The skills threat from China and India

- Fact or fiction
Report of key findings

Louisa Kiwana, Dr. Anil Kumar & Neil Randerson EngineeringUK

March 2012

Executive Summary
Coverage of the scale of engineering graduates coming out of China and India has been a cause for
concern for some in western countries who fear that they are losing their technological edge due to the
millions of globally competitive Chinese and Indian engineering graduates qualifying each year.
EngineeringUK has investigated this issue and found that:

76,400 Chinese and 124,400 Indian engineering graduates are globally employable1 compared to
8,600 for the UK.
Comparing the number of globally employable engineering graduates per 100,000 of population
reveals that the UK produces 2.5 times more globally employable engineers than China and 1.5
times as many as India

Research by the McKinsey Global Institute showed that only 25% of Indian engineering graduates and
only 10% of qualified Chinese engineering graduates2 are globally employable.
In 2009, China graduated 1.9 million young engineers3, however, on closer investigation it was found
that of these; only 763,635 received an engineering degree level qualification. With 10% of Chinese
engineering graduates globally employable, this equates to 76,400 globally employable engineering
graduates.
Similarly in India (2010), the number of engineering graduates was 793,321, of whom 497,475 were
studying engineering degrees at undergraduate level. Therefore, of the 497,475 engineering
undergraduates, around 124,400 (25%) would be considered globally employable.
Analysis of the data by the number of globally employable engineering graduates per 100,000 of
population shows that in the UK it was 14.3 per 100,000; two and a half times more than China (5.9/
100,000) and one and a half more times than India (10.4/ 100,000).

The term globally employable is from the McKinsey report The emerging global labour market: Part 2- The supply of offshore talent in
services It states that globally employable refers to engineering graduates that can be considered by the standards of a global company. The
suitability rates are empirically based on a total of 83 interviews with HR professionals working in the countries assessed.
2
Preparing for Chinas urban billion- Impacts of Urbanisation: Implications for labour and skills, McKinsey (2009)
3
Chinese Statistical Yearbook (2010)

1.0 The skills threat from China and India fact or fiction
It cannot be argued that the rise of China and India as major economic powers has not been central to the latest
phase of globalisation, creating huge opportunities for UK business. Nor can it be ignored that at the same time the
same rise has been heralded as a threat to the UK jobs market, particularly within the burgeoning technologically
driven sectors of engineering and manufacturing.
The Chinese and Indian economies are expected to grow rapidly over the next few decades and it is predicted that
4
by 2050, China and India will be the first and third largest economies in the world respectively . Furthermore HSBC
predicts that the share of the three largest industrialised markets (EU, USA and Japan) will fall from 60% in 2009 to
53% in 2020, while the share of the three leading major emerging markets (China, India and Brazil) will grow from
5
25% to 34% .

1.1 China and India talent pool

In China, participation in Higher Education has risen sharply; annual graduate output reached over 7.6 million by
2009, including 5.3 million from undergraduate and diploma programmes at regular Higher Education Institutions,
6
1.9 million from adult education and 0.4 million from postgraduate programmes. In India, it was estimated that
7
by 2011, there would be 1,522 degree-granting engineering colleges with an annual student intake of 582,000 ,
plus 1,244 polytechnics with an annual intake of 265,000.
The perceived scale of engineering graduates coming out of China and India has been an increasing cause for
concern for western countries who fear that they are losing their technological edge due to the millions of globally
competitive Chinese and Indian engineering graduates emerging each year. The genesis of this concern appeared
to stem from several reports and articles which stated that in 2004/05 the United States only graduated roughly
70,000 engineers; whilst India graduated 350,000 undergraduates and China 600,000 (Figure 1.0). Fast forward
seven years, and these figures are still being used despite, recent studies which have determined that the
commonly cited comparisons regarding the number of engineering graduates from China and India have been
inaccurate and incomplete.

