Midterm assignment Econometrics Topic: The impact of employability skills on fresh graduates job opportunities in Ho Chi Minh city Foreign Trade University HCM Campus Lecturer: Le Hang My Hanh Student: Tran Anh Nguyet
FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS -*** MID-TERM ASSIGNMENT COURSE: ECONOMETRICS THE IMPACT OF EMPLOYABLITY SKILLS ON FRESH GRADUATES’ JOB OPPORTUNITIES IN HO CHI MINH CITY Class: K55CLC3 GROUP MEMBERS: Nguyễn Hồng Lan 1601015210 Trịnh Cơng Minh 1601015259 Nguyễn Như Nguyện 1601015302 Trần Ánh Nguyệt 1601015304 Ngô Xuân Nhã 1601015306 Lecturer: Mrs Lê Hằng Mỹ Hạnh Ho Chi Minh City, October 17th, 2018 ABSTRACT In this study, ordinary least square (OLS) method is used to estimate the parameter of the linear regression model in order to define factors affecting job opportunity of freshgraduate employees in Vietnam with the data reported by our survey in 2018 The results show that soft skill, technical skill, foreign language and work experience have impacts on the employment rate of fresh graduates in Vietnam With the findings of the significance of employability skill on job opportunity, the study is useful for both employers and employees Thus, either a good job or good applicant can meet recruiters’ requirements, which implies that both of them can either refer or have more ideas to run their purposes INTRODUCTION Vietnam education is more and more developing, however, a majority of student seem it hard to find a job after graduation The number of unemployed graduate students is increasing, and some graduates work in sectors that not require degrees According to the statistics of the Ministry of Labor, Invalids and Social Affairs, by early 2017 there was 60% of students working in sectors they had not learned about and more than 200,000 unemployed bachelors despite the fact that demand for employees is still high The main cause of this problem is lack of employability skills There is 60% of Vietnamese graduates who are unable to secure employment and need to be re-trained Simultaneously, employers still have difficulty in finding graduates meeting the requirements of knowledge and skills for their workplace, according to OECD (2012) The status is dangerous; therefore, addressing unemployment for workers in general and students in particular is a top concern today The young adult population is beneficial to boost economic development This study is carried out to determine the important skills which fresh graduates need to apply for a job It shows the impact of employability skills on job opportunity, thus having some recommendations in order to reduce the unemployment rate of graduates in Vietnam LITERATURE REVIEWS AND ECONOMETRIC MODEL According to several researches, Singh, 2008; AlHady, Zakaria, Omar and Ali, 2011; Hairi, 2011; English Russell Group HEI, 2006; Andreas and Hiroshi, 2011; Kitao, 2001; Irham, Shafinah and Azhari, 2006; Department for Education and Skills, 2007; and Lees, 2002, the job opportunities of fresh graduates in Viet Nam affected by many factors, include the graduate’s soft skill, technical skill, work experience and foreign language Soft Skills Working environment is different from university environment, despite the fact that the amount of knowledge that graduates use to work is less than what they’ve learnt at school, since graduates practical things more than hypothetical jobs Certain activity needs particular skills that are appropriate for it, consequently, they ought to enhance more soft skills for the purpose of working Graduates are taught instructing theory lectures in universities for their future job, yet actual experience is more important to procure skills and attributes With more studies, Singh (2008) notices that a large part of the young graduates performed well in universities, have great certificates and degrees Nevertheless, these graduates are not so good at abilities, mentalities and comprehension; as they need to confront challenges when entering the working environment (AlHady, Zakaria, Omar and Ali, 2011) Employers today center around discovering good workers who have not just essential scholar skills like reading, writing, science, mathematics but also higher order soft skills like learning, reasoning, thinking creatively, decision making and problem solving (AlHady, Zakaria, Omar and Ali, 2011) Fallows, Stevens (2000) and Pittenger (2004) have distinguished presentation skills as a vital aspect of soft skills to advance business graduates' employability within an