Jobs market faces a tsunami of university graduates

This April more than two million applicants participated in the national university entrance exam, or ÖSS, in Turkey and at least 0.9 million will be admitted to four-year and two-year university degrees.

They will join more than six million students who are currently studying in Turkey’s 170 universities. The total number of students in universities and other institutions of higher education has increased by 91%, from 3.5 million students in 2008 to 6.7 million in 2013. (Russia, with a population of 143 million, had seven million students in higher education institutions in 2013).

When we compare these numbers to the total population of Turkey – 74 million in 2013 – we observe that in 2008 4.9% of Turkey’s population were university students, but this ratio increased to 9% in 2013 and it is likely to be even larger in 2015.

The majority of the 6.7 million university students will graduate in the next four years and enter the labour market in search of suitable jobs. As a result the labour market will face a tsunami of new job seekers that is much larger than in previous years.

As a simple demonstration let’s assume that each student graduates after four years and that, of the 6.7 million current university students, 85% (5.7 million) will graduate in the next four years.

Taking into account that in the past four years the number of admissions has increased every year we can expect that the number of graduates will also increase each year. One possible projection for yearly graduation figures that will add up to 5.77 million over four years is the following:
2015: 1.16 million
2016: 1.33 million
2017: 1.53 million
2018: 1.75 million.

Now one should ask if the Turkish labour market is ready for the entry of these large numbers of university graduates in the current year and the next three years. Based on current economic conditions and expected growth rates for the next three years, it is unlikely that all of these jobseekers will be able to find suitable jobs.

Many will join the ranks of the unemployed and of those who manage to find employment a good portion will have to accept jobs that are either low-skilled or unrelated to their field of specialisation.

The need for planning and preparation

Since the arrival of these large waves of university graduates into the labour market is entirely unprecedented and very different from normal trends, Turkish policy-makers must carefully evaluate the consequences of this development and plan ahead.

It might be helpful to look at the experiences of several other countries, such as Iran and South Korea, that have faced a similar crisis in recent years. The rising trend of university enrolment that we observe in Turkey today is very similar to what has happened in Iran in the past decade.

Due to higher education policies that focused on quantitative growth, the number of university students in Iran rose from 2.3 million in 2005 to 4.5 million by 2013. A similar focus on quantitative growth is responsible for the rapid rise of university enrolment in Turkey, which has exceeded that in Iran despite the fact that Turkey’s total population in 2013 was three million smaller than Iran’s.

As a result of the sharp increase in enrolment, Iranian labour market experts have predicted that an average of 1.5 million university graduates per year will enter the labour market in the period 2015-17. Iran is already experiencing a high unemployment rate among university graduates in many fields and officials expect the situation to get worse in the short run.

Similar to Iran, Turkey is also experiencing a higher unemployment rate among university graduates in comparison to high school graduates. Based on projections mentioned above, the unemployment rate among university graduates in Turkey could reach crisis levels of 15% to 20% in some fields of study in the next three years.

Hence Turkish policy-makers must plan ahead to minimise the adverse impact of this crisis in the next few years. Here are six recommendations:
  • • Clearly the most important immediate step is to coordinate economic policies for maximum job creation in both private and public sectors. This is not an easy task and the government already faces large fiscal constraints.

    Hence in addition to, or instead of, macroeconomic stimulation, direct labour market regulations might also be required. For example, the government might give a higher priority in awarding public contracts to private contractors that promise to create more jobs. The trouble with this general job expansion, however, is that only a fraction of the new jobs created may require university degrees.

  • • The government must also increase the job search and counselling services for new university graduates. The inability to find employment causes severe emotional and psychological difficulties for young individuals and their families.

    It is not uncommon for these young adults to sink into depression and blame themselves for a condition that is clearly out of their hands. Through counselling and mass media programmes the government must reach out to these individuals and their families to help them understand that they are not alone in this situation.

  • • Another undesirable consequence of this tsunami is that a high number of unemployed university graduates increases the risk of social and political unrest. Both unemployed and underemployed college graduates are likely to be unhappy because of their high expectations while studying.

    Some might channel this anger into destructive behaviour. Hence government must be prepared for an increase in youth unrest as the rates of unemployment increase.

  • • The government and social organisations must also carefully monitor the labour market for increasing incidents of exploitation of young jobseekers. Some dishonest employers will offer internships to desperate jobseekers to use them as free labour.

    As a result, the number of unpaid internships is likely to increase when university graduates face high unemployment rates. Through regulation and adequate monitoring the government must prevent dishonest employers from exploiting the interns unfairly.

  • • Policy-makers must decide on whether to encourage or discourage employers from hiring university graduates for unskilled jobs. When employers realise that there is a large supply of desperate university graduates they might require a college degree for jobs that can easily be performed by high school graduates. Furthermore they can do so without offering a higher wage.

    On the one hand, this practice creates more job opportunities for unemployed college graduates who accept low-skilled jobs for a few years until they find a more suitable job. On the other hand, when many employers do this the unemployment rate among high school graduates will increase and some high school graduates will be forced to go to college because they see that they now have to have a university degree even for low-skill jobs.

  • • Another helpful policy is to improve the wage and work conditions of jobs that do not require university degrees so that families don’t feel as much pressure to send their children to university.
Supply and demand

While these six suggestions are focused on addressing the short-term challenges of the job market for university graduates, the long-term solution lies in addressing the imbalance between the supply and demand of university graduates.

The economic and social value of a university degree can only be preserved if the government can prevent excessive growth in the supply of university graduates.

Since the university entrance exam and admission quotas in Turkey are centralised, it is possible for policy-makers to impose adequate limits on the number of students who are admitted to for each field. The quota for each field of study, such as chemistry or economics, must be determined on the basis of the long-term labour market demand for specific skills.

Without an adequate supply management policy in higher education the high unemployment rates for university graduates are likely to continue.

Several countries have already started on this path. The Russian government has recently announced a plan to reduce the number of universities by 50% in the next four years.

Singapore has introduced a 25% limit on the number of high school graduates who are admitted to higher education institutions. Turkey should look at what other countries are doing and plan ahead.

Nader Habibi is professor of Middle East economics in the Crown Center for Middle East Studies at Brandeis University, USA. He is also the founder of Overeducation International.