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$180 million Cut to Universities – Ripple effect of Graduates on Jobs likely to Suffer

For every 1000 graduates, 120 new jobs are created for people without a degree – this Ripple effect of Graduates on Jobs is likely to Suffer

Melbourne, May 4: New modelling shows that having more university graduates in the economy creates new jobs and lifts wages for workers who don’t have a university degree.

“For the first time, the work done by Cadence Economics – using the same type of model used by Australian governments and the Productivity Commission to assess the economic impact of policies – shows the spillover benefits to workers without a degree from having more graduates in the economy,” said Belinda Robinson, Chief Executive of peak group Universities Australia.

For every 1000 university graduates who enter the Australian workforce, 120 new jobs are created and wages are increased for people without university degrees, the modelling has found.

The analysis also finds that the wages of people without a degree are boosted by $655 a year – or $12.60 a week – when more graduates join the national workforce.

In the Budget 2016, with scrapping of previous plans to fully deregulate student fees, an options paper may be the key to resolving policy tug-of-war and softening the blow to universities with:

  • alternatives to full fee deregulation,
  • a reduction in the size of funding cuts, and
  • a 12 month delay to the introduction of higher education changes.

However cuts worth a combined $180 million to university programs that support disadvantaged students and teaching excellence, are blows, whatsoever.

The Turnbull Government has delayed the introduction of the proposed 20 per cent cut to 1 January 2018, and dropped the $1.2 billion efficiency dividend on legislated programs.

“Education Minister Simon Birmingham has delivered on his ‘no surprises’ commitment by unveiling an options paper…”, said Ms Robinson.

Having more graduates in the economy boosts the wages of workers without a degree through workplace productivity gains that make Australia’s industries more competitive, as well as higher spending that flows into the economy.

The findings highlight the role of university education in lifting wages and living standards across the broader Australian economy – not just for those who hold a degree. The modelling finds:

  • In 2014-15, the economic boost from new graduates entering Australia’s workforce created 25,000 new jobs for Australians without university degrees.
  • For every 1000 new graduates entering the workforce, 120 new jobs are created for people without a degree.
  • The impact of new graduates joining Australia’s workforce lifted wages for workers without a university degree by $12.60 a week or $655 a year.

Without the entry of new university graduates into the Australian economy, the growth rate in jobs for people without a university degree would have been zero over the last eight years.

In particular, the ‘spillover benefits’ of new graduates entering the workforce in 2014-15 created 8064 new jobs for technicians and tradespeople.

Universities Australia Chief Executive Belinda Robinson said the report’s findings are further proof that keeping our university sector strong will be indispensable to new jobs, higher wages, and economic growth for Australia.

“If we want to create more jobs and better-paying jobs for all Australians, we can’t afford to cut investment in the engine room of economic transition: our universities,” she said.

“Over the coming decades, it will be the skills and smarts of our people – our human capital – that will be central to strengthening the Australian economy and building economic resilience.

“What this report tells us is that higher education does not just benefit those with the qualification. A highly skilled, highly educated workforce is essential for jobs growth, workforce productivity and the overall competitiveness of Australian industry,” Ms Robinson said.

However, universities are deeply disappointed by Government plans to abolish the Office for Learning and Teaching (OLT) and cut $152 million from the Higher Education Participation and Partnerships (HEPP) Programme, which supports the most educationally disadvantaged students to succeed at university.

“Budget cuts to programs supporting disadvantaged students and encouraging innovative teaching and learning are counterproductive”, Ms Robinson said.

Since 2010, the number of low SES students starting at university grew by a third with the support of the HEPP program.

The Office for Learning and Teaching was supported by modest funding which has been redirected to TEQSA, the body that oversees quality and standards in the sector, and enhancing the Quality Indicators for Learning and Teaching (QILT) website.

“While universities are pleased to see more resources for TEQSA and QILT, it should not be at the expense of the highly effective OLT. The abolition of the OLT will end a program that underpins teaching excellence and innovation and supports student retention,” Ms Robinson said.

Universities Australia will continue to prosecute the case of a strong university sector for the task of economic transition and ‘The graduate effect’, a statement said.

Feature image: The Schweppes Australia Graduate program offers a unique opportunity to kick start a career within the FMCG industry.

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