OMG, Do we have an IT Graduate Problem?

I was recently browsing the Dept of Education, Skills and Employment website and stumbled across the 2019 university student enrolments data.

These days, nearly all IT workers have degrees so unsurprisingly graduates comprise the majority of the supply of new IT workers. Skilled immigrants are our secondary source, more about them later.

Interestingly there about 1.6 million university students in Australia, with around two-thirds domestic students and one third overseas students.

In the IT courses, Australian universities have overseen a stunning growth in student numbers growing from 60,731 in 2015 to 116,623 in 2019. This 92% increase compares to an overall student number increase of 14% for the same period.

So how did we pull off this miracle?

Obviously, this wasn’t an accident, our IT student numbers were heading in the wrong direction for a decade, dropping from around 80,000 in 2002 to an average of less than 50,000 from 2008 to 2013. No wonder action had to be taken – and that action was more foreign students. Many, many more!!!

In 2015 we had 29,614 foreign students studying IT, in 2019 this had almost tripled to 75,643, meaning around two-thirds of IT students studying in Australia are now from overseas – I had no idea it was this high.

Due to Covid, that flow of foreign students has largely stopped. (200 words into an article before I mentioned Covid – surely that’s a new record).

How big is the impact?

The data for 2020 has not been released. At this stage one of our best clues on the extent of the student losses comes from this Sydney Morning Herald article highlighting that student accommodation numbers are down 70%-75%. Assuming some of those that remain in accommodation are domestic students from regional areas, we are currently looking at an enormous rate of loss.

The real impact, however, is that many of those who remained enrolled have returned to their home countries and are studying remotely. They are now almost certain to secure their first job overseas and thus far less likely to ever return and join the Australian workforce. That represents tens of thousands of skilled workers permanently missing from our economy. And that is just the impact from the cohort of student enrolled in 2020.

And what of future enrolments?

If you are paying $100k for a degree and a similar amount in living expenses over a 4 year period, you want the best possible educational outcome. These decisions are not made quickly or lightly.

So if you are a potential overseas student and currently considering your options for future study, you would be unlikely to consider a country where the borders have been shut for a year and you might graduate with a Bachelor of Zoom. Therefore, the effects are likely to be felt in graduate numbers not only in the short term, but at least as far as 2025.

With a significantly reduced graduate flow for the foreseeable future and the absence of the 110,000 skilled immigrants who normally arrive on our shores every year, the supply of IT workers will be significantly impacted.

Does it matter?

Well, that depends on demand….and demand is looking very solid. There are now 14% more job ads on Seek.com.au than before the pandemic lockdown last March. At Balance Recruitment, the team is really busy, all of our clients are now hiring again – even those from the worst affected industries. And business confidence indices, both locally and internationally are now higher than pre-pandemic.

Yes, there are downside risks, many of them. However, on balance I’m struggling to come up with scenarios where we don’t experience a medium to long term skills shortage. How can you lose around half of graduates and still have an adequate supply of talent?

Yes, the immigration tap will be turned on again in the short to medium term, but by that stage we will have missed out on 200,000 new skilled arrivals and surely as many again in graduates.

On the upside, it is likely local students will be unable to take gap years and will immediately enrol, whilst universities will accept more local students (by lowering entry standards) to fill their empty lecture theatres; but is filling a short fall with moderately well-educated students really what we need?

I would love to hear your thoughts. Where will the new knowledge workers come from? Is there an issue? What’s the solution?

I’ll write next month about what steps can be taken to deal with this.

About Paul:

After 25 years in recruitment, Paul’s wisdom and experience is highly regarded and sought after within the industry. He’s known in industry circles as a thought leader on matters recruitment. Paul co-founded Balance in 2007 and he believes the success of the business is closely related to a ‘customer first’ approach.

If you have a question for Paul email him here or call on 02 9091 8202

Balance Recruitment is a specialist provider of IT recruitment services to the Australian market.