were targeted for cuts, but apart from that the system was in drift. Neither market forces nor a central planner was giving it direction. Table 5 indicates that only one broad field of study showed a shift in enrolment share of more than 1% over the 1997 to 2000 period. Table 5 Distribution of HECS places between fields of study, 1997–2000 (%)
Source: Adapted from Department of Education, Training and Youth Affairs and Department of Education, Science and Training, Students: Selected higher education statistics (various years). It was in this period that labour force shortages in the health professions needed to be addressed. Yet as described above, the number of commencing medical places was reduced instead of increased. While other health occupations did gain some places, there was only a small re-adjustment of the system as a whole towards health-related courses. Applications statistics suggest that, especially for medicine and allied health occupations, there was significant unmet demand for university places (figure 1). But with limited capacity to respond to either student or labour market demand without steering from the centre, the university sector delivered a weak response. F  igure 1 Eligible applicants not receiving offers, health courses 1997–2001 Note: Eligibility is defined across the system; an unknown number of applicants would have been rejected on academic grounds. Source: Adapted from Australian Vice-Chancellors Committee (now Universities Australia), unmet demand statistics.
The oversupply of science places has no basis in labour market needs. Graduate employment surveys consistently show that science graduates have below-average employment outcomes, and often significantly below average (Graduate Careers Australia 2008, pp.24–5). While employment outcomes improve to the more typical, of approximately three-quarters of graduates in professional or managerial jobs, the 2006 census suggests that many of these occupations do not require science degrees. About 18% of males whose main field of study in their highest qualification was science are employed as ‘natural and physical science professionals’. Another 8% are employed as school or university teachers, presumably mostly of science. The rest are spread across a very wide range of occupations, many of which would more obviously draw on qualifications other than science.xxxii Although the government’s own commissioned analysis of the science workforce confirmed that ‘demand is not expected to exceed total supply of science graduates’, this advice appears to have been ignored (Department of Education, Science and Training 2006, pp.31–3). Despite a small decline in applications share (table 3) for the natural and physical sciences, the enrolment share (table 4) increased over the 2001–07 period. To try to boost demand, the Rudd Government cut student contribution amounts for science and maths, beginning in January 2009. However, the available employment evidence suggests that it is the applicants who have made the correct judgement about science compared with other courses, and it is the central planner who is mistaken.
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