[In Focus] New study on HE provision and labour market needs in Western Balkans

Study-to-work  transition  seems  to  be  the  major  problem  students  and alumni  face  in  the  region.  High  unemployment  rates  of  new  graduates partly  result  from  the  lack  of  cooperation  between  higher  education institutions  and  the  labour  market.  The  overall  lack  of  quality  in  higher education,   outdated   teaching   methods   and   material,   overcrowded classrooms,  little  to  no  internship  opportunities,  lack  of financial  support, high level of corruption and nepotism etc. were also identified as common challenges. Besides  the  promotion  of  mobility  programmes,  scholarships  and  job - opportunities,  participants  agreed  that  one  of  the  main  added  values  of WB  RAA  would  be  to  support  the  modernisation  efforts  of  the  higher education systems in the Western Balkans. ("Identifying common challenges for students and alumni in the Western Balkans" (Dialogue on a Western Balkans Regional Alumni Association (WB RAA))

The recently published "Study on higher education provision and labour market needs in Western Balkans" offers concrete data for policy reform in both higher education and labour sectors, please find below its main conclusions and recommendations.

Main findings

After a period of rapid expansion over the last decade, there are now 240 public and private HEIs (universities including faculties, academies, and colleges) in the Western Balkans, providing 5,213 study programmes. Almost three quarters of a million students are registered to study at these HEIs. Having increased rapidly over the last decade, the growth in student numbers is now beginning to level off, except in Kosovo where expansion continues. Albania and Kosovo have more registered students in relation to population size than other countries. Throughout the Western Balkans, about 220,000 students newly enrolled to study in HEIs in the 2013/14 academic year and about 123,000 completed their studies, giving a completion ratio of 53%, varying from 33% in Kosovo to 85% in Serbia. 28% of students completed their studies in the fields of Business, Administration & Law, while 22% completed their studies in Science, Technology, Engineering & Mathematics (STEM) subjects. Graduates are moderately satisfied with the quality of higher education they received, but many perceive that their job prospects would have been improved by better teaching methods, a more relevant curriculum and by having better qualified professors.

Holding a HE degree provides advantages on the labour market. The average unemployment rate of HE graduates in the region is 16.2% compared to 23.9% for the whole labour force. However, the unemployment rate for new graduates is 37.1%, suggesting that graduates face a difficult transition from HEI to the labour market. On the labour market, there is a large oversupply of graduates in most study fields, especially from the broad study field of Business, Administration & Law. The sectors with the most rapid growth of graduate jobs include Information & Communication Technologies, Construction, Financial & Insurance activities, Professional, Scientific & Technical activities and Other Service activities. Graduate employment has grown relatively fast in micro and large employers, and in a small number of high-growth enterprises (so-c alled “gazelles”) whic h tend to be SMEs. Overall, on the HE side, enrolment policies should be more focused on labour market needs, and on the labour market side, more high-skilled jobs should be created in fast-growth sectors by attracting more foreign direct investment, and by supporting micro and small businesses to provide more graduate jobs.

Many graduates in the Western Balkans have a precarious entry to the labour market and often experience periods of unemployment before they find stable employment. This transition is not helped by a relatively low level of cooperation between HEIs and employers in relation to curriculum design and recruitment. Few employers discuss changes to curricula on a regular basis. Yet, most employers say that such cooperation would improve the matching of graduates to the job. This suggests that policy support is needed to encourage more such cooperative activity. When searching for employment, graduates rely primarily on family and friends to find a job. Graduates make little use of support from formal institutions such as HEI career centres or the Public Employment Services. A major barrier facing students in their transition from HE to the labour market is their lack of work experience, which is highly valued by employers in graduate recruitment decisions. Graduates with some prior work experience are more likely to find employment than others. In order to ease graduate entry to the labour market, HEI-business cooperation should be increased, graduate career guidance services should be better developed, and more opportunities should be provided for HE students to gain work experience before entering the labour market after graduation.

Employers in general are rather dissatisfied with the skills of their graduate recruits, although employers in high technology sectors are more satisfied with the skills of their graduate recruits than others. Only half of employers believe that their graduate recruits bring much value added in comparison with their non-graduate employees. Many employers believe that HEIs could better support the development of skills among graduates by modernising teaching methods, delivering teaching in small interactive class groups rather than in large anonymous lecture rooms, and adopting practical problem-solving approaches rather than theoretical and rote learning. Due to widespread skill gaps, especially in interactive skills such as decision-making skills and analytical and problem-solving skills, and in foreign language skills, most employers provide additional training to their graduate recruits. High technology employers, large and medium sized employers, and foreign employers are more likely to provide additional training than others. This suggests that governments should offer additional support for the post-graduate on-the-job training of graduates recruited by small domestic low-technology employers, especially suppliers to foreign investor supply chains. In addition, teaching methods within HE systems should be modernised to provide graduates with more interactive skills.

