Tuesday 14 October 2014

More grads suffer underemployment

Rate falls for all here except degree holders despite tight job market
By Rachael Boon, The Straits Times, 13 Oct 2014

MORE Singapore workers are getting jobs that match their skills, bar one group: degree holders.

The proportion of university graduates who have jobs but are "underemployed" inched up last year from the year before, according to the latest figures from the Ministry of Manpower (MOM).

For all other workers, the underemployment rate fell.

Unlike the unemployed, those who are underemployed have some form of work, but not as much - or not as high-paying - as what they are qualified for.

MOM defines an underemployed person as someone aged 15 and above who normally works less than 35 hours a week, but is willing and available to engage in more work. This covers those who are looking for full-time work but can land only part-time gigs.

Underemployment also refers to people who are highly skilled, but working in low-paying or low-skilled jobs.

Generally, underemployment figures drop as the educational level rises. On the whole, Singapore's underemployment rate fell from 4.6 per cent in 2011 to 4.2 per cent last year.

The glaring exception are degree holders, for whom the underemployment rate has held steady and even climbed, despite the tight job market.

Some 2.3 per cent of graduates were underemployed last year as a proportion of all employed workers, up from 2.2 per cent in 2012 and drawing level with 2011.

Human resource players point to rapid changes in the economy and complacency among mid-level workers as some reasons for the underemployment of graduates.

As economic sectors diminish in importance and new ones emerge, jobs are still being created for graduates - but they require new skills, and mid-career workers are not upgrading themselves fast enough, say experts.

Many professionals, managers, executives and technicians (PMETs) who are retrenched are unable to fit into new jobs. Left with no choice, they take on lower-level, lower-paying jobs.

Mr Erman Tan, president of the Singapore Human Resources Institute, likened the mindset to former star companies like BlackBerry or Nokia.

He said: "A lot of PMETs are... very comfortable where they are, which is part of the reason they are not motivated to learn, unlearn and relearn."

Mr Max Lee (not his real name) is one such example.

The former vice-president in his 40s was doing well in the electronics sector - with a regional management role in sales and marketing, coupled with a $20,000 monthly salary - until the industry's decline forced his company to restructure two years ago.

His role was made redundant overnight and he was forced to move into a property-related role, doing corporate planning.

The skills he had honed over the years were irrelevant in his new job, while his monthly salary fell to $8,000, a far cry from what he used to earn.

His case highlights the small but growing problem of graduate underemployment in Singapore, to which the Government is paying close attention.

In March, Manpower Minister Tan Chuan-Jin said that a graduate glut could result in "overeducated and underemployed" workers, as seen in South Korea and Taiwan.

Human resource experts have constantly reiterated that employees should take charge of their career growth in the organisation to ensure their skills stay relevant.

While employers and employees should share the responsibility for training and upgrading, workers must take the initiative to keep their skills up to date, said Mr Paul Heng, managing director of Next Career Consulting Group.

If their training is not subsidised by their companies, they should fork out money for it themselves, he added.

"Employees are still not prepared to pay for their own training and upgrading. Some are ignorant of the need to."


Those with degrees

2013 2.3%

2012 2.2%

Those with diplomas and professional qualifications

2013 2.9%

2011 3%

Those with post-secondary education

2013 3.9%

2011 4.7%

Graduate employment: Degrees of relevance
A degree is no longer a guarantee of a good job as more graduates face underemployment, working in jobs that pay less well or require lower-level skills than their qualification prepares them for.
By Rachael Boon, The Straits Times, 21 Oct 2014

A UNIVERSITY degree used to be seen as a golden ticket to job security and career success, but some of the shine is coming off that path.

More graduates here are experiencing underemployment, which the Ministry of Manpower (MOM) defines as workers who clock at most 35 hours of work a week, even though they want and are available to work more hours.

Some 15,100 degree holders were underemployed last year, up from 13,000 in 2012.

This works out to 2.3 per cent of all employed graduates last year, inching up from 2.2 per cent the year before.

While the increase is slight, it comes amid a tight job market and falling underemployment rates for all other types of school leavers, from secondary school dropouts to diploma holders.

Some also fear underemployment figures for graduates may be understated.

MOM's numbers track only workers who are working fewer hours than they want, not those in jobs lower-skilled than what they are qualified for.

The lack of hard data for the latter group worries Mr Patrick Tay, NTUC assistant secretary-general, who has been speaking about underemployment since he became an MP in 2011.

