There’s an increasing belief that you don’t need a degree to get a 21st century career. In the first of a two-part series on the future of tertiary education, AUT vice-chancellor Derek McCormack argues that New Zealand’s universities have an essential role to play in our changing world.

I’m constantly asked about the relevance of university, and the relevance of a degree in the 21st century. People ask me why we supposedly persist with the idea in New Zealand that everyone needs to go to university. As the robots apparently come for our jobs, and employers advertise for skilled positions that don’t need tertiary education, I get questions about why we have so many universities in New Zealand. I’m asked why universities don’t teach what employers and the labour market need, instead of putting out all these unemployable graduates with big debts.

While the nature of the labour market is undoubtedly changing at a rapid pace, New Zealand’s tertiary ecosystem is in fact a small and agile sector that is both vital to the strength of our economy and an essential part of our education system’s response to these changes. So when I answer those questions, my response starts with some simple facts.

There are eight universities in New Zealand. On a population basis that’s about the same as Australia and fewer than Canada, UK, most of Europe and the US. All of New Zealand’s universities are classified by ranking agencies as comprehensive, research intensive, or very research intensive and five star. Unlike the rest of the world, New Zealand is light on new universities – defined as under 50 years old. We only have one. Most countries have many and some countries are still establishing universities.

New Zealand has only an average university participation rate compared with OECD countries and a much lower rate than countries like the UK and the US. Less than one-third of young people in New Zealand pursue university education, with a higher proportion of women than men. We have an increasing, but still disproportionately low, number of Māori and Pacific young people attending university. Compared with other OECD countries, New Zealand has an unremarkable proportion of degree graduates among its under 35 year-olds.

While our participation in tertiary education may appear unremarkable, for those students at university in New Zealand, their chances of success at university and after they graduate are exceptional. New Zealand universities have some of the best qualification completion rates in the world.  More of our university students end up with a degree than in Australia or the UK, for example. And New Zealand universities also have amongst the best graduate outcomes in the world with higher rates of graduate employment, lower rates of graduate unemployment, and lower rates of graduate under-employment – that is, fewer graduates in jobs where a degree is not necessary as a requirement (as it is for jobs like doctor, teacher, lawyer, engineer) or jobs where a degree would not be an obvious advantage (as it would be for jobs like manager, consultant, policy advisor).

Recent data reveals that on average graduates with a degree get significantly better incomes than those with lesser qualifications. According to the Ministry of Education, median weekly earnings of graduates with a bachelor’s degree or higher qualification are 161 percent higher than those without any qualifications. This applies to almost every type of degree and degree major, and the income margin increases with higher degrees.

New Zealand universities are not only effective, they are efficient. They operate on a lower income base than those in the other English speaking countries and lower than the OECD average. For instance, on an equivalent dollar basis New Zealand produces graduates at 85 percent the cost that Australia does. Despite the lower income base, New Zealand is the only country where all universities are world-ranked by international agencies such as QS and Times Higher Education.

New Zealand universities make essential contributions to the economy beyond their obvious education and graduate outcomes. They are major employers, with their 21,000 staff representing about 1 percent of the New Zealand workforce. They make a strong contribution to New Zealand export earnings and international impact. International education is New Zealand’s fourth largest export market and universities make the biggest single contribution at around $1.1 billion a year. New Zealand’s universities are internationally competitive in the rising global market of country mobile students.

New Zealand has a higher proportion of international university students than any country in the world except Luxembourg and Austria. With most of the international university students returning home after graduating, this education relationship creates an enormous network of connection and affection for New Zealand around the world. And, important to note, almost none of the international university students have been connected to the recently reported scams around international study in New Zealand.

Research is a core and explicit role for New Zealand’s universities and we do more than our fair share of the heavy lifting to advance innovation in our country. Universities invest more than $800 million per year in research. That is about one-third of the total research and development spend, public and private, of the whole country. The majority of that research is on physical and information sciences, health, infrastructure and the economy.

As well as all that, universities contribute directly in areas like health, sport, media, business and culture, and indirectly to these things by producing the graduates who take up positions as engineers, managers, nurses and doctors, lawyers, accountants, designers, journalists, creatives, communicators and technologists.

Finally, they contribute to social cohesion by being a pathway for social and economic advancement. An increasing number of students from lower decile schools are accessing and succeeding in university and heading into jobs they never would have imagined, let alone landed, without university.

The New Zealand university system is strong; it certainly isn’t sick or broken. While there may be genuine opportunities for those without tertiary qualifications, people who have degrees are given a foot in the door to careers that will allow them to help New Zealand adapt and influence the changing world. I believe universities and their role in our society are more important than ever.

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