Educated Unemployment – Term Coined to Represent Unemployment of Population With a College Degree
Finding a job after college has become a common obstacle for recent graduates. In the modern world, there are numerous reasons attributed to causes of job shortage, but still none of them explain how most of college graduates with diplomas in their hands find themselves jobless.
Situation on Georgian job market According to CRRC report, out of people looking for jobs, the 18-35 age group occupies highest share (51% of respondents seeking employment). Considering modern accreditation of Georgian universities, newly selected faculty and wealth of educational resources, it’s surprising still how hard it is for new graduates to get job offers. These days, an average Georgian with no personal connections has hard time finding employment. Results of our online survey confirm this hypothesis. Total of 78 recent graduates respondents to survey, of which 67 (86%) indicate as being employed, of these employed recent graduates, 31% (ranking highest) found positions using personal/family connections, 17.5% indicate referral other than personal/family connections, 17.5% sought employment through job announcement websites. These findings confirm the expected trend that significant part of employed recent graduates sought employment through personal/family connections and other referrals. Survey results indicate that a recent graduate with no connections has roughly only 18% chance of finding employment through job websites.
Choice of major Another important factor in determining educated unemployment is students’ choice of majors. Even if we take into account that some industries and sectors are hiring more than others, there are limited number of openings in each particular major. Georgian National Statistics Office reports that during year 2013, out of female graduates the most popular majors were: Business Administration (39%), Health (23%). For male graduates leading fields were Engineering (63%) and Business Administration (16%). For both males and females, Science came to be the least popular choice.
Such choice of majors might explain the lack of recent graduates in science fields, or abundance of BA graduates who work in industries and sectors outside of their major. This particular problem is effectively being targeted by Millennium Challenge Corporation’s Georgia Compact II program, which proposes STEM Higher Education Project, the key objective of which is long-term delivery of bachelor degree programs in Science, Technology, Engineering and Mathematics. Such programs can raise popularity of particular projects in short term and hopefully set ground for long-term effect.
On the other hand, popularity of particular majors causes a significant number of graduates with similar background competing for same or similar positions. This forces some of the graduates to seek employment outside of their major. Our online survey results corroborate this line of thought. About 35% of respondents indicate they do not work in their own field, and out of the unemployed and those who do not work in their own field, 50% indicate they would prefer to work in the area of their major.
Economy and employers The economy in general also contributed to rise in educated unemployment. In 2013 created 12,000 additional jobs helped decrease actual unemployment level by 0.4%. Nevertheless there were 10,790 college graduates in the same year, most of whom had no work experience, and therefore could not match requirements for all jobs created. Even if we assume that out of 12,000 created jobs 10% were entry level, they would provide work opportunities only for 1,200 students, overlooking the fact that each graduate sought to gain work experience in their fields of choice.
It is also interesting to consider whether employers have a share of “blame”. On average, every low level employee, regardless of industry, is to be given on-job training. Therefore educational background constitutes one of the major items of employer checklists. Still, it is not surprising that employers prefer applicants with prior experience. However in this case, businesses cannot ensure getting the best people in the workforce, because experience-oriented approach for entry level positions that do not in themselves require experience discriminates against those graduates, whose university schedules do not permit internships or work, thus leaving them at a disadvantage.
Conclusion Educated unemployment is no news to the world; however in the face of this problem, several countries have adjusted their educational policies to fit graduates’ needs. Many European universities have corporate partners which provide internships for graduating students. In many countries public educational systems make internships an integral part of their curricula, allowing students earn experience and fit their skills to job market needs upon graduation.
Damage by unqualified workforce and educated unemployment, inexperienced and poorly selected workforce not only disrupts efficient functioning of an organization, but also slows down overall economy – there is no need for innovation and increased productivity when poor performance is not penalized since there is no healthy competition, workers are not motivated to “play hard”. In such conditions, mundane functioning barely ensures survival. Grant Thornton’s International Business Report (IBR) offers interesting follow up debate on this topic highlighting the relationship between poorly selected workforce and business growth.
IBR asked businesses around the world about the extent to which lack of skilled workers is constraining their ability to grow. Since 2012, the global average has increased by just three percentage points to 31% who say it is a problem. But the rises in the US (nine percentage points to 25%), China (five to 35%) and Japan (12 to 52%) have been far more substantial.
Maria Godziashvili is part of advisory team at Grant Thornton and holds Bachelor of Business Administration from Baruch College, specializing in Finance and Investments. During her time with Grant Thornton, she has worked on valuations, financial modeling assignments and agreed-upon procedures for clients in public utility and financial services sectors.