Many sides of skills gap issue – what the universities can and cannot do

By Dr. Senthil Nathan, Co-Founder and Managing Partner of the MENA Region for Edu Alliance. The Context: Reasons for students pursuing higher education have changed dramatically in the past few decades.

Just one hundred years back, going to a university was considered an elitist privilege for a select few from the community. Moreover, the reasons for attending college were to do with the broadening of intellectual horizons for the students. Only a few high school graduates went straight to college.

In 2017, about 70% of high school graduates enrolled in college [1]. The ratio of college students to 18 to 24-year-olds increased 20-fold, from 2% in 1900 to 40.5% in 2017 [2]. University education is becoming a matter of automatic progression in the USA. Over a third of the working population, today has bachelor degrees or higher – this was at 5% in 1940.

The past few decades have also seen manifold increase in tuition costs and hence increasing student debts. In-state tuition and fees at public four-year institutions increased from $3,190 in 1987 to $9,970 (both 2017 dollars). [3]. However, from 1960 through 2015, the inflation-adjusted average starting salary for a new bachelor’s degree graduate increased only by 5.9% [4]. Student loan debt in the U.S. has now topped $1 trillion. Over 44% of recent college graduates are underemployed — working in jobs that don’t require their degree.

The issue of Skills Gap must be assessed by university, industry and political leaders with a profound appreciation of such a significant increase in access to and costs of higher education combined with stagnant starting salaries for fresh graduates.

Is the Skills Gap a myth or a reality?

A majority of employers – in the USA and around the world – cite the skills gap as a major reason for difficulties in filling vacancies over a long period. Employers also see this issue as a major threat to their business growth. The Manpower Group conducts annual Talent Shortage Survey with major employers around the world. Its 2016-17 survey shows that of the more than 42,000 employers surveyed, 40% are experiencing difficulties filling roles the highest level since 2007. The top 5 hardest skills to find are skilled trades, IT staff, sales representatives, engineers, and technicians. [5].

Skills gap skeptics in academia, social sciences and journalism – argue that the magnitude of the skills gap is overblown. A recent study from MIT Sloan School [6] found that less than a quarter of manufacturing plants had vacancies that had lasted for three months or more. This fact may be contrasted with the manufacturing industry claims at the time that 75% or more faced a persistent inability to hire skilled workers. As unemployment has been steadily declining since the recession peak of 10% in October 2009, these experts counter the argument that the skills gap was to blame for elevated unemployment then and today’s full employment counters the persistence of that view. Skills gap skeptics also contend that employers will always complain about their candidate pools as they adjust the job requirements depending on current labor conditions ensuring a perennial gap. They also point to stagnant salary levels and vastly declining apprenticeship opportunities in the USA as lack of employer responses to persistent vacancies. Typically, when the unemployment is low – as it is now in the USA – wages for in-demand skills should rise; but that is not happening. A New York Times editorial [7] painted a picture of suspicion on corporates, “Corporate executives have valuable perspectives on the economy, but they also have an interest in promoting the notion of a skills gap. They want schools and, by extension, the government to take on more of the costs of training workers that used to be covered by companies as part of on-the-job employee development. They also want more immigration, both low and high skilled, because immigrants may be willing to work for less than their American counterparts.”

However, it is illogical to dismiss a consistent and majority response from widely different employers from different countries around the world with overly simplistic theories – calling Skills Gap as corporate fiction. Jan 2018 Bureau of Labor Statistics data [8] shows that 6.3 million jobs remain unfilled in the USA and even the best recruiters are struggling to fill those roles despite millions of people who “are willing and able to work.” This is a rather “disturbing trend” for recruiters. Even in my brief experience in searching for university presidents, provosts, and deans, I faced significant challenges in finding appropriate talent in spite of receiving scores of applicants from interested candidates for each of these positions.

The World Economic Forum’s Talent Mobility Report expresses this frustrating paradox of unemployment / under-employment and talent shortages/skills gap, “Many countries struggle with vast unemployment, underemployment and huge untapped labor pools beyond what can be attributed to the recent global economic slump. Yet, many industries struggle with significant talent shortages and skills gaps that are dampening economic growth.” [9]

Interestingly, there is increasing consensus among experts taking extremely different views on this debate on at least two keys to address the “skills gap” issue: 1) to improve access to apprenticeship opportunities and 2) to enhance learning and development budgets of corporate sector.

Why should the universities care? Universities cannot afford to sit idle on this debate or continue to ignore graduate employability and salaries. Increasingly, universities are being ranked on “Return on Investment” or ROI.

PayScale reports “Best Value Colleges” on 20 year Net ROI (difference between 20-year Median pay for the bachelor’s graduate and 24-year median pay for a high school graduate minus the total four-year cost of higher education). Harvard, a perennial #1 in world and US ranking lists, is ranked 26 in this ROI ranking while Harvey Mudd College takes on #2 rank [10].

Forbes has begun to rank “Best Value Colleges” [11] based on a formula that weighs six factors: Quality (25%) + alumni earnings (20%) + median student debt (20%) + on-time graduation (15%) + drop-out risk (10%) + Pell Grant recipients (10%) / gross tuition and fees. In this ranking, University of Florida is ranked #4 – just pipping Harvard, MIT, and Stanford.

