Sunday, May 03, 2009

What will Irish graduates do next year?

From teaching undergraduate classes, i do not have a great sense that final year students have worked out in detail their own personal recession recovery plans - clearly some have but as a general rule I do not think the majority are psychologically equipped for the market they are entering.

I guesstimate about half are actively thinking of doing masters degrees and that this will likely increase as the reality of the labour market hits home. This leaves a question about what the 15,000 or so Masters graduates will do. About 1,000 or so will do PhD's but its not clear what will happen the rest in the context of a public sector recruitment embargo and a very closed labour market. We are also clearly on the track of building a stock of Masters graduates that will become larger and larger as the recession persists. One of the traditional advantage that graduates have over non-graduates and older workers, labour mobility, is less relevant than it was in the 80's as the current recession is global. Furthermore, the downward wage adjustment channel is severely limited in the Irish context. This is for two reasons - firstly public sector salaries will adjust only very slowly and the savings are likely to be used to reduce the public deficit rather than hire more people. Secondly, private sector wage adjustment may simply be insufficient in the presence of low global demand and is also likely to be too slow due both to the wage bargaining process and the psychological resistance to wage cuts among both incumbents and (surprisingly, but verified in a lot of research) employers themselves.

The spectre of a growing number of people coming through Irish higher education institutions to take up positions on social welfare is a situation that simply needs to be stamped out. I will post as regularly as I can on research and policy responses to this issue globally and I urge anyone who is interested in this issue to keep their mind attuned to new and interesting thinking in this area and to either post material or alert me by email. Clearly, this is an issue that is being faced in many countries and looking closely at how countries in Europe, as well as countries with similar education systems and participation rates like Australia, Canada, US are adjusting is important.

Some proposals that have been considered include mass level graduate internship programmes across the public and private sectors, incentivisation of business start-ups, better mentoring, funding non-profit placements, enhanced career advisory services tailored to career advice in a contracting economy, developing pathways through which bright graduates can signal productivity such as graded work experience, training options that allow graduates to convert from disciplines that are now less attractive than they were when the person embarked on their degree. Others have simply argued that a "post-modern" generation will emerge from the universities that simply do not view progression in the labour market as a major source of self-esteem. In wilder moments, I have even heard a few people claim that this might contribute to a literary and cultural revival in some Irish cities. I do not have a great deal of sympathy for this view. Certainly, some good artists will emerge from this recession but the bulk of them would likely have been good anyway. The psychological costs of unemployment are far clearer than any putative benefits in terms of creativity.

Furthermore, it is important that groups involved in promoting welfare among young people put forward costed proposals rather than simply highlighting awareness of the issue.


Liam Delaney said...

One amendment I should make is that about 10 per cent of graduates from Irish universities are not Irish nationals. My point relates to the Irish policy response and clearly this group is going to be affected by this also.

Kevin Denny said...

The prospects for graduates in Ireland are pretty ghastly & Liam seems to be one of the few academics banging the drum here. Ancients amongst us will remember the '80s as grim when we graduated. Many of us went abroad: an option not really available now. I vividly remember taking the ferry to Holyhead (flying not an option in pre-Ryanair days): it was full of young people.Very sobering then as now.
Perhaps the policy debate should move on to this rather than the bank nationalisation issue?

Liam Delaney said...

The issue is not one of too much debate of NAMA versus nationalisation - if anything I would like to see more people following Karl's lead here as I think there is a lot we still don't understand about what's going on there and the potential ramifications. If the officials and researchers in charge of devising and implementing other areas of policy had as much scrutiny as Peter Bacon and Brian Lenihan are getting from Karl this would be a good thing.

The main issue is that we have had too few contributions on issues like welfare policy, labour market interventions, the role of education institutions, public sector reform, demographic change, healthcare, wage adjustment and so on. Many of the contributions to date do not attempt to reflect the changed situation and rely too much on prescriptions that may have been sensible a couple of years ago when demand was merely flagging but are obsolete now. In general, we are in danger of being "found out" in terms of lacking good ideas as a society and as academic economists.

Agencies like FAS have practically been silent throughout this whole thing and have not had nearly the amount of scrutiny that NAMA is getting.

Michael Daly said...

some stats & interviews on UK graduates

Michael Daly said...

highfliers graduate survey press release- "Major new student survey shows only
a third of this year’s finalists expect to
find a graduate job after university"

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