Our degrees don't repay their cost

By Susan Edmunds

New international report shows uni study has little effect on salaries.

Melissa Osgood and Richard Green. Photo / Getty Images
Melissa Osgood and Richard Green. Photo / Getty Images

New Zealand university degrees are the most worthless in the developed world, an international report reveals.

The value of spending years at university has been severely dented by an OECD report that reveals tertiary study adds little to our earning power.

New Zealand is at the bottom of the global league tables. The net value of a man's tertiary education is just $63,000 over his working life, compared with $395,000 in the US. For a Kiwi woman, it's $38,000 over her working life.

The Government says it has already cut the number of poor-quality courses by at least 15 per cent, and wants to reduce or eliminate fees for lower-level qualifications - because students who complete them don't make any money out of their qualification.

One expert says much of what passes for school or even university education would be better suited to after-school activities. Professor Jacqueline Rowarth of Waikato University's management school said New Zealanders weren't paid well for tertiary qualifications and thousands of students were enrolling in expensive creative arts courses that won't help them get jobs.

The OECD annual report on the state of global education, published this month, reveals that New Zealand tertiary fees were seventh-highest among developed nations.

Rowarth said too many people were going to university. About half dropped out and still more were left with tens of thousands of dollars worth of debt and no job. "They're sold a crock by people telling them to follow their passion. We fund an awful lot of peculiar courses."

That was because people enrolled in courses they would enjoy, she said, so universities got funding for them and put more time into seeing how many more enjoyable subjects they could build up.

Tertiary education minister Steven Joyce, who has a zoology degree, said Government figures showing how much people earned four years after study were more positive. By that measure, those with a bachelor's degree earned 46 per cent more than those with a level-three school qualification.

Joyce said the Government kept an eye on under-performance at the lower levels of tertiary study. There was no improvement in pay for people who had done NZQA level-three and level-four certificates and diplomas. It was not until they reached a level five or six, or a level-seven degree, that earnings increased.

The Government wanted lower-level qualifications to have low or no fees, Joyce said, because there was no earning premium to pay back a loan.

Sir Peter Leitch, who sold his nationwide Mad Butcher business four years ago, said he had wondered what life would be like if he had gone to university. "My life might have been a bit better with an education but then I may not have been so pig-headed and determined."

When he was recruiting, Leitch did not set any store by qualifications. "I used to look people in the eye," he said. "There are two different types of education, academic and street smarts, which I have. I still don't know my alphabet or times tables."

Labour MP Louisa Wall, a vocal supporter of education as a way out of poverty, said the OECD findings were a concern. "The concern I have is the reality of people who get an MA or a PhD going overseas where they are remunerated and valued better."

Employers and Manufacturers Association boss Kim Campbell agreed. People at the top in business weren't paid anything near what counterparts overseas were getting because we didn't have the big companies that paid top dollar.

A top-level executive in New Zealand would be lucky to get 10 times the entry-level pay rate, he said. In the US, it was not uncommon to get 200 times that level.

Campbell said people needed to think about what they wanted to achieve with their qualifications. The Government should consider reinstating interest payments on some student loans. "The loan scheme needs to be adjusted so it's for skills that are essential."

But Auckland University of Technology Vice-Chancellor Derek McCormack said a degree was becoming vital to finding work.

"Any work that isn't human service, [such as] cafe work, anything that can be reduced to an algorithm, automated or sent offshore, will be. The jobs for people with no qualifications won't be there."

Professor Stuart McCutcheon, Vice-Chancellor of the University of Auckland, said his graduate's salaries increased rapidly as they moved to positions of responsibility. "However, wages are lower across the board and if Australia's economy continues to expand at a higher rate than New Zealand's, we will continue to face the brain drain of our most talented graduates," he said.

Qualified successes

One sibling has a master's degree and 18 years' experience in the health sector. The other has a diploma and has been working since school.

Now one is "on the breadline" and the other has an above-average salary but if you think it's the super-qualified Melissa Osgood who has the healthier income, you're wrong.

Osgood changed careers at her brother Richard Green's urging after almost 20 years. After returning from overseas she found it hard to get mental health work.

Green said she'd be a good film producer so she studied film and began working her way up the career ladder again.

"It was a massive pay cut. I've now been poor for three years."

Green ignored expectations he'd go to university and worked overseas before doing a film diploma and setting up the Ugly Shakespeare theatre company, the longest-running theatre education company in New Zealand.

Green said people needed to start at the bottom and work hard.

- Herald on Sunday

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