increasingly competitive and global business environment Coincidentally, astounding verbal communication skills are additionally essential in order that graduates feel confident about their capacities to communicate such knowledge (Andrews and Higson, 2008) Communication has a relative impact on every part of business Great communication can help work execution and is the basic to build a cohesive and effective team Good communication skills also enable employees to limit the probability of industrial issues in the workplace (Wahab, Bakar, Rosli, and Junoh, 2013) In the current search for talent workforce scenario by Hairi (2011), bosses require five fundamental soft skills in the working place that is put in the order of significance, communication skill, teamwork, decision making and problem solving, creative and critical thinking, program and project management skill Communication and teamwork skills are the most important ones of soft skills because those are what employers mostly demand Technical Skills There are some jobs requiring technical skills such as specialist knowledge, technological skill, general intelligence, professional skills, experience and competencies, knowledge of other fields, analytical and research Technical skills are the knowledge and abilities which are necessary to mathematical, engineering, scientific or computerrelated duties, as well as other specific tasks acquired through learning and practice On the survey of English Russell Group HEI (2006) careers service, they show out employers require for main attributes and skills of graduates Firstly, a good degree from a good university serves as a form of “quality assurance” Secondly, work-experience needs to be developed on time, and enables graduates to get the job quite quickly Thirdly, participation is important as it implies that fresh graduates are a “doer” and a “contributor” and are active; and to self-initiate persons, they also show that they are able to be a part of a working community Depending upon economic sectors and the regions, their firm sizes and hierarchical structures, employers require different technical skills for their offers For instance, IT organizations usually request creativity and solid system design skills while the while the knowledge of mathematics, science, and engineering are less important However, fresh graduates, with strong ability to use modern tools and the knowledge of mathematics, science, and engineering, are prioritized by the infrastructure firms; which have been examined by Andreas and Hiroshi (2011) It has been fiercely debeting about graduates' employability in Ho Chi Minh workforces The economic globalization and rapid changes taking place in Viet Nam create a pressure upon employers in foreign companies To identify and recruit fresh graduates who possess key employability skills suitable to their current demands, employers test technical skills carefully To them, the fundamental requirements which graduates possess are basic education and technical skills are two for recruitment first Be that as it may, what will influence bosses to fulfill the most are the graduates' capacity to keep adapting freely in the procurement of new knowledge, skills and technologies for job performance Foreign language: According to Weinberg College of Arts and Sciences, foreign language proficiency consists of a variety set of abilities, including: The ability to read and write a foreign language; The ability to speak and understand a foreign language; Knowledge and understanding of the history and culture of the community or communities in which the foreign language is spoken; The ability to function in culturally-appropriate ways within a community or communities in which the foreign language is spoken Foreign language proficiency is a very important factor needed by fresh graduates to be recruited in Viet Nam If they were good at other languages, the opportunity to get a job is broad, especially a world-wide language like English English communication is rated as the most important communication skill and higher than any technical skill because nowadays, English is used widely in some areas of news and information, business, diplomacy, professions, travel and also entertainment, according to Kitao (2001) Based on a research conducted by Irham, Shafinah and Azhari (2006) (as cited in Shafie, 2010), the R&D department administrators have been looking for candidates who have the abilities to generate and express ideas verbally in English at 