Labour Market Outcomes and Subjective Wellbeing of University Graduates in Ghana

Abstract

Economic development in many African countries is characterised with fundamental and structural problems that marginalise the youth and unable to absorb them into the labour market. Youth unemployment has been, and still remains, a pervasive challenge in Ghana, particularly in the light of structural weaknesses and economic challenges. Yearly, universities churn out large numbers of graduates with few opportunities to absorb them into the labour market. The limited opportunities for a sizeable number of the graduates to gain access to employment has impacted negatively on their wellbeing. Long periods of unemployment can cause economic risk at the individual level through loss of earnings and subsequently reduced consumption. Despite the challenges faced by the graduates in obtaining access to the labour market, few studies have examined their labour market outcomes. Ghana lacks reliable data on graduate labour market outcomes especially segmentation and sectoral choice of youth and the linkages between programmes of study, employment aspirations and prospects as well as the transition from university to work. Very little is known about where the majority of university graduates end up in the labour market. There is, therefore, a knowledge gap on the labour market outcomes and the factors determining graduates’ entry into the labour market. Using quantitative analytical techniques, this study specifically investigates the determinants of employment, unemployment duration and its implications on subjective wellbeing of university graduates in Ghana. The study conducted a tracer study on 1,470 university graduates using Computer Assisted Telephone Interviews (CATI) to collect data. A probit analysis was employed to determine the factors influencing the employment outcomes of graduates in the labour market and the differences in subjective wellbeing of employed and unemployed graduates Survival analysis was conducted to determine the unemployment duration of university graduates in Ghana and the probability of gaining employment. Despite evidence in literature that females are marginalised in the labour market, the study unearthed that female university graduates are more likely to gain employment after their national service. Having social networks in the form of bonding and linking capital increases employment chances and reduces the duration of unemployment. The results also show that unemployment durations differ according to the programme of study. Engineering and Science graduates were found to be more likely to be employed compared with graduates with Arts and Social Science qualifications. Interestingly, the findings reveal that, even four years after national service, as many as 25 per cent of business graduates remain unemployed. This has policy implications considering that many of the universities concentrate on business-related programmes leading to an over supply of these graduates. Within the same period, no graduate of pure and applied science graduate was found to be unemployed and only 13 per cent of engineering graduates were still without jobs. The study further found that long periods of unemployment spells have implications for the psychological welfare of graduates as employed graduates reported higher levels of subjective wellbeing. The study therefore recommends that attention should be given to job creation strategies for graduates of Arts and Social Sciences who constitute a higher proportion of graduates from all universities and yet are less likely to find employment. Universities should offer degree courses in high demand career areas where they will be more employable since the study showed that graduates of the sciences and engineering are more likely to find jobs. Strategies such as job matching should be implemented to strengthen the effective foundation of the labour market to ensure the optimal allocation of jobs such that employment opportunities are given to the most suitable graduate instead of those with the strongest social capital.