From the reading room to career trouble
This spring more than 57 000 new graduates will make their way from higher education to a labour market with the highest unemployment figures for a decade. This cohort's opportunities to join the correct career path are worse than previous ones.
According to the latest (June) seasonally adjusted figures from Statistics Norway, there are 130 000 unemployed persons in Norway. Unemployment has risen steadily since 2014, and remained stable. 17 000 more men have become unemployed during the past year, according to Statistics Norway's Labour Force Survey. There were a total of 79 000 underemployed, part-time employed persons who have tried to find more work, in the first quarter of 2016.
Mismatch between education and industry
With 57 000 students looking for their first permanent job in the current market, the start of many of their careers will be delayed, compared with new graduates in recent years.
"Many will not make a good match with the industry their education trains them for, " says Professor Erik Ø. Sørensen, researcher at CELE and The Choice Lab, Department of Economics.
The industry they have trained for does not need their expertise. According to a new NHH study, the mismatch between education and industry will lead to many new graduates needing to taking jobs they are overqualified or unqualified for, and thus receive lower salaries. This may cost them dearly in terms of career development.
This is the finding in a study conducted by Associate Professor Kai Liu and Professors Kjell G. Salvanes and Erik Ø. Sørensen, all affiliated with the CELE research group at the Department of Economics.
They believe that the 2016 cohort will sense the downturn.
Good skills in bad times
Their article "Good skills in bad times: Cyclical skill mismatch and the long-term effects of graduating in a recession" was published this spring in the European Economic Review.
Here they mainly use figures from the strong recession around 1990.
"What is happening is that new graduates must begin at a slightly lower level of the industry they are targeting, or they will have to switch industry," says Kjell G. Salvanes.
The lack of correspondence between the competence of university graduates and the skills in demand by the industry results in loss of career opportunities.
"Instead of taking a higher position, they get a lower position, which does not allow them to learn the skills that their education would call for. They are held back, with tasks that are not challenging, and thus their salary trajectory is not as expected either."
Can handle lower salaries
This effect will last for four to five years.
"They do not achieve the right job match for their education, and educational institutions cannot simulate work experience for students. They need to get it themselves. Because they do not receive relevant experience, it will take them time to recover and reach the correct level," says Sørensen.
Students taking jobs in industries outside their field of education is not problematic in itself, point out researchers.
"Anyone can accept a lower salary in order to get a foot in the labour market, but the negative effect remains," says Salvanes.
"If people are forced to take jobs that do not match their education, this mismatch will have a negative impact on their opportunities in the long term," says Sørensen.
"Isn't a longer degree a good idea?"
"Education always pays off. You get better jobs and a higher salary. But it is important to be aware of these mechanisms, which are part of the recession. We are in a cyclical downturn, unemployment is higher, and also part of this is that the young people who enter the labour market will have this problem as well."
The best ones wait a little longer
The researchers point out the problem of negative selection. The most talented people wait to enter a poor labour market:
"Let's imagine that I'm clever, and see that it is difficult to get a good job, and that my education will not count for much. I wait before I begin working. I take extra subjects or improve my grades. This means that the people who go straight from education into a poor labour market are a select group, and might not be the best candidates," says Salvanes.
The researchers looked into this in their study. They see that a number of people wait to begin looking for work, but that this does not have much effect. It looks like recessions have real negative effects, and that this is not a matter of negative selection.
"They do not achieve the right job match for their education, and educational institutions cannot simulate work experience for students. They need to get it themselves. Because they do not receive relevant experience, it takes them time to recover and reach the correct level," says Sørensen.