90 percent; to give presentations using English at 90 percent; to write report in English at 60 percent; to speak English fluently at 60 percent; to have a good command of English language grammar at 30 percent; and to have persuasive skills in English language at 30 percent Almost of companies in Ho Chi Minh City refer students to have international English certificates such as TOEIC, IELTS, or TOEFL IELTS which score 6.5 is required to study in foreign universities or study abroad, or apply for a job of foreign companies Understanding the importance of using foreign languages, especially English, the Government has taken many measures to encourage students to learn English One of them is the Decision 1400/QĐ-TTg, dated on 30 Sept, 2008, which stated that by 2020 Viet Nam is going to improve English language proficiency for all students in universities accounted for 60 percent by 2015-2016 and 100 percent by 2019-2020 to help them use a foreign language confidently in their daily communication According to The Gallup Organization, Hungary upon the request of Directorate-General for Education and Culture (2010), at least three-quarters of respondents in 24 countries agree that English is very or rather important when recruiting higher education graduates Finally, foreign languages play an important role in the future so students should pay attention to improve English proficiency from the very first days in the university if they want to develop further in their career path Work experience: Work experience is all knowledge and skills which is acquired during working period With work experience, employees have more opportunities to get jobs and have a good performance in workplace In addition, it helps employees become more valuable and productive in working According to Department for Education and Skills (2007), employees at all ages can get work experience to develop their key competencies and skills, as well as upgrading their employability Majority of students try to work to support themselves when studying at university, as a result, they get work experience automatically, according to Shabi, (as cited in Lees 2002) The more they work, the more they gain knowledge, develop key skills as well as increase understanding about both themselves and the workplace Work experience can help demonstrate to employers that you are ready for the world of work They are increasingly looking for students who are able to combine excellent academic achievement with practical hands-on experience Based on our mentioned arguments, this paper addresses and contructs the model to research affecting factors that have impacts on employability of fresh graduates as follow: JOi = β1 + β2SSi + β3TSi +β4WEi + β5FLi + ɛi (1) In model (1), JO (job opportunity) is the perceptive employability of a graduate The interpretations of the variables and the expectations of variables’ signs in model (1), βj, are present in Table Table 1: Description of indepentdent variables Variables SS TS WE FL JO Interpretation Confident on Soft Skills aspect Confident on Technical Skills aspect Confident on Work Experience Confident on Foreign Language efficiency Jobs changeability, Qualification and and applicability Scale to to to to to Expectation of the variables’ signs + + + + + From the mentioned literature reviews, we deliver the expectations for the variables’ signs: probability of findings β2 positive: employers can refer on graduates’ social or community activities or interviewing process to judge their soft skill β3 positive: employer wants to choose employee with better technical capability β4 positive: an employee become more valuable and productive in working, especially new one, with pre-exist experience β5 positive: as English or foreign language used widely in extensive of industries and activities, the more capable as this equal to a higher chance in employability METHODOLOGY The study follows quantitative research methods The survey to acquire data is conducted in some famous universities for statistical analysis These primary data which describe abilities and knowledge of fresh graduates to evaluate their employability The Linkert scales - for each dependant variables (1 for total disagree and for total agree) Based on the collected data, the paper use probability to describe the perceptive chances for employments of fresh graduates, then proceed to use OLS to estimate the mentioned model (1) to determined the yielding effects on possibility of fresh graduates’ employments Table 