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INTERNATIONAL HIGHER EDUCATION

Manpower Planning and University Enrollments: The Debate in Singapore

Pang Eng Fong and Linda Lim
Pang Eng Fong is practice professor of management at Singapore Management University. E-mail: efpang@smu.edu.sg. Linda Lim is professor of corporate strategy at the University of Michigan. E-mail: lylim@bus.umich.edu.

Faced with growing resource constraints, many countries are grappling with the issue of how best to allocate resources to publicly funded universities. Quite a few governments have used manpower planning models to guide policies regarding university enrollments and resource allocation. These models typically derive educational enrollments from projected manpower requirements based on forecasts of economic growth. Recent public debate on university admissions policy in Singapore raises anew the question of the effectiveness of the manpower planning model that Singapore (and many other countries) relies on to guide university intakes. The Singapore government is committed to giving its universities greater autonomy over financing and student admissions to enable them to develop into world-class institutions. It has pledged that it will not require full financial independence of publicly funded universities. Nevertheless, the government continues to direct university admissions to ensure the output of graduates matches projected skilled manpower needs.

University Autonomy
The stated goal of university autonomy may, however, not correspond to the manpower planning model that has influenced university admissions and funding for the past 30 years. The model was useful while Singapore’s mass-manufacturing-driven economy was catching up to developed-country levels of industrial development. Today, rapidly changing technology and skill requirements make it harder to discern the way ahead, even for the world’s most adroit, anticipatory nations and world-class multinationals.

In most countries where the government provides the bulk of the funding for universities, individual universities make these policy decisions. “University autonomy” means that each institution decides what degree programs to offer and their course content; how many and on what criteria students are admitted to each program; how much is charged for tuition; the types and terms of faculty recruited; and how faculty, students, and the university itself are evaluated.

Market Signals
How do universities make these decisions? They depend on market signals from employers who hire their graduates; students and their parents who choose (and pay for) degree programs; and the demand for and supply of academic manpower in various specializations. This market responsiveness ensures flexibility and efficiency in resource allocation.

If employers do not hire the graduates of any particular university or degree program or if the salaries they offer are too low, students and parents will shift their demand (and tuition revenues) to other universities and courses whose graduates are better rewarded in the job market. Faculty in specialized, high-demand areas will experience a rise in salaries, which will attract academic talent into those areas.

These supply-and-demand alterations do not always take place instantaneously or smoothly, but the market functions well on the whole. In producing academic excellence and technological innovation, these changes also absolve governments (who fund universities) of blame should universities misjudge market signals and make the wrong decisions.

Employers look for higher-order thinking and communication skills, and more recently, IT skills. They value employees with the capacity to learn, relearn and unlearn. They also seek a diverse workforce in terms of training, outlook, and subject knowledge. Business leaders who sit on the advisory committees of American universities often counsel against training undergraduates in specific narrow and especially novel fields. They stress instead basic disciplines and breadth of course work because highly specific skills and knowledge can quickly become obsolete.

How Universities Respond
Highly rated and market-responsive universities offer a variety of degree programs and produce a wide range of graduates. Unlike Singapore, where manpower planning is skewed toward engineering and business, top British and American universities produce few business graduates at the bachelor’s level. At the University of Michigan, for example, less than 400 out of an annual total of 5,000 graduates are business majors. Yet the vast majority of its graduates find employment in the business sector.

Students and their parents want equitable and transparent access to higher education, a fair admissions process, flexibility in course selection, good-quality instruction, government or private-sector financial assistance, and good jobs upon graduation. Universities, for their part, want continued government funding but with autonomy over enrollments, fees, admissions standards, student and faculty recruitment, and course curricula. The institutions compete for top-quality faculty and seek to recruit well-qualified graduate students to advance research agendas and assist in undergraduate instruction.

Promoting Equity and Efficiency
Equity and efficiency should be the criteria for evaluating the various stakeholder interests while determining policies on student admissions and tuition. Tuition-based funding borne mainly by students themselves is efficient because it produces a better match between supply and demand for particular university places and for particular types of graduates. The courses students choose will reflect their own intellectual preferences and expected lifetime income. On a yearly basis, the courses are likely to be “closer to the market” than manpower plans based on projected economic growth rates. Tuition-based funding is also equitable since the individual graduate is the main beneficiary of the higher lifetime income and nonpecuniary benefits afforded by the person’s university degree.

In developed economies, many students pay for university tuition by taking out loans from the government or the private financial sector. Involving banks in providing loans will help allocate resources more efficiently, since they can charge higher interest rates for more risky courses of study. In Singapore, however, it may take a while to change mindsets. Accustomed to highly subsidized education, families and students remain reluctant to take loans to finance education.

We believe a market-based system of allocating university places, funded primarily by tuition paid by students themselves, is both efficient and equitable. Such a system improves the performance of universities themselves and encourages academic excellence, to the benefit of society as well as graduates and employers. All stakeholders—the government, employers, parents, students, universities, academics and the public—will adjust to this system if it is allowed to evolve.

The deterministic manpower planning models that have served many countries well, including Singapore, are no longer appropriate as guides to resource allocation. It is time to introduce more market-based and flexible mechanisms into university enrollment planning.

[Online] Available: http://www.bc.edu/bc_org/avp/soe/cihe/newsletter/Number41/p11_Fong_Lim.htm