Compared to many other countries, Australia trains a large number of PhDs per capita each year.
Yet that has not stopped recent controversy over the future supply and demand for doctoral degrees. In Australia, a decline in people pursuing a PhD has fuelled concerns about implications for universities’ research capacity. Notably, this decline has been particularly pronounced among domestic doctoral candidates.
At the same time, there have been calls to better prepare PhDs for a range of careers outside academia because only a small fraction of PhD graduates ends up in stable academic employment.
For many people, this suggests an oversupply of PhDs graduates – at least if the PhD is seen primarily as a pathway to an academic career. Australia is not alone in having debates around the future of doctoral training, as many peer countries are having the same challenges.
How do Australia’s PhD numbers compare internationally?
To get a clearer picture of whether there is a shortage or oversupply of PhDs, it is first of all useful to see how many PhDs Australia produces in comparison to other countries.
One way of doing this is comparing published data on PhD graduates across the OECD and adjusting for countries’ size of population. When conducting such analysis using 2021 data, we found that Australia ranks among the top countries in the OECD in terms of its per capita production of PhD graduates – ahead of R&D powerhouse countries like Netherlands, South Korea, and the United States.
This finding may come as a surprise given that Australia is not known to be a R&D heavy hitter by international standards.
Why does Australia produce so many PhDs?
This naturally raises the question of why Australia produces PhD graduates at the rate it does. The answer is in significant parts structural.
High numbers of PhD completions are incentivised by national research funding settings – on average, more than a quarter of the research block grant funding that is annually allocated to Australian universities by government is tied directly to their PhD completions. Considering also the competition between universities for funding, this creates a considerable incentive for universities to aim for as high a number of PhD completions ads possible.
The incentive to aim for high numbers of PhDs is reinforced because PhD candidates tend to be relatively affordable as a research workforce while also making valuable contributions to research productivity. This is particularly so in the lab-based STEM disciplines.
Here, a lot of the experimental grunt work is done by PhDs on stipends and at a labour cost that is commonly half of what hiring a regular staff member would cost. This is also since universities’ PhD stipend rates in Australia tend to be rather low considering the high cost of living. Overall, there remain strong incentives for universities in Australia to enrol and complete as many PhDs as feasibly possible.
So, what needs to happen? Three recommendations for policy and research
Ultimately, the above figures suggest that some moderate decline in the numbers of PhDs graduating from Australian universities is per se no reason to panic. For domestic PhDs, there is much to suggest that declining numbers will continue unless Australian universities are willing to pay significantly higher PhD stipends than hitherto.
In the broader picture, however, any evaluation of the situation concerning supply of and demand for PhDs Australia remains hampered by patchy evidence concerning the long-term labour market outcomes of PhD graduates in Australia. As such, our first recommendation is to invest in better systems for comprehensively tracking the career trajectories of PhDs post their graduation and over extended periods of time, to establish an evidence base for policy responses and, if needed, intervention.
Related to this, and similar to the situation in many other countries, there is an imbalance in the way PhD supply and demand has been a concern of national policy that needs to be addressed. In Australia and elsewhere, research training funding and policy settings have remained largely focused on the supply-side, including through financially incentivising large numbers of PhD completions.
At the same time, issues concerning labour market demand for PhD graduates, both in universities and the broader economy, have received much less explicit policy attention. Consequently, our second recommendation is to shift the focus of policy attention more strongly to the demand-side. Such shift should include, as researcher Hugo Horta notes, the development of policies aimed at improving conditions for various sectors to employ PhD graduates.
Third and finally, we think it is imperative to further tweak the PhD-associated funding mechanisms in the research block grant, to provide an incentive for universities to provide better conditions and support for their PhDs even if this comes at the cost of lower enrolments and, ultimately, completions. For example, the current funding architecture provides little incentive for universities to substantially increase the stipend paid to their PhD candidates above the stipulated minimum rate. Introducing a mechanism that adjusts some of the weighting of PhD completions in the funding formulae in line with stipend conditions granted to PhDs over the course of the degree could well be a change worthwhile exploring in this regard.
Peter Woelert & Gwilym Croucher both work for the University of Melbourne.