He cites anecdotal evidence of graduates taking jobs that do not require a degree but says it will be hard to gather data, "as it will involve looking at each job" and measuring it against the skills of the worker employed.

Still, the anecdotes paint a picture of a job market that may have become less friendly for graduate workers, who usually land jobs as professionals, managers, executives and technicians (PMETs).

This is the group most likely to lose their jobs, an MOM report in April showed. They made up more than half of those laid off last year, up from one-third in 2010.

In March, Manpower Minister Tan Chuan-Jin warned of a graduate glut that could result in "over-educated and underemployed" workers, an emerging trend in South Korea or Taiwan.

After The Straits Times ran an article on underemployment last week, Mr Tan posted on Facebook that "the situation still remains rather positive" but "we should still look out for those affected".

The Government is trying to help with schemes such as those conducted by the Workforce Development Agency, and the national Jobs Bank portal that opened in July. As of last month, more than 80 per cent of the 62,100 average "live" vacancies on the portal were suitable for PMETs, MOM told The Straits Times.

But to ensure graduate underemployment doesn't become a bigger problem, it is important to understand what is driving it.

Structural changes

WHILE underemployment is not as dire as actual unemployment, it signals a misallocation of resources - such as people paying for a pricey university degree they don't use - and a waste of human capital. In some extreme cases in the United States, degree holders work minimum-wage jobs.

Experts point to two main reasons behind Singapore's graduate underemployment.

The first is structural unemployment, caused by rapid changes in Singapore's economy, including multinationals moving out of the country after decades here.

This has led to a mismatch between the skills possessed by workers whose industries have shrunk and the abilities sought in new growth industries.

Dr Tan Guan Hong, whose work as programme director at A*Star's Institute for Infocomm Research includes managing programmes for older workers, said many laid-off PMETs have spent decades rising to become team leaders. But when their jobs are made redundant, they find their skills not useful in other sectors.

While PMET jobs are still being created, many require skills that retrenched job-seekers need time to learn. Even if retrenched workers are willing to acquire new knowledge to enter another industry, they would be competing for lower-level jobs with younger rivals and "must be prepared for a pay cut", said Mr Erman Tan, president of the Singapore Human Resources Institute (SHRI).

Because PMETs have a good education, they can usually find another job, though it may be part-time, lower-level or lower-paying than their previous position. Human resource experts consider this underemployment.

They say part of the problem is that many displaced PMETs have stayed in the same company or industry for a long time, which leads to a false sense of job security or an over-reliance on their company to take care of their training and career development.

"Out of 10 executives I coach, eight do not realise the world has morphed a lot since the last time they looked," said Mr Paul Heng, managing director of NeXT Career Consulting Group.

He added: "They focus on doing a good job... (When) they are told their services are no longer required, they freeze and simply do not know what to do."

Degrees are common

AS ECONOMIES like Singapore's advance and business costs rise, SHRI's Mr Tan noted that a trend of job polarisation also tends to take place - the second driver of graduate underemployment.

Companies seek to cut costs by automating some job functions or outsourcing them to specialist firms or cheaper countries.

These jobs tend to be the well-paying, middle-level jobs held by PMETs.

Most jobs that remain are either well-paid, high-skilled top posts, or jobs right at the bottom, where unskilled workers are still the cheapest option.

"The PMETs with skills not relevant to the jobs at the top will have to find work lower down the rungs, thus contributing to the growing ranks of underemployment," Mr Tan said.

Making things worse is that university degrees are more common now, both at home and elsewhere.

MOM has said the rise in underemployed degree holders "largely reflects the rising number and share of degree holders in the workforce".

In 2011, 28 per cent of employed residents were graduates; last year, it was 32 per cent.

This is partly because privately-run degree programmes at schools such as Singapore Institute of Management and the Management Development Institute of Singapore are churning out more graduates, NTUC's Mr Tay noted.

Meanwhile, more people are earning degrees in lower-income countries, increasing the competition for mid-level jobs even as the number of such jobs declines.

Having a degree alone is no longer enough to command higher pay, argue social economists Phillip Brown, Hugh Lauder and David Ashton in their book, The Global Auction: The Broken Promises Of Education, Jobs And Incomes.

They say companies can now cast a wider net for the cheapest workers with the skills they need, turning the contest for mid-level jobs into a "global auction".

The way forward

UNDEREMPLOYMENT has yet to become a huge concern for Singapore, where the unemployment rate is still near record lows.

