Higher education and labour markets: looking for solutions to contrasting needs

1. Higher education and labour markets: looking for solutions to contrasting needs Marino Regini Department of Labour and Welfare Studies University of Milano Paper presented at OECD/France International Conference “Higher Education to 2030” Workshop on “Labour market changes and the future of higher education” Paris, 8-9 December 2008

2. Up to 30 years ago Contacts between universities and business were sporadic and infrequent, at least in Europe HE and business were two separate worlds with regard to objectives, values, organizational models; and both were firmly convinced that was the way it should be. “Elite” university systems “Fordist” production systems

3. Last 30 years: scenario radically changed • “Mass university”: • “employability” of university graduates • from securing autonomy of teaching to verifying learning outcomes • student orientation and placement services • demand for greater efficiency, autonomy and evaluation • “Post-fordism” and knowledge-based economies

4. Relationships between HE and LM Two major problems • How to estimate the actual need for human capital? • A demand for what kind of skills?

5. 1. How to estimate the actual need for human capital? • To what extent do companies have instruments that can effectively anticipate their needs for highly skilled human capital? • Do they rely on skills they actually use given current organization of work, or can they anticipate the skills that would be useful to improve such organization? • To what extent do they demand only competences they can immediately use instead of those which could increase their innovation capacity? • To what extent do they give priority to increasing and diversifying their store of internally available knowledge even if it exceeds their short-term needs, as a strategic element to make the company flexible and versatile, thereby enabling it to adjust more rapidly to volatile markets?

6. Debate on over-education and mismatch • Assumption that, for highly trained human capital, demand for skills should guide the supply of graduates • However, a large reservoir of human capital, though it is seen as a mismatch to existing demand in T0, may become a prerequisite for a company’s capacity to innovate, to reposition itself on the market, to enhance its competitiveness in T1

7. Literature on the “varieties of capitalism” • “Low road” to competitiveness of national economies, based on low skill–low wage–low product quality–low price equilibrium vs. • “High road” based on high skills, high wages, high product quality and high prices

8. Implications for HE in the future • The main future challenge for relationships with labour market is to be sensitive to employability of graduates, but at the same time capable to anticipate range and type of skills needed by innovative economies, without depending on short-term demands from employers • The worst way to tackle this future challenge would be for HEI to simply look at past records of graduates’ employment and strictly adjust their curricula, teaching methods, research objects, to such records. In this way they would avoid major mismatch between supply of graduates and current demand, but would amplify the problem of adjusting to rapid obsolescence of technologies and skills

9. 2. A demand for what kind of skills? Kind of training that companies would like universities to provide so that graduates can be best equipped to enter the labour market: • very specialized or wide-range knowledge? • mainly technical or social and relational skills?

10. Company size as key determinant of demand • SMEs tend to favour basic technical and work-oriented training. They prefer vocational track of tertiary education over academic track, where a binary system is in place • Medium-large enterprises are usually satisfied with technical knowledge provided by universities, since they can easily supplement it with firm-specific training, while they often complain about the lack of social and relational skills

11. Variation in the mix of skills that business will demand Variation mainly depends on a set of institutional and organisational features of economies and is likely to produce a variable impact on the structure of HE: • one such variable is the degree of job turnover in a labour market • another such variable is the degree of orientation to customer in the production of goods and services

12. Degree of job turnover in a labour market Depends on institutions of job security and on organisational patterns of firm • A labour market with high percentage of stable jobs, for either institutional or organisational reasons, will put a premium on specific skills produced by HE and required for those jobs • On the contrary, an economy where unstable jobs are predominant will require mostly generic, basic skills, which can be used in a plurality of work situations

13. B. Degree of orientation to customer in production of goods & services • Some companies compete on ability to adjust rapidly to changing demand, or to work in strict cooperation with customers in the development of goods and services • Others find competitive advantage in providing high-tech and high-quality products and services, hence operate in markets dominated by producers rather than by consumers • What the latter demand of HE is mostly provision of high technical skills • The former will look for graduates who have not just technical knowledge but also a range of social competences

14. Implications for HE in the future Best way to tackle such variability and uncertainty would be providing students with a mix of competences: • specific professional skills highly demanded by the labour market • broad multi-disciplinary training that allows graduates to adjust to variable and rapidly changing work contexts • social skills highly appreciated by employers