Are Australians really overeducated? It depends what education is for

The federal government is aiming for 80% of Australian adults to have a vocational or university qualification by 2050, up from the current rate of 60%.

It seems fair to question this goal, when almost half of Australian workers say they are overeducated, according to new survey results.

The latest Household, Income and Labour Dynamics in Australia (HILDA) Survey, released on Thursday, shows 49.5% of workers aged 18 to 64 were “overeducated” in 2024. This means they had a higher educational level than they believed they needed to successfully do their job.

On top of this, 25.7% of workers said they were overskilled, meaning they reported they do not use many of their skills and abilities in their job.

But before rushing to judgement, it is worth considering reasons why almost all countries worldwide are educating more tertiary graduates than a generation ago.

Reporting on overeducation

HILDA is an annual survey that tracks around 17,000 Australians. Each year, it asks respondents for their highest educational qualification.

Every four years since 2012, the survey also asks respondents for the minimum level of education necessary to satisfactorily complete their job. The information on the actual and the required minimum level of education is compared to measure rates of overeducation.

As we can see from the chart below, occupations with the highest levels of overeducation were labourers, sales, machine operators and personal and community care workers.

Australians complete more formal education than they once did

In the last several decades, wealthy countries around the world have had an increasing proportion of adults completing higher education. Many developing economies are following the same trajectory.

Going back to the period after the second world war, most countries have sought to widen participation in higher education to up-skill work forces in the hope it will drive economic growth.

Australia is no different. For example, the proportion of people aged 15 to 74 with a bachelor’s degree or above has increased in recent years from about 26% in 2016 to almost 34% in 2025.

The uses and purposes of education

There are many reasons people choose to study, including being able to get a job and the likelihood of earning more money and more employment opportunities. These are not the only reasons.

People also choose to study because they are interested in the subject or want to explore the possibilities it might hold.

When selecting a course, recent research suggests people seem to preference their interests over the cost of the course or their potential earnings.

While people may feel there is not a great match between employment and their job today (particularly in a poor economic climate), they may not feel the same way at a different point in their working lives. A bachelor’s degree can support a career over a lifetime, not just a single job.

Education and the economy

There are also different economic theories about what education is for.

Economist Gary Becker was famously concerned about “human capital”, or people having the necessary skills and experiences required for a specific job.

This suggests a qualification is about providing a discrete skill set that matches a job.

But other economic research argues having a qualification can have a different function. For example, it can act as a signal to employers they are considering a “good” candidate, such as one that can meet deadlines, work on projects long term and under pressure.

Here, having a degree is not about having certain skills but developing and demonstrating broader capabilities.

What can these figures tell us?

As Australia seeks to reshape post-secondary education through reforms to university funding and more support for vocational education and TAFE, the HILDA figures suggest many people see some mismatch between their study and their job.

Given the many reasons people study (and how they value this may change over time), the latest findings suggest we should be open to a post-secondary education system that has a lot of different choices.

For example, do we need the option for shorter higher education degrees, which are common in the United States? Or more opportunities for micro credentials? Do we need different combinations of vocational degrees and certificates, such as short courses?

The needs of labour markets are continually evolving, so some skills mismatches will be an unavoidable price.

Deciding on what education we should offer, however, requires a full consideration of all the reasons we continue to choose to study.