Only 48% of graduates are vertically well matched to the skills required by the job they hold by the level of their qualification, while 37% are overqualified for their job and 15% are underqualified, the latter suggesting that nepotism may be a feature in graduate recruitment. In addition, about 35% of graduates are horizontally mismatched in relation to their field of study. The benefits of successful matching are reflected in higher pay for well-matched graduates, reflecting potentially higher productivity due to matching. Being well matched by field of study assists graduates to keep hold of their job and avoid falling into unemployment. Having had an internship or work experience, following a vocationally oriented study programme, following a study programme with whose contents employers are familiar, studying at a private HEI, and receiving support from the HEI in finding a job all seem to be important factors that raise the likelihood of a graduate finding a horizontally well-matched job. A similar set of factors affect the likelihood of a graduate achieving a good vertical match on the labour market. Having above average performance at HEI, studying in small class groups, being exposed to teaching methods that use problem-solving and creative thinking methods, having an internship or work experience during studies, receiving support from professors or from the PES, all increase the likelihood of finding a well matched job.

In summary, while only 53% of students complete their study programme; of those that do complete their course only 52% find a job; and of these, only 48% find a job that is well matched to their level of education. We define a coefficient of internal effectiveness of the combined HE and labour market systems (the HE-LM systems) equal to the product of these three proportions, which is 13%. In other words, of every hundred new students entering the HE systems in any one year, it can be expected that only 13 will eventually graduate and find a well-matched job.

This indicates the rather low level of effectiveness of the HE systems in the Western Balkans in providing incoming students with the skills needed to find a well matched and stable job, and the ineffectiveness of the labour markets in providing a sufficient number of appropriate jobs for the graduates supplied by the HE systems. In order for the HE systems to make a better contribution to building human capital and to the competitiveness and growth of the economy, significant reforms of the HE systems and the graduate labour markets are needed, and better cooperation between employers and HEIs should be encouraged.

Policy recommendations

Higher education

1. HEIs should modernise curricula and improve teaching methods promoting a more student-centred approach to learning based on small discussion classes, student presentations, teamwork assignments, and analytical and practical problem solving exercises.

2. Government should remove incentives to HEIs to take on too many students by capping the number of students that an HEI can enrol in line with its capacity to provide high quality education. Imposing stricter criteria for enrolment, stricter progression conditions and additional support from teaching staff may contribute to better completion rates.

3. Steps should also be taken to tackle corruption in the entry process through greater transparency in regulations and procedures. Relevant institutions should strengthen inspections, ensure compliance with assessment and grading regulations and expand the power of ethics committees.

4. Where not already established, the accreditation of HEIs and study programmes should be carried out, and rigorous quality assurance measures should be applied to raise the quality of HE services. External evaluation of HEIs should be carried out in accordance with the European Standards and Guidelines for Quality Assurance.

5. The relevance of study programmes should be improved by encouraging greater cooperation between HEIs and employers in the design of curricula, and by providing work experience opportunities and internships. Having employers participate in faculty boards could contribute to ensuring that students are equipped with the right skills needed for the labour market. Such university-business cooperation should aim to modernise and adjust curricula and learning outcomes to those needed by the labour market.

6. Governments should use scholarships to steer students towards priority subjects such as STEM subjects and away from over-supplied subjects such as Business, Administration & Law. HEIs should provide more information to potential applicants on the likely labour market demand for various study programmes. This could be done through outreach programmes to local schools in partnership with public educational guidance services.

7. Governments should support entrepreneurial learning within HEIs so as to maximise the opportunities for graduates to set up their own small high-technology businesses. Entrepreneurship learning should be based on links with the local business community.

8. Work experience gained through internship schemes can be instrumental in improving graduates’ future job prospec ts. HEIs and employers should be encouraged to negotiate more work experience placements with local businesses so that graduates enter the labour market with some prior experience of working practices.

9. HEIs and public employment services should provide improved support to graduates in their job search to ensure that more graduates find well-matched jobs. This is needed to reduce reliance of support of family and friends and diminish nepotism in the graduate labour market. In parallel, HEIs should seek to track the employment destinations of their graduates by field of study, as a way to provide information on the success of graduates in finding a job and enable better evaluation of labour market needs.

Labour market

1. Priority should be given to raising awareness about the importance of employer cooperation with HEIs over curriculum design and recruitment. Governments should establish programmes to facilitate cooperation between HEIs and employers and should act as a network broker to bring the two sides closer together. New or additional programmes to provide internships for both students and graduates should be established. These should be carefully supervised to ensure that they provide useful learning outcomes.

2. Governments should support the activity of fast-growth SMEs (‘gazelles’) in high technology knowledge intensive sectors. Such enterprises tend to have a relatively high density of graduate employment. This can be done through the provision of low-cost finance through the banking systems, in partnership with EU funds and programmes.

3. Governments should encourage competition and remove barriers to entry for new high technology enterprises by creating supportive spaces for graduate-friendly business incubators and start-up hubs in public spaces at low rental cost. These should be closely linked to local HEIs, and collaboration between HEIs and new start up enterprises should be encouraged, promoted and supported.

4. Active labour market policies (e.g. training activities) should be better focused on recent graduates. Employers should be encouraged to expand training programmes for new graduate recruits through tax deduction of the costs of employer-sponsored training and use of training subsidies or vouchers. Training for micro, small and medium sized firms that employ graduates and have supply linkages to foreign investors should be prioritised. Governments should fund graduate training schemes for knowledge-intensive SMEs, which lack resources to fund such schemes.


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