- The earnings premium for higher education graduates remains strong.
- Analysis by KPMG shows the premium for women is less than that for men.
- And there’s little or no upside for women opting for vocational qualifications.
Getting a university degree is still the route to earning more money across a working life, according to analysis by KPMG.
The advantage is greater for men than for women, and vocational qualifications make little or no difference to the earning power of women.
The study analyses 10 years of wage rates and earnings from 2006.
The author of the report, Professor Stephen Parker, says the analysis shows the higher education graduate premium compared with students leaving after Year 12 has remained constant despite the mass expansion in numbers getting a higher education.
“But it is striking, and alarming, that this wage premium is around 20% for men, but only about 15% for women,” he says.
“Also of concern is that the average return for vocational qualifications compared with a Year 12 Certificate holder is just 2.5% for men and zero, or even less, for women, on average.
“This suggests to me that much more needs to be done in two areas — gender equality and in raising the perceived societal value of vocational education.”
For those not going into tertiary education, there is also a clear lesson — finish your Year 12. Those with a Year 12 Certificate get a pay premium, 10% for men and 8% for women.
The wage premiums by education and by sex:
The analysis, carried out for KPMG Australia by the National Centre for Social and Economic Modelling (NATSEM), incorporates the Household Income and Labour Dynamics in Australia (HILDA) surveys of 2006, 2011 and 2016.
“It is worrying that the vocational education premium for women may actually be trending downwards in recent years,” says Parker.
The report argues that one of the reasons for the higher education graduate premium remaining strong, despite the increased numbers of graduates over the last decade, is that the knowledge economy has expanded sufficiently to take them up.
But this is not the same for occupations typically served by vocational education, even though skill shortages remain.
“In the absence of an influx of skills into the working population, or an increase in the working population, and a complete re-think of tertiary education we risk a two speed society servicing a two speed economy,” says Parker.