Misalignment in education?

Let a thousand flowers bloom! With the end of the academic year, it is harvest time again for colleges and universities. Over 550,000 graduates are hoping they will not be left withering on the vine.

The odds are not exactly in their favor. The January 2014 Labor Force Survey reported an unemployment rate of 7.5 percent. This means that the current crop of graduates will be joining some 3 million unemployed people already looking for jobs.

But the graduates are sailing out of their academic ports on a strong tide and with a brisk wind at their back. The economy has never been as healthy in a long time. Three institutions just raised their growth projections for the year: World Bank to 6.5 percent, Standard and Poor’s to 6.6 percent, and Asian Development Bank to 6.4 percent.

The Philippines is on track to come only second to China as the region’s best performer. It is also moving up in the competitiveness rankings, moving from 138th of 189 countries in 2012 to 108th.  The 30-step improvement was the biggest jump recorded by any country last year.

A growing, more competitive economy should boost business confidence and merit a second look from investors. A more robust business

climate will, hopefully, translate to more employment opportunities.

In the hunt for jobs, the college degree does provide an edge. About two-thirds of the unemployed lack this credential. But 20 percent, or nearly 600,000, of the job-seekers had completed their college education, compared to 18 percent in 2013. If we have to put a positive spin on the numbers, we can proclaim that we are raising the quality of our unemployed.

But, obviously, a diploma does not guarantee employment, let alone a job appropriate to the training it presumably represents. A four-year degree is not necessary to open and close doors at a hotel or to produce a cup of coffee at Starbucks.

While the unemployment rate is gradually inching down, the plight of jobless graduates, given the rising cost of investing in a college degree, becomes particularly disturbing. The investment has not been paying off in terms of jobs, but, at the same time, we hear employers complaining that they cannot find the people they need for the positions they must fill.

This situation has also emerged in the United States, where it has raised concerns about the “skills gap.” In a jointly-authored article published in Politico, Jamie Dimon, CEO of JP Morgan Chase, and Marlene Seltzer, CEO of Jobs for the Future, noted that 11 million Americans are unemployed, while 4 million jobs sit unfilled. The piece called for closing “the gulf between the skills job seekers currently have and the skills employers need.”

The article and its argument provoked a dismissive rejoinder from Paul Krugman. The lingering effects of the financial crisis, in his view, explained the high unemployment rate, not alleged inadequacy of worker skills. An MIT survey supported Krugman. It estimated that unemployment across all education levels had risen between 1.3 and 1.9 times higher than 2007, but this was due to a lack of demand rather than the workers’ lack of education or skills.

A Boston Consulting Group (BCG) study concluded that the so-called gap affected less than 1 percent of 11.5 million manufacturing workers and less than 8 percent of 1.4 million highly-skilled manufacturing workers. The problem was significant only in seven states. Research thus sustains Krugman’s view that the skills gap in the United States is exaggerated—in his words, a zombie that will not die (NYT, 30/3/14).

Looking at jobless graduates, we tend to speak of “misalignment in education.” Misalignment, arising from the students’ choice of studies to pursue in college, offers one possible explanation for a skills gap. If students end up jobless, it really is their own fault. They keep enrolling in education and business courses. Had they majored in econometrics or bio-engineering, they could probably have landed high-paying jobs.

How much blame do the victims really deserve? Misalignment in education can result from various forces. Common complaints about skill levels have not normally focused on BCG’s high-level manufacturing skills. In 2011-12, nearly half of about 150,000 “hard-to-fill” vacancies were clerical and call center positions.

The BPO recruitment success rate of less than 10 percent and the dismal record of Teacher Education Institutions to getting their graduates through the Licensure Examination for Teachers speak to a different kind of misalignment: that between what the institutions are supposed to teach, what the students actually learn, and what the market needs.

Are the students failing to select the right courses, or are the schools failing to teach the right skills in the right way in these courses? And what is the role of government? Education misalignment, as an explanation for unemployed graduates, deserves the same rigorous scrutiny that the skills gap has undergone in the United States.

Edilberto C. de Jesus ([email protected]) is professor emeritus at the Asian Institute of Management.