2.1: Measurement scales Table 2.2: Descriptive Statistics No Factors/Items SS1 SS2 SS3 SS4 SS5 SS6 SS7 SS8 TS1 TS2 TS3 TS4 TS5 Mean 3.640 3.715 3.690 3.690 4.010 3.960 3.625 3.800 3.970 3.585 3.695 3.685 3.735 Std deviation 0.9330 0.7898 0.8740 0.8966 0.7483 0.7130 0.9134 0.8485 0.6922 0.8676 0.9391 0.9358 0.8513 No FL1 FL2 FL3 FL4 WE1 WE2 WE3 JO1 JO2 JO3 JO4 Mean 4.005 3.605 3.660 3.695 3.690 3.685 3.685 3.725 3.705 3.715 3.790 Std deviation 0.7176 0.8994 0.9080 0.9338 0.9022 0.9305 0.8976 0.9052 0.8933 0.9131 0.9197 DATA ANALYSIS AND DISCUSSION 4.1 Regression model determination and coefficients interpretation The paper uses the Ordinary least square (OLS) method to estimate Model (1) to define factors affecting job opportunity of fresh-graduate employees in Vietnam The result is showed in the Table Table 3: Result for sample data regression by Eviews Dependent Variable: JO Method: Least Squares Date: 10/16/18 Time: 15:24 Sample: 200 Included observations: 200 Variable C SS TS WE Coefficient -0.214604 0.519642 0.193686 0.267049 Std Error 0.131911 0.117111 0.094775 0.067111 t-Statistic -1.626890 4.437170 2.043652 3.979204 Prob 0.1054 0.0000 0.0423 0.0001 FL 0.077340 0.084268 0.917788 0.3599 R-squared Adjusted R-squared S.E of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.845061 0.841882 0.320011 19.96932 -53.37566 265.8891 0.000000 Mean dependent var S.D dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter Durbin-Watson stat 3.733750 0.804774 0.583757 0.666215 0.617126 1.678457 From the regression acquired by Eviews (Table 3), we have the regression model as follow: JO = -0.2146 + 0.5196SS + 0.1936TS + 0.2670WE + 0.0773FL Regression coefficients interpretations: As we can see from the table, the p-values of independent variables: SS, TS, WE and FL are 0.0000, 0.0423, 0.0001 and 0.3599, respectively All of p-values are less than α = 0.05 so that we can conclude of the variables have statistical significance, the variables FL was not statistically significant β2 = 0.5196: When the confidence on soft skills of the fresh graduate increases by 1%, the possibility and qualification of finding jobs will increase by 0.5196% on average β3 = 0.1936: When the confidence on technical skills of the fresh graduate increases by 1%, the possibility and qualification of finding jobs will increase by 0.1936% on average β4 = 0.2670: When the confidence on work experience of the fresh graduate increases by 1%, the possibility and qualification of finding jobs will increase by 0.2670% on average In short, all variables seem to significantly explain the dependent variables and statistically significant This result met our prediction of signs and expectations based on series of literatures review, as also common senses that soft skill was the most influential factor 𝑅2 = 0.8450: The independent variables of the model account for 84.5% of the variation of the dependent variable, another 15.5% is due to factors not yet included in the model 4.2 - Model statistical significance testing with ∝ = 5% significant level Hypothesis testing: (H0: The model is not fitted; H1: The model is fitted) From the result in Table 3, Pvalue (F) = 0.000000 < α = 0,05 So we can reject the Ho hypothesis The model is statistically significant 4.3 Multicollinearity testing Multicollinearity phenomenon testing by coefficient of correlation: Table 4: Coefficient of correlation of model’s variables Correlations SS SS TS 0.93406 WE 0.901593 TS 0.93406 0.883513 WE 0.901593 0.883513 FL 0.920713 0.901316 0.866013 FL 0.901316 0.866013 0.920713 The Result from table show us there’re significances between independent variables (all ecceeding 0.8) The multicollinearity phenomenon happen in model (1) can be explained from the fact that many students can be good at multiple aspects or take advantage to excel in other fields Possible solution for this can lie in changing forms or implications of survey questions or notice the student to be vigilant and separative in their responses 4.4 Heteroskedasticity testing Table 5: Result of heteroskedasticity test (White) by Eviews Heteroskedasticity Test: White F-statistic Obs*R-squared Scaled explained SS 1.599158 21.59063 21.41114 Prob F(14,185) 0.0826 Prob Chi-Square(14) 0.0874 Prob Chi-Square(14) 0.0916 Test Equation: Dependent Variable: RESID^2 Method: Least Squares Date: 10/16/18 Time: 15:33 Sample: 200 Included observations: 200 Variable C SS^2 SS*TS SS*WE SS*FL SS Coefficient 0.202645 0.059075 -0.122933 -0.056340 0.186668 -0.421668 Std Error 0.341130 