Date
24 May 2017
The salary premium of fresh university graduates over those with only high school qualifications has been narrowing as the labor market is unable to create enough high-skilled jobs. Photo: HKEJ
The salary premium of fresh university graduates over those with only high school qualifications has been narrowing as the labor market is unable to create enough high-skilled jobs. Photo: HKEJ

How higher education has failed young people

As the percentage of university graduates in the population continues to rise, there is growing concern over whether we can produce enough high-skilled jobs for them.

In the meantime, more and more university graduates are getting frustrated with their income levels and career prospects.

To find out the real picture, the New Century Forum to which I belong and the New Youth Forum have collaborated on a study of salary levels of university graduates, in an attempt to find out whether their university degrees give them any substantial advantage over less-educated workers in the job market.

According to the findings of our study, the median entry level salary of university graduates in Hong Kong has significantly declined over the past 20 years.

Also, the gap between the median income levels of university and high school graduates has continued to narrow over the past two decades.

Around 20 years ago, according to our study, fresh university graduates were paid on average 19 percent higher than those who only had high school qualifications. Today that gap has narrowed to just 4 percent.

We also learned that the decline in the salary levels of university graduates started to accelerate sometime in 2000, when then Chief Executive Tung Chee-wah launched his ambitious plan to raise the proportion of university graduates in our population to 60 percent.

Since then our city has seen a rapid growth in the number of self-funded associate degree programs, and the number of associate degree graduates increased almost nine times in 2005/06 from 2000/01.

Unfortunately, our labor market failed to create enough high-skilled jobs for the rising number of university graduates, and many of them eventually ended up in low-skilled and low-paid jobs, leading to the decline in their median salary level.

Worse still, these graduates often have a lot of student loans to pay off. As a result, many of them are struggling to get by from paycheck to paycheck.

The mismatch between the number of university graduates and jobs appropriate for their skills has continued to deteriorate in recent years, and more and more degree holders have found themselves unable to climb up the social ladder.

Perhaps it is now time for our society to take stock of whether our higher education system is delivering desired returns for the graduates and society as a whole.

This article appeared in the Hong Kong Economic Journal on Sept. 28.

Translation by Alan Lee

[Chinese version 中文版]

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RT/CG

Hong Kong Economic Journal contributor

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