Author: Kwabia Boateng

Affiliated organization: Economic and Social Policy Division Economic Commission for Africa

Type of publication: Report

Date of publication: 2002

Link to the original document

Introduction

The main hypothesis of this paper is that the phenomenon of increasing graduate unemployment and the low returns to higher education in Africa can be attributed to the weak linkage between the higher education sector and the labour market. awumia and Laryea (1997), using labour income measures, found negative human capital indices for the majority of African countries and concluded that the investment in education in these countries is not being translated into increased productivity of the labour force.

One could posit several reasons for the low returns to education, notably, the increasing unemployment of educated labour; brain drain; poor quality of educational output; lack of complementary factors like equipment; and generally poor working environment. But the more fundamental cause is the continuing failure to subject the educational sector to the requirements of the labour market.

In Africa, however, there is evidence of widespread disparity between what educational institutions produce and what the labour market wants. The consequence has been increasing incidence and duration of unemployment among the educated labour force in various African countries. In Ghana, it is estimated that about 47 percent of social science and arts students who graduated in 1999/2000 likely to enter into unemployment, given the changes in skill demand in Ghana

Based on the analysis the paper recommends that the following should be established or strengthened:

1) The flow of labour market information (coordinated by properly resourced public employment centres) to educational institutions (through on-campus career advisory centres) and job seekers

2) Correspondence between the human resource development programmes of the private sector and public employers on one hand and educational institutions on the other, coordinated through education-business-government collaborative mechanisms.

Higher Education-Labour Market Linkage Model

“Mismatch” here may be defined in terms of the ability of the educational sector to meet the (human resource) requirements of the economy, as measured by the absorption of educational output into the available job vacancies. To the extent that there is a mismatch, the flow of educational output back into the pool of out-of-school job seekers (instead of being employed or employable) and then into the pool of in-school job seekers will continue, swelling the demand for educational services. However, the part of educational output that matches existing vacancies will enter the employed pool, and thereby reduce the number of job vacancies. In a system of perfect linkage between the labour market and educational institutions the output of the latter will match known (current and projected) vacancies and equilibrium will be established, that is, in the long run.

The conclusion is that the solution to the increasing graduate unemployment is to achieve congruence between educational services (that determine the type of educational output) and labour market needs. To the extent that educational services are not responsive to labour market signals because they are scrambled by non-market factors, or to the extent that such signals are non-existent,blurred or distorted- by an inefficient LMIS-, the problem of graduate unemployment will persist, especially given the diminishing role of the public services in graduate employment.

Developments in Graduate Employment in African Labour Markets

The decades after 1980 have been characterised by increasing educated unemployment, and an expanding role of the informal sector as the major source of urban employment. This has resulted not only from the slow economic growth and lack of investment in African economies, in particular the industrial sector, but also the technological changes in the structure of production and hence employment around the world.

The majority of workers with higher education (at least three-quarters of university and polytechnic graduates) are in paid employment. In 1998/99, nearly 90% of Ghanaians with higher education were in paid employment, an increase of 8 percentage pOints in the ten-year period. However, of the larger labour force without higher education. 20.3% were in paid employment in 1988/89. which dropped to only 12.4% in 1998/99 due to the slack in both private sector employment and retrenchment in the public sector.

It needs to be noted that while employment opportunities have substantially declined in most African countries, tertiary graduates have fared relatively better than the less educated groups. Furthermore, while employment opportunities in the formal sector have declined for tertiary graduates in most African countries, graduates in certain disciplines have not been affected.

Structure of Higher Educational Institutions

Objective and Focus

Because of the shift of the centre of employment from the public to private sector, it is imperative for African universities and other centres of higher learning to re-orient their outputs. Tertiary graduates must now find jobs outside the public sector.

Higher education institutions play a crucial role in generating the human capacities for leadership, management and technical expertise, with which to face the challenges of globalisation and development. However, universities in Africa appear to see their role in development as purely tangential or incidental.

Financing and Legal Status

First, African higher education institutions are mostly public or state-owned. This means that they are funded and controlled by the government. Until 1997, there were no private universities in Ghana. But even now, the first choice of every student is the public universities because of free and “better” tuition, subsidised residential accommodation and prestige. Secondly, universities dominate the higher education sector, as polytechnics and other components of higher education are considered less prestigious within the linear and liberal educational system established after independence.

Since the main source of finance for higher education institutions is the government, the inadequate GDP and hence public revenue growth in the 1980s and 1990s have caused low and unpredictable funding levels in education, in particular, and the social sector in general. There are three main reasons why government must support higher education, namely, government’s own manpower needs, social needs and the public good nature of education.

Quantifying the Mismatch

The most direct measure of quantity mismatch is the extent of graduate unemployment. The main facts about graduate unemployment in Africa are that: it is increasing; it is more prevalent among recent graduates; and it is more prevalent among graduates with arts or social science background.

