New Unemployment Trends for the Highly Educated

“Although the number of people with a tertiary education has increased all the time, unemployment has unfortunately also increased. It’s a complicated problem,” said Heikki Räisänen, the research director of the Ministry of Employment and The Economy while referring to a new study concerning the labour market situation of the highly-educated, released by the ministry on Tuesday.

Specifically, the study conducted by The Research Institute of the Finnish Economy (ETLA) focused on the prevalence, repetition, and duration of unemployment spells, and the use of unemployment services in these contexts. Being the first study of its kind, it was deemed necessary by the ministry to see the changing structures of unemployment for this segment of the population and how it has changed, particularly given the recession.

The prolongation of unemployment periods is a relatively new phenomenon for highly educated people," says Heikki Räisänen. Picture: Tony Öhberg for Finland Today

The prolongation of unemployment periods is a relatively new phenomenon for highly educated people,” says Heikki Räisänen. Picture: Tony Öhberg for Finland Today

“I think there are several simultaneous issues going on: the number of highly educated people is increasing, and during the recent years the economic downturn affected certain branches more heavily than others.”

“I think there are several simultaneous issues going on: the number of highly educated people is increasing, and during the recent years the economic downturn affected certain branches more heavily than others. The labour market for those people has changed. Unemployment became more and more common, and longer terms of unemployment started to occur at the same time, which was a new phenomenon . . . that also touched people in higher education in a way that was not experienced before in Finland,” he said. According to Räisänen, most of the highly educated people are steadily employed. “But when you face unemployment, it is not so easy today to find your way back to the labour market. The prolongation of unemployment periods is a relatively new phenomenon for highly educated people.” Additionally, careers have become more uncertain, with concurrent and clear signs of increasing unemployment, which applies to all levels and fields of study. A worrying feature is the markedly large number of highly educated people outside the labour market, with some fields having high numbers of people working outside the field in which they were trained, even exceeding numbers of unemployed.

“The length of unemployment depends on the field of study. If you take a person who becomes unemployed and he or she has technical skills, then it might be that the unemployment spell really prolongs.”

Rita Asplund, a research director at ETLA and one of the main contributors to the report, had more to say on the matter. “The length of unemployment depends on the field of study. If you take a person who becomes unemployed and he or she has technical skills, then it might be that the unemployment spell really prolongs,” she said. “Because of rapid technical progress, skills get outdated quickly. If you have outdated skills, it’s very hard to come back to into the working life. If you take an example concerning the medical field, the unemployment spell is usually short, and you return quite quickly to work life.”

The effect is more pronounced in technical fields that rapidly develop and change, as Asplund elaborates. “I think that it is very much a question of the specialisation and what is happening in the labour market, and as I already said, the technical change which is very rapid. It means that your skills and education might become quickly outdated, after which you would need to re-educate to re-enter the workforce. That isn’t easy, especially if you’re looked upon as an ageing employee.”

According to Rita Asplund, those with a technical education are facing more challenges when re-entering work life. Picture: Tony Öhberg for Finland Today

According to Rita Asplund, those with a technical education are facing more challenges when re-entering work life. Picture: Tony Öhberg for Finland Today

Asplund said that those with a technical education are facing more challenges when re-entering work life. “They continue being unemployed and usually go into some early retirement arrangements. But if you are specialised in health or social fields for example, then you have a broad set of working history. Comparatively, it’s quite easy to get a little bit of extra education, and then you are fit for a familiar or new position. Specialisation is much easier there: you just build on what you already know.”

A recent example from Asplund illustrates this point further. “We saw this in the case of telecommunications when we moved from analogue systems and changed to digital. We have the analogue system, which was quite simple, but then everything changed and they started the new system. It meant that especially ageing employees that were specialised in the analogue system became unemployed and had trouble returning to normal working life, usually going into early retirement arrangements.” One of the compounding problems for the higher-educated also lies in the usage of the unemployment services. Only a small share use employment services, and if they do, the process is rather utilitarian. “We noticed that they use these services in a very similar way irrespective of the field of study or the level of their degree. My interpretation of that result was that these employment services are allocated to unemployed, higher educated people in quite a mechanical way, without enough care being taken to their background — the skills of the person, what the person would actually need from the employment services,” said Asplund.

