Overeducated staff can be a tricky HR issue

It’s almost a cliché by now to say Ireland has a highly educated workforce. Multinationals choosing to set up operations here almost always cite this as a key reason why they decided to come to this State.

But could we be too educated? Recent research has revealed we have the highest percentage of overqualified workers in the European Union. "So what?" you might think. "Surely that's a good thing." And on the surface it might seem so.

For many people, education has been a refuge when things are tough. During the recession, for example, it served as an alternative to emigration with large numbers of choosing to go back to college and wait out the downturn until the economy picked up and more jobs became available.

In the past, Ireland’s heavy emphasis on education has served us well, but some labour market analysts now believe having an overeducated workforce can be bad both for employers and employees.

According to recent research undertaken by Séamus McGuinness, Adele Bergin and Adele Whelan of the Economic and Social Research Institute (ESRI), a whopping 33 per cent of the Irish workforce is deemed to be overeducated, meaning they have more qualifications than required for the job they are doing. At a time when many companies are complaining of a skills shortage, it might seem odd to see this as a concern. And there are some advantages associated with having overeducated employees. But it seems that often these are short-term gains only.

Dissatisfaction sets in

“Having overeducated workers does give some benefit in the sense that they do tend to help raise productivity levels, but because such employees tend to get dissatisfied quickly, they are more likely to quit their jobs than others.

There is a cost of replacing them that employers have to consider,” said McGuinness, a research professor at the ESRI.

There’s also a cost for employees, with those who are overqualified and who end up in non-graduate roles, typically earning about 20 per cent less than their peers, although they still usually earn more than those in the same job whose most advanced qualification is the Leaving Cert.

McGuinness said that, in addition to higher levels of dissatisfaction and job mobility, overeducated workers are also likely to find themselves caught in a situation that is not easy to escape.

“Being overeducated tends to scar people in some way and make it difficult for them to get into a matched job. These workers tend to change jobs frequently in the hunt for a better role, but yet continually end up in jobs that don’t suit,” he said.

“Usually it is only when someone enters employment that they see they’re mismatched and by then it is often too late so understanding the nature of overeducation is important.

Educations vs labour

“It is not realistic to say we have to reduce the number of people in third level, but we do have to do more to assist those moving from education to the labour market,” McGuinness added.

On the surface, it seems many employers are happy enough with the status quo. The rise in the number of people going into third-level education has led to an increase in credentialism in the labour market as a whole. “If we look at the data for Ireland, overeducation is a norm so employers are quite happy to hire overqualified people for jobs that aren’t particularly skilled, such as for call centre roles. One downside is that those who have little formal education find it even harder to get employment, but another is that organisation may end up with highly educated employees who can’t do the role they have been employed to do,” he said.

Ireland is not alone in having this problem. A recent study from the Chartered Institute of Personnel and Development (CIPD) in Britain shows that six in 10 graduates there are overqualified.

CIPD's Ireland director, Mary Connaughton, said that while there is concern about the issue of overeducation here, the latest Higher Education Authority study shows that 79 per cent of Irish companies are still seeking to employ graduates.

“The challenge for Ireland, as for other countries, is to have a supply of high-skilled graduates while at the same time increasing the supply of high-skilled jobs so that the work is there to match the education and qualification standard,” she said. “Recent CIPD research in the UK argued that there are too many overqualified university leavers entering non-graduate jobs there. The report showed that, in a comparison of EU data, however, Ireland fared somewhat better at matching the supply of graduates with increased demand from high-skills jobs, which reflects the structure of our economy and our higher productivity rates,” Connaughton added.

Recruitment firms here mostly hold that having a highly educated workforce is all for the good. While noting that many companies are increasingly looking beyond qualifications when hiring, Caroline Ward, a HR services consultant with Collins McNicholas, said educational achievements are still considered important.

“Experience is something on which employers place a premium but, for many jobs, a third-level qualification will still be a prerequisite. Often it is not experience or qualifications that are the most important element of a candidate’s application, with attitude, interest, motivation, culture fit and aptitude for a job proving more essential,” she said.

Ward added that, during the recession, there was a sharp increase in the number of highly qualified people performing lower-level roles, but said that this has largely changed.

“When unemployment was between 13 and 15 per cent, we saw a number of people with third-level qualifications taking on production operator or admin roles to gain experience to complement their qualifications. However, many of these individuals have since been promoted into more senior or specialist positions where their qualifications are now more relevant,” she said.

Employer compromise

Alan Nuzum, chief executive of SkillsNet, the national agency responsible for funding and supporting training networks, said he is seeing an increase in situations where employers are having to compromise a little bit in terms of the workers they might be able to hire.

“Increasingly, organisations aren’t necessarily getting an immediate match of applicant and vacancy, and this requires employers to focus more on the personal skills element as opposed purely to a person’s qualification. After this, it is about designing training that converts them from where the employee is to where the employer needs them to be,” he said.

According to Nuzum, conversion programmes are becoming increasingly important in addressing both the issue of overeducated employees and a talent shortage in key sectors such as IT.

“Increasingly it is difficult to get a 100 per cent fit in terms of candidates, particularly in Ireland where there is a large number of overqualified people in the workforce. But that doesn’t mean that it is all bad news.

Force of recession

“During the recession, vast numbers of people with engineering qualifications suddenly found themselves overskilled for the market they were in. Many of these undertook conversion training and ended up successfully working in burgeoning sectors, and this could prove the solution for other overqualified people too,” he said.

McGuinness argues that, with Ireland facing a skills shortage in some sectors, it is time to move away from seeing third-level education as the holy grail.

“There is a need for a greater focus on vocational education and for better policy efforts to raise the profile and esteem associated with it,” he said. Connaughton meanwhile suggests that investment in targeted training initiatives such as the Springboard programme needs to continue. “Ireland has a history of valuing education and its contribution to our economic success. We need to get better at providing a range of avenues to build skills and not be solely reliant on university education,” she said. “Both Government training initiatives and employer-led development programmes need to get better at providing flexible delivery of a wide range of occupational paths to boost our labour market and support individuals to be their best.”