0.219151 0.248621 0.169032 0.224887 0.365188 t-Statistic 0.594041 0.269562 -0.494461 -0.333308 0.830054 -1.154662 Prob 0.5532 0.7878 0.6216 0.7393 0.4076 0.2497 TS^2 TS*WE TS*FL TS WE^2 WE*FL WE FL^2 FL 0.110300 0.092073 -0.366851 0.680706 -0.043567 0.013639 0.090821 0.128146 -0.380327 0.132304 0.120049 0.167878 0.248121 0.069046 0.128994 0.188444 0.111306 0.224867 0.833682 0.766959 -2.185220 2.743441 -0.630985 0.105730 0.481955 1.151295 -1.691338 0.4055 0.4441 0.0301 0.0067 0.5288 0.9159 0.6304 0.2511 0.0925 R-squared Adjusted R-squared S.E of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.107953 0.040447 0.141630 3.710900 114.9166 1.599158 0.082649 10 Mean dependent var S.D dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter Durbin-Watson stat 0.099847 0.144584 -0.999166 -0.751792 -0.899058 2.275208 From table 5, we can derive our conclusion that model (1) does not occur heteroskedaticity, since prob Chi-square = 0.0874 > α This result has already taken into account several other tests, e.i Breusch-PaganGodfrey with prob Chi-square = 0.2016 and Glejser with prob Chi-square = 0.2699 CONCLUSION The conclusion of the research This report examines the factors that affect the employment rate of fresh-graduate students with the data researched in 2018 Estimations show that there were main determinants influencing directly the job opportunity of students after graduation with the significant distinction among the proportion of each factor: foreign languages, employability skill set (soft skills and technical skills) and work experience, respectively from upper to the lowest To come to conclusion, there should be an alignment between the objectives of the research and results of the estimations, which may be also useful for the further research Firstly, foreign language is one of the crucial factors to get a good job There are some criteria to evaluate the English levels such as fluent speaking, fast reading and academic writing with correct grammar, impressive structure, and various vocabularies Nowadays, the more advanced your foreign language is, the more job opportunities you can have This has been especially right since Vietnam become more globalized after joining WTO in 2007, which requires English as a compulsory language used in every field from technological industry, international business, etc to education, entertainment, and agricultural industry Secondly, the importance of employability skills consisting of technical skills and soft skills is confirmed for every occupation In regard to technical skills, creativity on job, simultaneously, the analytical and research skill either contribute in applicants’ performance or persuades employers to give them the best jobs, which gains significant meaning to study the relationship between employability skill and job opportunity In term of soft skills, communication, self-confidence, leadership, and problem-solving skill are 11 highly appreciated by most of the employers as they are necessary for every field of work and not easy to be learned unless these employees are really excellent and ever experienced Finally, work experienced is also required for most jobs Actually, it is hard for fresh graduates to show off work experience However, this type of experience can be gained from an internship, part-time as well as a full-time job when they are university students By this way, fresh graduates can prove that they are experienced and can the job well and easily, which will not only save time and money but also create high productivity for the companies Implications of the research In a developing economy like Vietnam, education is the key factor playing an important role in developing the country However, Vietnamese fresh graduates are considered to be young and account for a large amount in population but lack of employability skills and languages, making the unemployment rate of people holding bachelor degree still stands at a high level The most feasible solution for this situation is that there should be a positively and innovatively change in Vietnamese education system, especially the university curriculum, to help students acknowledge and master almost entirely the requirements of globalized labor market before graduation The studies about employability skills are good materials to improve the ways used to teach students in universities The results are evidence supporting confidently education system in the change of either studying or teaching methods positively and accurately In