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Degrees of underemployment: fresh grads stuck in a bind

Fresh graduates coming into the job market are facing a tough new reality that many are not prepared for. What does this mean for their future?

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DEGREES OF UNDEREMPLOYMENT: Study hard. Go to university. Get a good job. Right? Wrong.

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DEGREES OF UNDEREMPLOYMENT.

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The skills requirements of some jobs have become more specialised over the years, which contributes to underemployment.

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When Chris Lim, 26, graduated with a Bachelor of Business Management degree in December 2016, he didn't expect that it would take him 10 months to land his first full-time job. After all, the Singapore Management University (SMU) graduate was "aggressively applying" and had sent out 70 applications in less than a year, only to be called back for less than 10 interviews.

He explains the Catch-22 he found himself in: some companies required at least one to two years of work experience for sales and marketing roles which, coming just out of university he did not have, and further, "they don't teach you how to be a salesperson in school".

For roles such as an accountant, universities provide that initial base to excel in the workplace, but for a lot of other roles, the market evolves at such a fast pace that academia can't really catch up, Mr Lim says. Internships or contract positions have become the default job offer for many graduates, which they take on in the hope that they might eventually be converted to full-time employment.

According to annual surveys of recent graduates from the National University of Singapore (NUS), Nanyang Technological University (NTU), and the Singapore Management University (SMU), only 78.4 per cent of graduates last year managed to secure full-time permanent employment six months after their final examinations. This figure was the lowest in 10 years, down from 79.9 per cent in 2016, and 89.8 per cent in 2007.

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For those who took private degrees, the drop was even more drastic, with the full-time permanent employment rate falling to 47.4 per cent last year from 60.1 per cent in 2016.

Even among the autonomous universities, a large pool of graduates, mainly in humanities or some science courses such as chemistry, remained unemployed six months after their finals - only 50-60 per cent found full-time jobs. The findings, revealed in the Ministry of Manpower's 2017 Graduate Employment Survey, also point clearly to what jobs are in demand: almost all graduates with computing, accountancy, maritime studies and nursing qualifications found full-time jobs within the same period. And 100 per cent of those with degrees in education and dental surgery bagged full-time employment at above average starting salaries. (Full survey results at stats.mom.gov.sg/Pages/Employment-and-Monthly-Gross-Starting-Salary-of-graduates.aspx)

In addition, a greater proportion of graduates were engaged in either freelance, part-time or temporary jobs - a sign that the gig economy in Singapore is gaining traction and that the employment paradigm has changed.

Not the full picture

Overall, Singapore's economy did well last year. It picked up pace to expand by 3.6 per cent, beating initial estimates thanks largely to strong growth in manufacturing. This was up from 2.4 per cent growth in 2016, with unemployment at just 2.2 per cent.

However, in an April interview with CNBC, regional chief investment officer at UBS Wealth Management, Kelvin Tay, notes that Singapore's robust economic growth and low unemployment rate masks some underemployment, and that to a certain extent, it has been a jobless recovery.

"Don't forget that in the recovery we've seen in the last 12 to 18 months, jobs creation has actually been very, very mild. You get the tightening labour market, but labour market has always been tight in Singapore," says Mr Tay.

"Still, we have some slack in the economy because not everyone is gainfully employed. The underemployment issue is still an issue where the economy is concerned."

Indeed, growth and unemployment rates alone do not paint the full picture of our economy, and experts have highlighted that the official unemployment rate has its limitations.

For one, the statistic doesn't distinguish between full-time or part-time employment. It also doesn't account for people who are underemployed, or working in jobs they are overqualified (and underpaid) for, whether by choice or circumstance. And it doesn't show just how many have become so discouraged that they give up hope of finding full-time jobs.

Graduate unemployment appears to be a growing issue, notes Vincent Chua, associate professor at NUS's Sociology department. "This is perhaps sobering in two senses. First, it signals a mismatch between what employers are looking for and what graduates are able to supply."

"Second, graduates probably wouldn't expect to be unemployed given their formal qualifications. When human capital investments are not met with job outcomes commensurate with those investments, the dissonance between expectation and reality produces disillusionment."

For Vivien Yap, 23, the job-hunting process was "scary" and something she wasn't prepared for. The NTU Bachelor of Communication Studies graduate began applying for jobs as early as last November till June this year, but to no avail.

