Do labour markets welcome shorter tertiary degrees?

by Dirk Van Damme
Head of the Innovation and Measuring Progress Division, Directorate for Education and Skills

At the turn of this century, two different models of higher education programmes prevailed in the world. The first mainly consisted of three- or four-year programmes leading to a first qualification – a bachelor’s degree – sometimes followed by a “postgraduate” programme at the master’s level. This model predominated in the United States, the United Kingdom and most other English-speaking countries. The second model, prevalent in Europe, entailed long, integrated programmes – in some fields of study, six, seven or even eight years long – leading to a plenitude of qualifications. Emerging economies in Asia mainly copied the American model, while Latin-American countries mainly followed the model of the European colonising powers.

Sixteen years later, the global landscape of higher education looks much different. What happened is that the continental European model transformed itself to the standard of the English-speaking world, which was considered to be more successful, both in scientific research and in education and labour market outcomes. This process of reform was instigated by the Bologna Declaration of 1999 and the so-called Bologna Process, through which the study programmes in all signatory countries were reformed.

The Bologna Process is mostly seen as a process of harmonisation – some would even say “standardisation” – of study programmes in the “European Higher Education Area” in order to promote European integration and mobility. Less well-known is that one of its objectives was to reduce the length of study at European universities and to ensure that people would enter the labour market at a younger age. Having young people first start their working life at the age of 27 or 28, which was often the case in Germany and Italy, was seen as unsustainable. Economic lobby groups, such as the European Round Table of Industrialists, argued explicitly in favour of a drastic reduction in the length of study programmes; national governments and the European Commission responded.

The Bologna reform process has largely been a success, although in some countries the transition is still not completed. Most programmes are now structured around the “bachelor’s/master’s” model. But are there more graduates with bachelor’s degrees or with qualifications from short-cycle tertiary programmes in the labour force? And are these graduates sought after by employers? The Bologna reforms implied changes to the supply side of education, but has the demand side – the labour market – adjusted itself to these new graduates?

The latest Education Indicators in Focus brief provides some interesting statistics on this. The data show that among adults with a tertiary degree, the share of 25-34 year-old graduates holding a bachelor’s or equivalent degree as their highest level of educational attainment is ten percentage points larger than the share of 55-64 year-olds holding similar degrees, on average across OECD countries. In some countries, such as Italy, which is famous for its long study programmes, the difference is as large as 20 percentage points. In 2015, almost one in two (49%) tertiary-educated 25-34 year-olds has, at most, a bachelor’s degree or equivalent.

As expected, among tertiary-educated adults, the share of graduates with a master’s degree has declined, but the rise of the prevalence of bachelor’s degrees is also the result of a decline in short-cycle tertiary qualifications. This is surprising, because the Bologna reforms also prompted new interest in the potential of short-cycle study programmes below the bachelor’s level. While some countries have expanded access to and availability of such short programmes, others have not, or have even phased them out.

The figure above gives a detailed profile of 25-34 year-old tertiary graduates across OECD and some partner countries. The general picture is that the higher the level of qualification, the better the employment rate, with holders of doctoral degrees and the equivalent benefitting from the highest employment rates. But the differences among the employment rates among the four qualification levels vary enormously across countries. The variation is actually larger for those with master’s degrees or short-cycle qualifications than for those with a bachelor’s degree. In two-thirds of the countries examined – those at the left side of the chart – at least 80% of graduates with a bachelor’s degree are employed. This means that in these countries, labour markets have adjusted well and have opened up opportunities for bachelor’s degree holders, even if, only a few decades ago, this level of qualification did not provide access to jobs. The one-third of countries at the right of the figure has not yet adjusted their labour markets to this new reality; they still value master’s degrees more than bachelor’s degrees. In some of these countries, such as Greece, Italy and Spain, the employment rates for all levels of qualifications are extremely low.

The situation for short-cycle programmes is even more confusing. Employers in some countries, including Austria, France and Luxembourg, seem to value these qualifications highly. In others, such as Norway and Sweden, there seem to be few employment opportunities for adults with short-cycle qualifications. And in many more countries, labour markets still have to adjust to be able to absorb graduates of these programmes.

Educational reforms are often grounded in a predominantly supply-side approach; and governments and higher education institutions often expect labour markets to adjust easily to these reforms. But in order to safeguard the future of young people it is much more important to look at the interaction between the supply and demand sides. In order to co-ordinate the acquisition of skills and qualifications with the exigencies of jobs and workplace needs, education and labour market stakeholders need to work together. In most countries, a well-balanced supply of bachelor’s and master’s degrees now seems to be in place, and that’s a major achievement. In these countries, the bachelor’s degree is now a well-established level of tertiary qualification, providing access to jobs and professions. But in a large group of countries, better policies are needed for both sides of the equation to match the supply with the demand for skills and qualifications.