A recent survey by Taiwan’s Directorate General of Budget, Accounting and Statistics (DGBAS) shows that the number of PhD and masters degree holders is expected to top one million this summer. However, the demand for employees with PhDs and masters degrees has not kept pace with supply and the unemployment figures for these degree holders surpassed the number of unemployed college graduates for the first time in the first half of 2012. In the Commercial Times, Hu Sheng-cheng of Academia Sinica said that unless Taiwan’s businesses increase the demand for research and development professionals, the unemployment rate among graduate degree holders will continue to rise.
The paper reported that in recent years the number of graduates with a PhD or masters degree surpassed 60,000 a year. In early 2011, the number of higher degree holders reached 909,000 in the civilian population, and this figure jumped to 970,000 by July 2011. With this past graduation season, the number by June 2012 will easily have surpassed one million.
With the rapid increase in the number of graduate degree holders in Taiwan, the chances of them finding suitable employment becomes ever more difficult. The statistics recently compiled by the DGBAS indicate that in the first half of this year, the unemployment rate of PhD and masters degree holders, who previously enjoyed better job prospects, now stands at 3.32 percent. Although this figure is lower than the 5.66 percent unemployment for university graduates, 4.29 percent for high school and vocational school graduates, and 3.45 percent for middle school and elementary school graduates, it is higher than the 3.17 percent unemployment among junior college graduates.
As a result of nearly a decade of restructuring, the number of junior college graduates has fallen year on year, according to DGBAS statistics. Trained in vocational fields, junior college graduates enjoy an advantage when it comes to finding employment. As such, the unemployment rate of this category of graduate is much lower than for people with other types of degree.
The Commercial Times reported that the reason why PhD and masters degree holders were previously more employable was because of a boom in R&D departments in both the private and public sector, combined with greater research demand at public and private universities, according to Hu Sheng-cheng. With the current saturation in private sector and university R&D, the unemployment rate of graduate degree holders has inevitably increased.
The rising unemployment rate for graduate degree holders is caused by an over supply of such degrees and by the widening gap between graduate school disciplines and the business world, according to analysis conducted by Lin San-kuei, director general of Employment and Vocational Training at the Council of Labor Affairs. While people with PhDs and masters degrees have received academic training, they are not necessarily equipped with transferable skills that employers are looking for. This mismatch needs to be addressed by restructuring the educational system, according to Lin.
Lin’s recommendations are that the government should carefully review whether the distribution of educational resources is properly balanced, and take action such as reducing enrollment or increasing the threshold required for students to graduate.
Hsin Ping-lung, a professor at National Taiwan University, warns that the high unemployment rate of advanced degree holders will only get worse in the future if there is no structural review of Taiwan’s higher education system, the Commercial Times reported. It does not cost much for universities to set up graduate schools, especially in the arts, humanities, law and business. With lower operating costs, these faculties are seen as money making centers. In contrast, these graduates have less competition to enter graduate school in comparison with the fierce competition required to enter university. The government should respect the natural adjustment of the market mechanism, but should not take measures such as “subsidizing the salaries of those with higher degrees”, which will distort the market, according to Hsin.
The Commercial Times noted that the government funds invested in higher education in 2007, 2008 and 2009 accounted for 4.47 percent, 4.49 percent, and 4.26 percent of Taiwan’s annual budget, respectively. However, 2007 spending was higher than for South Korea (2.1 percent), Japan (1.7 percent), the US (3.3 percent) and Germany (2.6 percent).
Taiwan’s government invests vast sums of money into higher education each year, which has yielded impressive results in terms of the quantity of graduate degree holders, but due to a severe imbalance between the supply and demand in the workplace, and a severe gap between university training research institutes, and industry demands, it is imperative that Taiwan reforms its higher education policy. If this issue is ignored, not only will talented young people suffer, but Taiwan’s economic competitiveness will also be negatively impacted, according to the paper.