Competitors challenge universities on employability

In March of 2015, Universities Australia, the Australian Chamber of Commerce and Industry and a number of other organisations launched a national strategy for work-integrated learning.

In May, the US National Association of Colleges and Employers, or NACE, released the results of its largest-ever survey of the career outcomes of college graduates.

The US Department of Education is considering trialling access to federal student aid for a new crop of non-traditional postsecondary education providers and initiatives characterised by a focus on student employability.

These efforts and others like them are a response to a debate about the return on investment from a degree, for students, employers and taxpayers, and anxiety about national competitiveness and middle-class status in the face of globalisation and automation.

The NACE survey, and equivalents in other countries, emphasise that most recent graduates secure decent jobs, while the Australian strategy and US federal ruminations imply that there are real problems with the status quo. Which perspective is right?

A recent international seminar, hosted by RMIT University in Australia, tackled this question. The conveners were the Observatory on Borderless Higher Education, or OBHE, a think tank that tracks global developments in distance learning, internationalisation and commercial activity, and the International Education Association of Australia, or IEAA. The seminar attracted over 50 senior representatives from universities, associations and employers, from Australia and beyond.

In my presentation at the seminar, I argued that higher education is thriving as an engine of economic stability and innovation, but that it is also failing a growing minority of students and is vulnerable to competitors unencumbered by the conventional degree.

Return on investment

Many countries now publish data that shows a positive correlation between educational attainment and human capital. Graduates are less likely to be unemployed and they earn a substantial wage premium, even in the US where tuition costs and student debt have soared.

A 2012 report from the UK Department for Business, Innovation and Skills concluded that graduates also exhibit an array of socially desirable features, such as being more likely to vote, less likely to divorce and in better health than their non-graduate counterparts.

Within six months of graduation, surveys such as the Destinations of Leavers from Higher Education in the UK or the Australian Graduate Survey, confirm that most graduates are employed full-time or are engaged in further study. Generally speaking, employment rates and starting salaries have held up well, despite an ever-larger number of graduates.

All this suggests that graduate employability is far from in crisis.

But there is also evidence to the contrary. In the US, while the gap between the median wages of degree holders and high school graduates has never been larger, median wages have begun to fall for all levels of educational attainment.

Decline has been most severe for the least educated, but holders of bachelor and masters degrees have also been affected. Is this a short-term effect of the 'Great Recession' or a sign of an over-supply of graduates or an indication that too many graduates are not worthy of the name?

A comparison between rates of degree attainment and capability assessments appears damning. In 2012, 37% of Australian adults aged 25-34 had attained a bachelor degree, as had 40% in the UK and 34% in the US, but the OECD’s capabilities assessment of the same year found only around 20% of participants from this age group could successfully complete a series of literacy tasks at a sufficiently high level. Similar gaps were found for numeracy and problem-solving.

Does this suggest that 'employability' remains strong for many graduates, but is questionable for others?

It may be telling that the NACE survey found that liberal arts and specialised institutions exhibited proportionately the fewest unemployed bachelor degree graduates and large public institutions the most.

This may point to the virtues of curricula focus but also 'organised' curricula breadth exemplified by the best liberal arts colleges in contrast to the comprehensive university which can embody the best of both but risks achieving neither.

The fact that in the US most specialised and liberal arts institutions are small, private and expensive is a reminder that higher education perpetuates social elites as well as creates ladders of opportunity. The comprehensive public university, as a means to scale and widen higher education participation, sometimes struggles to serve diverse populations amid the pitfalls of decentralisation, anonymity and constrained resources.


How are conventional higher education institutions responding to employability concerns, and what is the pitch of the new competition? As a general rule, the larger and more varied the institution, the harder it is to achieve enterprise-wide reform. Any attempt to engineer a particular experience for all students, regardless of discipline, tends to flounder in a culture of departmental and faculty autonomy.

This reality also hinders national strategies, as advocates for Australia’s work-integrated learning are well-aware. More common are departmental or programme-specific innovations, such as competency-based degrees or work skills boot camps for liberal arts graduates.

But is this enough to hold off the competition? A host of new firms, offering a variety of intensive workplace skills development, often tech-focused but also more general, sense opportunity in higher education’s troubles. These firms lack degree-awarding powers and – as yet – public subsidy. Examples include Galvanize, Fullbridge and Minerva.

Some firms position themselves as a ‘finishing school’ for graduates while others push degree alternatives. Free from the time and cost burdens of a degree, or in cases of partnership with a conventional university – such as Georgia Tech and Udacity, the MOOC firm; or the University of New Haven’s deal with Galvanize to offer a masters in data science – rethinking the degree from the ground up, competitors can concentrate on effectiveness and efficiency over form.

Perhaps the biggest advantage these challengers have is a niche product. Most higher education institutions are in the business of academic instruction and research, with explicit attention to employability often an after-thought.

It is early days for these firms, and there is no evidence yet of many prospective students rejecting a bachelor degree. The prospect of public subsidy might generate demand, but it might also dampen innovation and ultimately impact.

Now that many countries send a majority or large minority of high school graduates to college, and large numbers of adults view a return to college as the path to economic stability, is the conventional degree the best fit for all? Is growing concern about graduate employability really a matter of degree enrolment gone a step too far? If employability is the goal, is the conventional degree the solution?

In a time of constrained resources, the fact that degrees are lengthy and expensive yet most universities publish minimal student outcomes data is problematic.

Universities are rightly proud of their heritage of interdisciplinary critical thinking apart from the marketplace, but are decentralised to the point that quality and consistency often seem at odds.

Students can learn a great deal from navigating the complexities of the university and the idiosyncrasies of departments and faculty, but it is often maddeningly difficult to distinguish good practice from convention and limited oversight.

Higher education is challenged to both maintain its glorious diversity and better map cause-and-effect between the student experience and employment. New competitors risk trading rounded graduates for narrow technicians, but if such dangers are avoided may help push the employability debate to another level.

Richard Garrett is director of The Observatory on Borderless Higher Education, or OBHE, London. He is also Chief Research Officer at Eduventures, the Boston-based higher education research and advisory firm. He spoke at the OBHE international seminar on employability and internationalisation in Australia on 9 July on “employability” initiatives from conventional universities and alternative providers.