The bias against science in tertiary enrolments is not because of the lack of public policy. In fact public policy have since the early days of independence been in favour of science and technology education. The source of the problem is the lack of public funding, which has resulted in inadequate laboratory facilities from high school to the universities, to absorb the increasing numbers that apply for science. The lack of laboratory facilities has also affected the level of student interest in science programmes, as practical exposure is limited in educational institutions.

Though the public demand for holders of arts and social science degrees started to decline in the early 1990s with the introduction of structural adjustment programmes and public service reforms. the trend in university enrolment continue to be dominated by these courses.

Another aspect of the quantity mismatch is gender. Though female enrolment in higher education has increased significantly since the 1980s in Ghana and Nigeria, as in other African countries, female students lend to be over-concentrated in the humanities. Thus, while public policy is attempting to address the issue of employment bias against women in the labour force, educational institutions are far behind in supplying the numbers of women that are required in the many and varied fields

We can conclude that as enrolment increases in the arts and social sciences, as indeed is the case in most African countries, the incidence of graduate unemployment will increase because of the divergence between educational output and labour demand. For belter matching, in the nominal sense, enrolment percentages should therefore follow the accommodation ratios. To do this would require drastic changes in admission policies, as well as in the collection and analysis of statistical information on job vacancies

Consequences of Weak Linkage

The primary consequence of the mismatch between educational output and labour market requirements is that of graduate unemployment. Two major contributory factors to the unemployment problem is the divergence between the expectations of new graduates and what the labour market can offer- due in part to the lack of career guidance and counselling-, and the high hiring costs of new graduates which apparent mismatch creates.

At the enterprise level.low or doubtful quality of educational output has adverse effect on effective labour demand, by increasing the hiring (fixed) cost of labour and causing a downward shift of the marginal productivity of labour schedule, with adverse consequences for both employment and starting wages of new graduates. In many cases employers compensate for the inadequacies of new graduate employees by organising remedial courses for them or extending their probation periods. Some employers take new graduate employees through intensive post-employment training.

There are therefore costs, both private and public, to the mismatch between educational output and labour market requirements. Non-utilisation of graduate labour entails inefficient use of scarce public resources. It is therefore necessary that public authorities review their educational expenditure policies and, for that matter, public policy towards the education sector vis-a-vis national manpower needs.

Institutional Reform

Finance

The major source of the crisis in higher education in the developing world is finance (Ransom et ai, 1993). The costs of higher education are both direct (the cost of facilities, tuition, etc.) and indirect (forgone individual income or benefits of alternative projects). However, government financing of higher education is severely constrained by the slow growth of the economy, relative to the growth in population and hence the needed level of enrolment.

Possible sources of cost reduction that should be examined include the elimination of unnecessary administrative procedures and practices that contribute to the high overhead costs but lillie to efficient delivery; faculty specialisation and institutional rationalisation; distance education and facility sharing; direct private sector financing of specific components of academic programmes such as research.

Measures need to be adopted that enhances private sector involvement in educational financing. There are three key decision factors for the private sector: cost control and cost effectiveness; clear human resource development policy; and appropriate incentive system.

Possible sources of cost reduction that should be examined include the elimination of unnecessary administrative procedures and practices that contribute to the high overhead costs but lillie to efficient delivery; faculty specialisation and institutional rationalisation; distance education and facility sharing; direct private sector financing of specific components of academic programmes such as research.

Private Educational Goals, Enrolment and Career Counselling

Private educational goals among African students are formulated in the context of very limited labour market information. Public policy must deal with the labour market preference structures of prospective students and graduate workers. This will require a reformed LMIS with strong links to career centres on the campuses. Admission and scholarship policies must be based on the national human resource development programme, which in turn must be based on manpower projections emanating from current LMI and trends in the national and global economy.

Higher Education and Private Sector Employers’ Linkage

In many African countries interaction between educational institutions and the private sector is rather lukewarm. Yet there are possibilities of partnership with the private sector through tapping the expertise of private sector executives in advisory boards; through internships; research funding; and faculty job attachments (Amoako, 2000). The Nigerian National Rolling Plan 2001-2003, for example, catls for the establishment of a strong tripartite linkage between the manpower planners, producers and employers for effective coordination between the world of learning and the world of work. The tripartite structure will ensure efficient flow of information, which is at the heart of the education sector, public policy and labour market linkage.

Public Sector Incomes Policy

Public sector compensation systems need to be reviewed, in the light of current labour market developments. Enhancing the earnings in particular disciplines could help induce greater willingness on the part of private individuals to finance their own education.

Conclusions and Recommendations

-Effective labour market information systems linked to career centres at the universities

-Comprehensive national human resource development policy. with an incomes policy

component

-Effective tapping of private sector resources for educational institutions. through consultations

in curriculum development; student and faculty attachments; funded research and scholarships

-Installation of flexible and lean management structures in educational institutions and designing

expenditure framework based on results and delivery of specified outputs

-Effective cost-sharing mechanisms, including review of public funding of residential costs.

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