The main difference was found in the numbers in each distinct pathway, implying that the degree level and field of study mainly affects the way and speed at which the highly educated person leaves (or does not leave) unemployment.

Additionally, the report examined the risk of marginalisation of highly-educated workers and the resulting changes. Comparisons were made across the level of their degree and fields of study, including other factors like age, gender, geographical location, use of unemployment services and features of unemployment experienced. Post unemployment trajectories were similar in the sense that highly educated people tended to follow typical pathways. The main difference was found in the numbers in each distinct pathway, implying that the degree level and field of study mainly affects the way and speed at which the highly educated person leaves (or does not leave) unemployment. The results further indicate that unemployment severance is often quite challenging. Simultaneously, re-employment opportunities are spread across many fields of study. However, the main determinant of prolonged unemployment is both the degree level and field of study, reaffirming that educational choices matter.

Given the trends illustrated by the study, what then can be expected in order to ameliorate pressures on the unemployed and highly educated? Räisänen was quick to consider some starting points. “We have to discuss with the educational authorities . . . probably there are some new measures in policy needed. Labour market policies are our responsibility. We probably have to tailor labour market policy more carefully for the needs of highly educated people. One issue is that while digitalisation is more and more common in employment services, people are more and more responsible for providing their basic information on education and labour market backgrounds, and that is one issue that people have to understand… it can be very decisive what you report of your career, as it impacts what services you are offered. We have to be very careful and communicate more with the job seeking customers in order to get the correct information.”

When I pressed about the common perception in the increase of short-term contracts by employers or the ubiquitous short-term internship offerings, Räisänen quickly responded. “I think that the new phenomenon (of short contracts and reapplying for jobs) is overemphasised in public discourse. Most people still have an open ended contract and full-time jobs, so it has increased, but it’s not so significant in the whole labour market.”

"My impression is that the results will be used in a positive sense: useful reforms and rearrangement of employment services directed towards the unemployed and highly educated," Asplund says. Picture: Tony Öhberg for Finland Today

“My impression is that the results will be used in a positive sense: useful reforms and rearrangement of employment services directed towards the unemployed and highly educated,” Asplund says. Picture: Tony Öhberg for Finland Today

The main data used was compiled by statistics Finland, covering the years 2000-2012 and specifically examining highly educated people between the age of 18-64. The other dataset was compiled by the Ministry of Employment and Economy, based on information gathered from public employment agencies, looking at highly educated people who had experienced unemployment at least once between 2010 & 2015. Asplund had some wishes for the future when I probed about the modified dataset offered by the Ministry of Employment and The Economy. “We faced many problems, and we couldn’t use all aspects of the data due to the limited set. Obviously, they thought that the original data would have been too challenging for those doing the research, but Pekka is very good at going through hard and complex data. These limitations in the data, of course, restricted our possibilities to draw robust conclusions on various dimensions concerning unemployment spells and use of employment services. That is something I would hope for in the years to come,” she said. “I would like to get hold of the original ministry data on unemployment spells and duration, as well as employment services. We only had the ready-made data made available to use, and many interesting details were missing from the data, which could be found in the original dataset. Of course, it would be extremely important and interesting to update the data with more recent years. After two or three years, we could update the dataset, and see if the trend has continued, and what it looks like during these recession years. That would be very interesting.”

Given the structure and focus of the current government, I fielded a sceptical question concerning the use of the study. It is possible to imagine that the results provided could be interpreted either as unemployment services as an inefficient and extra expense for a government that has readily and consistently cut from education and welfare. However, Asplund was more optimistic in this sense. “My impression is that the results will be used in a positive sense: useful reforms and rearrangement of employment services directed towards the unemployed and highly educated.” However, the reaction from the government is yet to be known.

Cover photo: Tax Credits

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