But if the economy and job market take a turn for the worse, underemployment could quickly turn into outright unemployment.

Each of the two drivers of underemployment needs a different solution. To some extent, structural unemployment can be mitigated by more mid-career training, which Singapore is addressing with its Continuing Education and Training (CET) 2020 plan.

This will help mid-level PMETs stay relevant in their current jobs, or move quickly up the learning curve in a new industry.

To maximise a company's limited training budget, firms could use co-payment schemes where workers take some responsibility for their education, said Mr Heng.

The other reason for graduate underemployment - job polarisation - is harder to tackle, and will require a combination of efforts.

The Government must shift priorities away from an expensive paper chase and towards cultivating in-demand abilities. Recent proposals to improve Institute of Technical Education (ITE) and polytechnic vocational education are a step in the right direction.

Companies should also realise that with an ageing population, their best bet may be to tap the "human capital resource" already invested in middle-aged PMETs, rather than keep looking for the cheapest worker, said Dr Tan.

Most of all, workers need to develop deep skill sets and hard-to- replicate expertise - such as overseas work stints, foreign languages and secondary subject-matter abilities - rather than rest on the laurels of their university degree.

These solutions will take time. But graduates can start helping themselves now by refreshing their skills or picking up new ones. It's never too early to guard against complacency.

Too many Korean grads chasing too few jobs
With oversupply of grads, high-schoolers asked to consider vocational training
The Straits Times, 14 Nov 2014

SEOUL - South Korea went into "hush" mode yesterday, as nearly 650,000 students sat the annual college entrance exam that will play a large part in defining their adult lives in the ultra-competitive society.

Preparation for the crucial exam starts from primary school, and so does the relentless pressure that has been blamed for everything from early burnout to teenage depression and suicide.

A 17-year-old boy was found dead on Wednesday evening, having apparently jumped from his family's apartment. His parents told Yonhap news agency that he had become extremely stressed as the test neared.

Success in the eight-hour exam means a secured place in one of South Korea's elite universities - a key to future careers as well as marriage prospects.

With so much riding on the outcome, the whole country pulled out all the stops to ensure nothing went amiss on this big day.

Traffic was barred within a 200m radius of the 1,257 test centres; public offices and major businesses opened an hour later than usual to give way to student commuters, and police cars were on standby to help escort those who got stuck in traffic.

But the irony is this: South Korea's obsession with education has resulted in an oversupply of highly educated youth all vying for limited jobs offered by major conglomerates.

According to the Education Ministry, South Korean parents spent 19 trillion won (S$22.4 billion) on extra tuition for their children last year.

The college entrance rate stands at over 80 per cent, up from 30 per cent in the 1990s.

But many college graduates are unable to find jobs, due to a severe labour mismatch. The jobless rate for people aged 15 to 29 is 8 per cent, slightly lower than the decade-high figure of 10 per cent in February. Government data showed that there were more than three million graduates who were "economically inactive" last year, meaning that they could not find jobs or had given up trying.

For some, job hunting is more stressful than preparing for the college entrance exam. Samsung, for instance, holds its own corporate entrance exam every year.

Ms Oh Seoyeon, 23, told CNBC: "Having been through the exams and then entering the workforce, job searching was definitely harder."

Experts said the underlying problem is that graduates are reluctant to accept anything less than a job offer from a chaebol (Korean for conglomerate).

Having worked so hard and spent so much money to get a degree, these young job-seekers have high standards, refusing to even submit their resumes to small and medium-sized enterprises that are in dire need of human capital but are unable to offer attractive salaries.

It is time to change that mindset, observers say. Noting that "the reckless entrance into college is bringing huge losses to the country", former president Lee Myung Bak had in 2011 advised some high-school students to consider vocational training instead.

An OECD report earlier this year noted that apprenticeships can help increase employability for young people. In Seoul, the government has set up Youth Employment Academies to offer training courses according to industrial demand.

Industry observers said more fundamental changes must be made in education in order to raise the youth employment rate.

Mr Park Che Khun, an official from the Korea Chamber of Commerce and Industry, told Korea Times that the college entrance rate should be reduced.

- Many college graduates cannot find jobs. The jobless rate for people aged 15 to 29 is 8 per cent, lower than the decade-high figure of 10 per cent in February. More than three million college graduates were "economically inactive" last year.
- Experts said the problem is that college graduates are reluctant to accept anything less than a job offer from conglomerates. They refuse to submit resumes to small and medium-sized enterprises that need human capital.


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