regard of economic side, not only employers know how to recruit good applicants based on results these studies but the employees also know how to improve their skill and experience to meet recruiters’ requirement, which helps to choose the right person for an accurate job and to balance supply and need in labor market Thus, the problems of economics and society can be solved, as a result, the economy also develops more sustainably QUESTIONAIRES Link of online survey: http://bit.ly/econometrics_survey 12 REFERENCES AlHady, S.M., Zakaria, A., Omar, M.W and Ali, M.N (2011) Fresh graduates entrants to the working world Elixir International Journal [Retrieved from http://www.elixirpublishers.com/articles/1350112667_38%20%282011%29%2042 08-4209.pdf] Andreas, B and Hiroshi, S (2011) Employability and Skill Set of Newly Graduated Engineers in India Education Team, South Asian Region, World Bank Report Retrieved from http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-5640 Andrews, J and Higson, H (2008) Graduate Employability, “Soft Skills” versus “Hard” Business Knowledge: A European Study Higher Education in Europe, 33(4), 411422 doi: 10.1080/03797720802522627 Department for Education and Skills (2006), “Departmental Report 2006”, HM Government, [Retrieved from https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attach ment_data/file/324573/DFE_Departmental_Report_2006.pdf] Fallows, S and Steven, C (2000) Building employability skills into the higher education curriculum: a university wide initiative Education and Training, 42(2), 75-82 doi 10.1108/00400910010331620 Hairi, F B., Toee, M N.a nd Razzaly, W B (2011) Employers;s perception on soft skills of graduates: a study of Intel elite soft skill training Unpublished PhD thesis, International Conference on Teaching & Learning in Higher Education (ICTLHE) Retrieved from http://eprints.uthm.edu.my/2191/1/EDC243.pdf Kenji Kitao (2001) Why we teach English?, Doshisha University (Kyoto, Japan) [Retrieved from http://iteslj.org/Articles/Kitao-WhyTeach.html] Kong Jun and Jiang Fan (2011), “Factors Affecting Job Opportunities for University Graduates in China - the Evidence from University Graduates in Beijing”, Research in World Economy, [http://www.sciedu.ca/journal/index.php/rwe/article/viewFile/189/73, accessed October, 2018] 13 Mikolai Jasinski, Marek Bozikowski, Agnieszka Chlon Dominczak and Tomasz Zajac (2018), Who gets a job after graduation? Factors affecting the early career employment chances of higher education graduates in Poland [https://www.researchgate.net/publication/323002225_Who_gets_a_job_after_gra duation_Factors_affecting_the_early_career_employment_chances_of_higher_edu cation_graduates_in_Poland, accessed Oct 2018] Singh, S.K (2008) Malaysian graduates\u2019 employability skills UniTAR e-Journal, 4(1), 15-45 Steven Devaney (2011), “Who gets the jobs? Factors influencing the employability of property and construction graduates in the UK”, Construction Management and Economics, 233-246 Susima Weligamage (2014), “Graduates' Employability Skills: Evidence from Literature Review”, University of Kelaniya, Sri Lanka, 115-119 The Gallup Organization, Hungary (2010), “Employers’ perception of graduate employability”, Eurobarometer, [Retrieved from http://ec.europa.eu/commfrontoffice/publicopinion/flash/fl_304_en.pdf] Wahab, N.A., Bakar, A., Rosli, R and Junoh, A (2013) Critical Success Factor of Graduate Employability Programs: Effective Contents or Communication Skills? 4th International Conference on Business and Economic Research (4th ICBER 2013) Proceeding, 04 - 05 March 2013 Golden Flower Hotel, Bandung, Indonesia ISBN: 978-967-5705-10-6 Xiaowei Xu and Weiwei Zhang (2015), Analysis of the Influence Factors of the Ability of Graduate Employment Based on the Logistic Regression Model, [http://www.sersc.org/journals/IJCA/vol8_no9/39.pdf, accessed October, 2018] 14 ... 0.9 358 0. 851 3 No FL1 FL2 FL3 FL4 WE1 WE2 WE3 JO1 JO2 JO3 JO4 Mean 4.0 05 3.6 05 3.660 3.6 95 3.690 3.6 85 3.6 85 3.7 25 3.7 05 3.7 15 3.790 Std deviation 0.7176 0.8994 0.9080 0.9338 0.9022 0.93 05 0.8976... SS4 SS5 SS6 SS7 SS8 TS1 TS2 TS3 TS4 TS5 Mean 3.640 3.7 15 3.690 3.690 4.010 3.960 3.6 25 3.800 3.970 3 .58 5 3.6 95 3.6 85 3.7 35 Std deviation 0.9330 0.7898 0.8740 0.8966 0.7483 0.7130 0.9134 0.84 85 0.6922... 0.3 651 88 t-Statistic 0 .59 4041 0.26 956 2 -0.494461 -0.333308 0.830 054 -1. 154 662 Prob 0 .55 32 0.7878 0.6216 0.7393 0.4076 0.2497 TS^2 TS*WE TS*FL TS WE^2 WE*FL WE FL^2 FL 0.110300 0.092073 -0.366 851