Why Gen Z, and women in particular, is saying no to higher education

A university education is not the be all and end all that it once was.

Are we seeing a swing away from university education in this country – and does it matter anyway?

Research released on Saturday argues Australia’s 18 to 22-year-olds (the Gen Zs) are not bothered about getting the degree their parents and grandparents saw as the pathway to wealth and happiness.

Formal tertiary education is a “nice to have” but not an essential for two-thirds of this cohort, according to research by freelance employment platform Fiverr. And women lead the charge, with 71 per cent cocking a snook at campus.

Factor in that Fiverr’s potential pool for this research has an entrepreneurial bent with people relying on their chutzpah rather than their diplomas, but the finding is still a pointer to how much digital technology is giving many young, innovative people the opportunity to work outside big companies where formal training may be required.

The survey confirmed that freelance work is a popular option, in part because it allows more work-life balance and the chance to avoid burnout. And it warns companies may have to change their educational prerequisites if they want to hire from this group.

But it seems the questioning of university education is well under way, with a 10 per cent drop in the number of Australians in higher education over the last couple of years. That decline runs in tandem with one of the tightest labour markets in our history, suggesting that when the Gen Zs are offered a job, they grab it.

The research is based on ABS data and comes from one of our leading labour market economists, Professor Jeff Borland, from the University of Melbourne.

Borland reveals in one of his regular economic “snapshots” released this week, under the title “Employment up, education down”, that between May 2020 and May 2022, the proportion of Australian-born people aged 15 to 24 who attended university full-time dropped from 19.9 per cent to 17.7 per cent.

That 17.7 figure takes us back to before 2014, when it was 17.8. A drop of 2.2 points doesn’t sound like much, but it’s significant given the almost 20 per cent of the cohort enrolled in institutions just two years ago.

(Borland cites Australian-born stats to avoid complex factors involved in tracking the overall student population, which includes overseas students whose entry was disrupted due to Covid-19. Even so, he finds the overall percentages are roughly the same.)

Borland asks if the decline is a problem. On one hand, he says, there’s the “nothing to worry about” answer: “In the 2010s, the proportion of young people in employment dropped quite a bit.

“If we think that caused some young people to go to university whose best career option would have been to go straight into work (had jobs been available), and they have then dropped out of university or not wanted to work in the field of their qualification, then the shift from university to employment for some young people might be a good thing.”

Borland doesn’t spell it out, but this goes to the debate in the Western world about whether we need so many highly educated young people who in the past sometimes found their degrees did not get them into work.

It also goes to the question of whether everyone is intellectually suited to university and whether institutions have lowered standards to accommodate them.

On the other hand, says Borland, there’s the “we should worry” angle: “Young people (like all of us) are myopic in judging what is best for them.

“The prospect of an immediate job may make some young people think it is best to get into work and not go to university. But, in fact, if they could forecast their alternative ­future careers with and without a university education perfectly, they would realise it was in their best interest to go to university.

“In this case, the shift from university to work is a bad long-run outcome for the young people and for ­national productivity.”

Borland says people may be delaying starting at university and we might see “a catch-up phase of higher participation” later. Just how long that might take, and whether a worsening economy will lead to employee lay-offs, and thus force more children into higher education, is uncertain.

The nexus between education and employment is fundamental to economic management, with the pressure to keep people in study often being more about preventing them competing for jobs with older people than about the need for them to attain knowledge and skills to equip them for work.

The changing demographics in the West – not enough babies in a world where women are in paid work, and too many old people who need to be supported – have distorted labour supply and left some badly remunerated jobs, such as horticulture and agriculture, short of workers. Throw in aspirational parents, as well as children, and pretty soon no one wants to pick peas. In this country, overseas students and backpackers were traditionally cheap labour for service industries but Covid-19 halted the flow, which is only now returning. The Gen Zs eschewing higher education are presumably avoiding the jobs on our farms and in our restaurants, but Borland says that without further analysis, it’s hard to really see where people are finding work.

He says a rebalancing between education and jobs may not harm the economy in the long term because “in higher education, one of the big stories is about dropout rates and non completion” so moving some people into employment would be positive for them.

“We had a progressively weaker labour market for young people in the 2010s (and this) meant people thought, I need more qualifications to get one of the available jobs, and then suddenly, when the labour market improves, I don’t need that qualification so much.

“Young people are particularly sensitive to the business cycle because they’re disproportionately in the group of people who are looking for work as they’re making the transition from education to the labour market.

“They are disproportionately adversely affected (in a downturn) and they disproportionately benefit in an upswing.”

He’s optimistic we can avoid a big increase in unemployment this year and there is still “a big number of ­vacancies”.

If he’s right, will the “nice to have but not essential” attitude to higher education last?