She soon came to the "shock realisation" that some employers simply didn't need the skills that she had. These days, she gets by through freelancing at musical gigs or writing, and earns about S$600 to S$800 per month on average. She is also thinking of taking a Masters in creative writing.

Black swan or rising problem?

Perhaps the notion of graduate underemployment or unemployment may not be all that bad, if it can spur individuals to become more resilient or create new pathways for themselves.

Career coach and managing director of Next Career Consulting Group, Paul Heng, is of the view that there will always be people who are underemployed in a free market, and doesn't think that underemployment will pose a major issue in Singapore.

He does, however, observe that more graduates are now becoming "portfolio warriors", meaning they work on multiple assignments with different employers.

"More graduates have realised that they need not embark on a career directly related to what they studied. It's quite a different world," Mr Heng says.

Julian Wee, investment strategist at Credit Suisse, agrees that graduate unemployment does not appear to be significant at this juncture.

He cites the resident unemployment rate for degree holders, which at 3.2 per cent as of June 2017 was only marginally higher than the overall resident unemployment rate, and thinks that the job market in general appears to be fairly strong.

"We do not seem to have much data on underemployment, but given the low unemployment and the rising vacancies to unemployed ratio, underemployment is not likely to be something that would be a huge concern," says Mr Wee.

Yet, a study released earlier this year revealed "worrying statistics of seriously underemployed Singaporean graduates", as National Trades Union Congress (NTUC) Assistant Secretary-General, Zainal Sapari puts it.

Conducted by the Lee Kuan Yew School of Public Policy and the Ong Teng Cheong Labour Leadership Institute, the survey noted that a small group of degree-holders had fallen into involuntary underemployment.

Of the 1,626 survey respondents, 70, or 4.3 per cent, had fallen into severe underemployment, earning less than S$2,000 per month, despite working full-time.

"These are the 'graduate poor' and it is a black swan in our labour landscape," says Mr Zainal.

While the survey may not be representative of all degree-holders in Singapore due to its small sample size, it does shed some light on the issue of graduate underemployment in our city-state.

Singapore University of Social Sciences (SUSS) economist Walter Theseira is not surprised. In the past, having a degree used to reflect both advanced training, and very high ability or background, he says. "When there were very few degree-holders, their skills were in quite short supply and they could expect to earn a wage premium. This is not true anymore."

For the pioneer generation, less than one in 10 had a degree, but for younger Singaporeans, that proportion has now risen to about 50 per cent, says Dr Theseira.

"Simply put, a university education is now accessible to the majority because we have the resources to pay for it, and the standards of basic education have greatly improved."

"But not all degrees are the same, and some are in high demand by employers because they represent difficult-to-obtain skills, while others are relatively easy to earn, or may simply not be in demand, and don't help job-seekers stand out."

He adds that the skills requirements of some jobs have gotten more specialised over the years, which contributes to underemployment if people get training for these jobs, but end up not being selected.

Whether the changing job market will have an effect on income remains to be seen. Citing government statistics, OCBC economist Selena Ling notes that there are about 21,800 unemployed residents with a degree in Singapore. These people could be temporarily displaced due to technology or industry shifts, but are actively seeking new opportunities. The greater concern however, is if they are forced into underemployment due to their skills or industry becoming obsolete, and hence their incomes taking a significant hit, Ms Ling says.

She adds that former Manpower Minister, Lim Swee Say pointed out last year that the number of primary freelancers remained flat at about 167,000 in 2016, with 32,700 of them doing it not as their preferred choice. "Without more granular data, it will be difficult to generalise on their income trends and how many of these workers have benefited from the Adapt & Grow initiative amongst others," she says.

A global phenomenon

In the US, data from the New York Federal Reserve as of March 2018 show that 34 per cent of college graduates are underemployed, which means they work in jobs that do not typically require a degree. This rate is even higher among recent college graduates, with 43 per cent of those age 22 to 27 being underemployed in their first job out of university.

Worryingly, a study by the US Burning Glass Technologies and Strada Institute for the Future of Work published in May this year, also revealed that college graduates who start out underemployed are more likely to fall into the "underemployment trap". Of those who were underemployed in their first job, two-thirds remained underemployed after five years.

