Better university student performance adds billions to economy
Tackling major challenges currently facing the Australian education system could add $3.1 billion a year to national GDP by 2030, according to an EY report compiled for the country’s Federal Education Minister Dan Tehan. Challenges include keeping students interested, and making them future-ready.
The analysis is cast in a rapidly evolving economy, where the business environment is opening itself up to change and disruption. The underlying assumption is that Australia has a strong and highly skilled workforce, which can be relied upon to navigate major threats to the business environment.
While the country’s workforce is strong, EY reports that it is far from reaching its potential. The firm has examined the problem at source – the education system – to gauge the nature and magnitude of challenges that prevail. Particularly in the higher-education segment, there is room for improvement.
There are seven major challenges for Australia’s higher education sector to tackle, according to EY. These include, in no order of significance, declining completion rates among graduates, matching fields of study with employment, producing ‘job ready’ graduates through integrated learning, maintaining student satisfaction, better alignment of skills with the choice of higher education, providing clear and transparent career advice, and enhancing employment prospects for recent graduates.
Provided that these challenges are dealt with, the resultant scenario is likely to be a more adept alignment of the skill profile among new graduates and the demands of an ever-evolving contemporary workforce. Reaching this stage would in the eyes of the researchers add tremendous economic value.
The Big Four accounting and advisory firm breaks this economic value added into two components. The first is the monetary value that would emerge if wage premiums across the country were to be increased and were to produce better employment outcomes. By 2030, this could add $2.7 billion to the economy each year in 2030.
The second priority is to improve completion rates. In 2009, the 9-year completion rate for graduates in Australia stood at 75%.. By 2017, this figure had fallen to 66%. EY reports that rectifying this scenario could be saving more than $400 million in economic resources by 2030.
Provided these two components come to fruition and Australia's youth becomes ready for its expanding workforce, the overall productivity uplift in Australia could be as high as $3.1 billion by 2030. Delving more in the details, a range of factors are likely to play a role as these potential scenarios unfold.
Incentives for completing degrees are falling gradually, given that the rate of unemployment or under-employment amongst new graduates appears to be increasing, stretching to four months of no engagement after graduating. However, graduates tend to win over those with lower academic qualification in the long run, although some fields – such as pharmaceuticals and medicine – have a clear advantage over others when it comes to short-term employment.
Nevertheless, the lack of short-term unemployment is significant in its dampening of enthusiasm for education. "For most students, employment is a factor in their decision to enrol in a higher education course. For bachelor-degree students, about 85 per cent give a job-related consideration as their main reason for study," states the report.
The best way to improve short-term employment is to equip students with the skills of the future. EY Managing Partner for Oceania Government and Health Sciences Catherine Friday said, “Our study shows that the ability to align the skills of graduates with those needed in our workforce today and into the future will be important for the economy. The opportunities for the nation and graduates are immense if we can get it right.”
