Graduates enjoy high rate of employment and rising pay

More than nine out of 10 university graduates in Australia are in full-time jobs three years after finishing their degree and graduates have also enjoyed strong growth in their salaries, with an average starting salary of AU$58,700 (US$39,500) growing to AU$72,800 (US$49,000) after just three years in the workforce, according to new data released by the government.

The graduate unemployment rate is just 3.3%, well below the national average of 5.3%.

The data was released less than a week after Minister for Education Dan Tehan announced that graduate employment outcomes will be the most important factor under the performance-based funding model for universities.

Tehan said the 2019 Graduate Outcomes Survey – Longitudinal report demonstrated the value of the Morrison government’s focus on job creation.

“More than 250,000 jobs were created last year and this data shows that university graduates are key beneficiaries,” Tehan said. “Universities are a key driver of job creation, job growth and productivity improvements in this nation.”

The strong jobs picture holds nationally for graduates across the university system, with some variation due to local labour market conditions, Universities Australia said.

Universities Australia Chief Executive Catriona Jackson said it was good to see the continuing recovery of the labour market since the global financial crisis – with graduates especially well placed.

“To continue to strengthen the Australian economy, to create new jobs and grow new industries, universities are our engines of growth,” she said.

“Highly skilled graduates and university research breakthroughs are vital economic assets for the nation – seeding new jobs, lifting labour productivity and keeping jobs in Australia that may otherwise go offshore.”

Postgraduates perform strongly

The data shows 90.1% of students who graduated in 2016 were in full time jobs by 2019. The results were even stronger for people who did a postgraduate coursework degree – with 86% in full time jobs four months after graduating and 93% within three years.

Jackson said for every extra level of education attained beyond high school, people’s earnings rose on average and their chances of being jobless fell.

“If you have a university degree, you are also two and a half times less likely to be jobless than if you had no education beyond school,” she said.

The survey of more than 40,000 graduates also confirmed that more than three-quarters of graduates were working as managers or professionals.

Dentistry produces the most employable graduates, with 99% of graduates in full-time employment three years after completing their studies, followed by medicine (98%), rehabilitation (98%), veterinary science (96%), engineering (95%) and law (95%).

Graduates with more generalist degrees – such as the sciences and the humanities – often took a little longer initially to find full-time jobs, but were employed at similar rates within three years.

Performance-based funding model

Tehan said on Tuesday that putting graduate employment outcomes at the centre of the performance-based funding model for universities means universities will be “incentivised to continue to produce job-ready graduates”.

The government will provide additional funding for universities through the Commonwealth Grant Scheme (CGS) in line with both the population growth of the 18- to 64-year-old cohort and performance under the performance-based funding model.

Performance will be assessed across four measures: graduate employment outcomes, student success and retention rates, student satisfaction with their university experience, and participation of Indigenous, low socio-economic status, and regional and remote students. Graduate employment outcomes will account for 40% of funding, with the other three measures weighted at 20% each.

Starting in 2020, performance-based funding will determine more than AU$80 million in CGS funding, growing over following years to 7.5% of CGS for domestic non-medical bachelor degree level students at public universities.

Tehan said the government is providing record funding to universities of more than AU$17 billion this year. “This includes access to around AU$7 billion of funding a year through the Commonwealth Grant Scheme driven by their ability to attract and retain students,” Tehan said.

He said the productivity gains from improving graduate employment outcomes and lifting completion rates are worth an estimated AU$3.1 billion a year by 2030.

“Importantly, our model is not punitive. Where a university does not meet its performance target, it will be supported to improve performance.”

The funding model will be reviewed in 2020 and 2023.

Jackson stressed that universities had worked with government to negotiate the complex scheme and thanked Tehan for his “consistent reaffirmation that the intent of the scheme is not to be punitive – but rather seeks to support all universities to perform highly”.

“We know prevailing economic conditions are the strongest determinant of jobs across the economy, and job prospects for graduates follow the curve of that trajectory very closely,” she said. “We appreciate the government’s understanding of that relationship and the need for a strong economy as the single most powerful factor that shapes whether our graduates can find work.”