OECD warns on ‘mismatch’ between subject choice and market demand

The graduate earnings premium has held strong as higher education has expanded globally, but high variations across subjects in countries such as the UK show students need “more reliable information on the prospective labour market value of their studies”, an expert said.

The latest edition of the Organisation for Economic Cooperation and Development’s Education at a Glance report, published on 10 September, shows that “the employment rate of adults with a tertiary degree is about 9 percentage points higher than for those with upper secondary education only, and they earn on average 57 per cent more” across member nations. This shows that “the demand for tertiary skills in the labour market remains strong in spite of the increasing supply of graduates”.

But the report raises questions about the balance of subject provision across OECD nations, finding that “less than 15 per cent of new entrants to bachelor’s programmes study engineering, manufacturing and construction and less than 5 per cent study information and communication technologies – even though these fields are most commonly associated with technological progress and yield the best labour market outcomes”.

Andreas Schleicher, the OECD’s director for education and skills, said that “stable earnings returns signal that the massive increase in knowledge workers hasn’t led to a decline in their pay, which is what we are seeing at the low end of the skills distribution”.

But he added that it was “harder to discern to what extent this reflects the value added by higher education institutions”, or a “sorting” effect from higher education recruiting “smarter people”.

“Big variations in the earnings outcomes by field of study also reflect a mismatch between study choices and labour demand,” Mr Schleicher said.

He cited the example of the UK, where Education at a Glance finds “a relatively large difference in earnings advantage across fields of study”.

Students “who studied natural sciences, mathematics or statistics earn over 180 per cent of the earnings of a worker with only an upper secondary education”, it says. “Meanwhile, those who studied arts, humanities, social sciences, journalism or information earn 92 per cent of the earnings of a worker with an upper secondary education.”

The report also warns that the UK may be seeing the most relevant skills dwindle. “There is a substantial gap (more than 10 percentage points) between the share of tertiary educated 25-64 year olds who studied engineering, manufacturing and construction and the share of recent graduates who have done so,” it says.

Mr Schleicher said that, given students in England “pay much higher tuition [fees] than elsewhere, they probably deserve better guidance and more reliable information on the prospective labour market value of their studies”.

john.morgan@timeshighereducation.com