In the UK, roughly one in three graduates end up being mismatched to their first job after leaving college, research by advocacy organisation Universities UK shows.

In Asia, graduates in South Korea too face the same odds.The Straits Times reported in 2016 that of the half a million young people who enter Seoul's job market each year, over 60 per cent are degree-holders. But government data shows that only 200,000 permanent positions are available, with the rest being lowly paid temporary jobs.

And in a country obsessed with education and status, many even go on to private cram schools after graduation to take civil service exams or company entrance tests in the hope of landing a job at a huge conglomerate, or chaebol.

Towards a focus on skills

Already, a mosaic of shifts is taking place in work environments with advancements in technology and automation. Some industries may grow, others may decline, and new ones we cannot yet envision will be created.

This means that workers will need to work on demand and bring new skills to bear, as and when required. According to a report by the World Economic Forum, 65 per cent of children entering primary school today will be employed in jobs that do not yet exist.

As Nominated Member of Parliament (NMP) Shiao-yin Kuik points out, it is hard for anyone who enters university to accurately predict what the job market will look like when he graduates. Some jobs such as nursing or teaching will be less prone to disruption; other vocations more so.

Does this change the future of learning, and what we have come to know and expect of higher education? Ms Kuik, who has been part of the education ecosystem for the past 16 years, notes that while the value of a degree may not be as high as it once was, this doesn't mean it has no value.

"At the end of it, it's not about the degree - it's about what you got through the degree," Ms Kuik explains.

"You could have gotten sharper skills, new knowledge, a more disciplined mind, better distinctions, broader networks of contacts. If you were enterprising and imaginative with getting yourself the right internships or the right teachers, you could also get all that without a degree."

She added that ultimately, employers want to hire a "solid worker" with skills and knowledge, who is good with people, and open to change and learning. "Those are classic traits that do not go away, and not correlated to whether you have a degree or not."

For young graduates to be ready for the future of work, the skills that they need to navigate their careers will be crucial. As a report by the Foundation for Young Australians (FYA) highlights: "We need to support young people to develop a portfolio of skills, knowledge and attitudes that will deepen over time and become highly portable across many sectors."

The study pointed to four factors that can help accelerate one's transition to full-time work. These are: an education that builds enterprise skills, undertaking relevant paid work and apprenticeships, finding employment in a growing sector, and developing an optimistic mindset. Additionally, investment should be directed towards a few key areas including a strategy to redesign learning, a commitment to work-integrated models of learning, and a policy targeted at mental well-being.

In the UK's University of Kent for instance, an online Careers Explorer service allows students to match their skills to career options, and utilise a work-study scheme that offers bursaries for work experience. Likewise, undergraduates at the University of Dundee can take employability modules in tandem with their degree.

Within the Singapore context, NTUC's Mr Zainal notes that being updated about how jobs are changing under the Industry Transformation Maps is a good start to upskill, as is being aware of government programmes available.

That being said, NMP Ms Kuik suggests that people should not get caught up on "blindly upgrading" themselves with substandard courses and get frustrated when opportunities do not present themselves.

"I hope that we stop assuming that education is there to get us a job or worse, help us pass an exam."

She explains that education is there to sharpen our ability to think, feel and do different things in the world. "Education needs to leave you feeling more empowered and more independent than when you first began. That stronger locus of personal power becomes really important especially if you hit a professional wall, and realise you literally have to create the job you want.

"If we changed our perspective on education, we might get much more selective at picking what kind of learning we need, to build the future we ourselves want to live."


Meet Raymond Eng, 27
Over the past two years, Raymond has sent out about 300 applications, but has yet to find suitable full-time permanent employment. He graduated with a Banking and Finance degree from SIM-UOL in 2016, and has since been working on internships and contract jobs. His first internship out of university paid S$1,500 per month. According to Raymond, the market has an oversupply of graduates, and the influx of foreigners might have depressed wages.

Meet Novabelle Ng, 28
Armed with an SMU Accountancy degree, Novabelle first started working as an auditor, and then a credit analyst. But she soon got jaded and made the jump to a tech startup. While she took a 50 per cent pay cut, income from her other job as a singer more than makes up for the difference. Though her degree is in an unrelated field, she says that going to university helped build a good foundation to understand business. She was also taken by surprise to find many portfolio warriors like herself when she started performing.

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