As this idea is spreading across the ocean, an UK consulting company “Expert Market” has begun to rank “Best value universities in the UK” [12] by cross-referencing the university expenses with the average income and opportunities available to students after graduating from each university. Loughborough University is ranked #1 in this list while many of the Russell group universities are missing from the top 25 in UK. Cambridge is ranked #12, Oxford at 52 and University College London at rank 54.

What can the universities do? Aside from the top-ranked universities in the world, most of the private as well as public universities and colleges must pay as much attention or more to graduate employability as they do for increasing their tuition and other fees. Universities and colleges must

  • Closely align their program offerings to the current and emerging demands from employers in their region. They must proactively seek effective and ongoing involvement of their regional employers in their program and course design. Traditional programs must be revamped to fit the era of technology-mediated
  • Increase partnerships with regional employers to increase apprenticeship opportunities for students. German experience clearly teaches the exceptional benefits of apprenticeships in minimizing the skills gap and the gap between expectations of employers and fresh graduates.
  • Revamping of curriculum and assessments may be done in line with meta-skills required for graduate success in the workplace. For example, the universities may switch from recording student achievements by letter grades / GPAs and transition to graduate outcome-based assessment reports and portfolios. When I was a graduate student at Rice University – in the 1980’s – the university used a practice of not reporting graduate GPA in the transcript – as they believed that graduate’s accomplishments must not be summarized or evaluated by a single number. (Rice was pressured to change this policy later as other universities and employers demanded to see a single GPA in the transcripts). Curriculum design and delivery must include many and varied learning opportunities for students to gain soft skills at the required competency levels. Curriculum design tools may include project-based learning, problem-based learning, community projects, applied research, work placement – co-operative experience and the like
  • Actively counsel students with program choices and careers, matching student aptitudes and interests with the selection of majors. Educate the freshman students on career prospects and average salaries of various program majors.
  • Measure, monitor and report graduate success and progression (employment or advanced education immediately upon graduation; career progression and salary details) as feedback to relevant faculty to validate or refine programs and courses.

What the universities cannot do? Employers cannot expect universities to produce graduates who can be productive in a specific corporate setting from day one. Specific industry induction, learning and development and performance feedback are the sole responsibility of companies and universities are not positioned to contribute much to the progress of entry-level graduates in these aspects. Most of the soft skills – teamwork, people skills, communications, problem-solving, critical thinking, innovation and entrepreneurship and the like – may be introduced at the university but are best honed and developed at the workplace.

A partnership model: There is a yawning gap between local industry and businesses and regional universities. It takes consistent and sincere efforts on both sides to develop and sustain strong linkages that would greatly benefit the graduates, the businesses, and the universities – in that order

  1. https://www.bls.gov/opub/ted/2017/69-point-7-percent-of-2016-high-school-graduates-enrolled-in-college-in-october-2016.htm
  2. https://nces.ed.gov/pubs93/93442.pdf
  3. https://trends.collegeboard.org/college-pricing/figures-tables/tuition-fees-room-and-board-over-time
  4. http://www.naceweb.org/job-market/compensation/salary-trends-through-salary-survey-a-historical-perspective-on-starting-salaries-for-new-college-graduates/
  5. https://www.manpowergroup.com/talent-shortage-2016
  6. https://www.aeaweb.org/conference/2014/retrieve.php?pdfid=316
  7. https://www.nytimes.com/2013/06/16/opinion/sunday/dont-blame-the-work-force.html?_r=0
  8. https://www.bls.gov/news.release/jolts.nr0.htm
  9. https://www.scribd.com/document/268005138/WEF-Talent-Mobility-Report-2012
  10. https://www.payscale.com/college-roi?page=2
  11. https://www.forbes.com/value-colleges/list/#tab:rank
  12. https://www.timeshighereducation.com/student/news/best-value-universities-uk-revealed

 

Senthil 2 copyDr. Nathan is Co-Founder and Managing Partner of the MENA Region for Edu Alliance.  Since the founding of the company in 2014, Senthil has been involved in numerous advisory & consulting projects for higher education institutions, and investment firms . 

He joined the Higher Colleges of Technology in 1993, the largest higher education institution in the UAE with 23,000 UAE National students. He served in a variety of positions and from 2006-2103 was Deputy Vice Chancellor / Vice Provost for Planning & Administration. He has been involved in numerous advisory and consulting roles in education / training & development engagements to a multitude of clients in the United Arab Emirates, Canada, The United States, Africa, and India and speaks on the current issues of higher education in the Middle East.

Dr. Nathan in 2014 received the Distinguished Alumni Award from the National Institute of Technology in India by the former President of India Dr. Abdul Kalam and is a member of the Board of Trustees for Livingston University in Uganda.  In addition to his Ph.D. in engineering from Rice University, Senthil has completed executive education programs from Harvard and MIT.


cropped-edu-alliance-logo-square.jpgEdu Alliance is a higher education consultancy firm with offices in the United States and the United Arab Emirates. The founders and its advisory members have assisted higher education institutions on a variety of projects, and many have held senior positions in higher education in the United States and internationally.

Our specific mission is to assist universities, colleges and educational institutions to develop capacity and enhance their effectiveness.

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