Fig. 1.0: Poorly grounded engineering statistics 2006-2011

Chinas plusses over India are nothing to sneeze at. China graduates 70 percent more engineers annually than
does India -- 600,000 compared with 350,000, RANDs researchers say.
China in Time of Millionaires Frustrates Neighbor, www.Bloomberg.com (2011)
China is today the largest producer of engineering graduates in the world, with some 600,000 passing out of its
colleges and universities last year. Compared to China, the United States produces only 70,000 engineering
graduates every year. All of Europe produces just 100,000.
Technology and engineering education in China- Alliance learning training and educational resources (2009)
Last year Chinas schools graduated more than 600,000 engineers and Indias schools produced 350,000
compared with 70,000 in America
The US Department of Education, Press Release (2006)
The Chinese and Indian authorities responsible for providing Higher Education engineering graduation statistics
8
9
both admit to discrepancies and inconsistencies within their data collection and analysis. So whilst it is clear that

Opportunities and challenges for UK businesses: Department for Business Enterprise and Regulatory Reform (BERR): 2009
Sizing the Climate Economy: HSBC, September 2010
6
Chinese Statistical Yearbook, editions: 2005-2010
7
Science and Technology Education. Press Information Bureau. Retrieved 2009-08-08
http://pib.nic.in/archieve/others/2007/May07/2007050113.pdf
8
Chinese Ministry of Education (MoE), National Association of Software and Service Companies in India (NASSCOM)
9
Duke University: Framing the outsourcing debate
5

China and India have made progress in improving their Higher Education systems, there still remains a significant
10
education performance gap between them and the more advanced economies such as the UK.

1.2 Globally employable Chinese and Indian engineering graduates

11

Research carried out by the McKinsey Global Institute (2005) found that on paper, graduates appeared strong
12
candidates, yet, according to HR professionals, fewer than 25% of engineering graduates and less than 15% of
13
general graduates in India are globally employable. Whilst in China only 10% of qualified Chinese engineers and
14
3% of generalist graduates could be considered globally employable (Figure 1.1).

Fig.1.1: Supply of skilled engineering professionals in selected countries

100%
20%

20%

19%

80%
60%
40%

75%

80%
80%

80%

20%

25%

20%
0%
Germany

Japan

UK

Engineers considered as suitable

90%

81%

US

India

10%
China

Engineers considered as unsuitable

Source: Department for Business Enterprise and Regulatory Reform (BERR):

Officials in China and India have both stated that the word engineer does not translate well into different dialects
and has no standard definition; it was reported that Chinese provinces varied in the way they perceive types of
degrees, stating that the title engineer was comprised of students studying motor mechanics and other varied
forms of technical trades. Furthermore, students studying short cycle courses spanning one or two years, (which in
15
the UK would be considered a diploma level) were also considered as undergraduates. In India, the engineer
bracket included a vast majority of graduates specialising as IT technicians and other computer science branches.
Neither country had a clear or standardised way of defining engineering besides some form of technical
16
engagement.
17

In 2009, (Table 1.0) China claimed to graduate 1.9 million young engineers , however it was found that the pool of
young engineers was not as deep as it may seem, with only 763,635 students receiving an engineering degree level
qualification, while the remaining 1,154,793 were qualified in specialised courses. Researchers at Duke
18
University discovered that an array of students studying subjects such as motor mechanics, computer science
and information technology had been awarded engineering degrees. After taking into account that only 10% of
Chinese engineering graduates are considered globally employable, this means that the number of globally
competitive engineering graduates is around 76,400 out of the recorded 1.9 million.

10

Opportunities and challenges for UK businesses: Department for Business Enterprise and Regulatory Reform (BERR): 2009
McKinsey (2005b) The Emerging Global Labour Market
12
Nine occupations studied were: engineering, finance, accounting, life research, medicine, nursing, support staff and quantitative analysts
13
India graduates millions but too few are fit to hire. Wall Street Journal,
http://online.wsj.com/article/SB10001424052748703515504576142092863219826.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsTop
14
Preparing for Chinas urban billion- Impacts of Urbanisation: Implications for labour and skills, McKinsey (2009)
15
Seeing through preconceptions: Where the engineers are: http://www.issues.org/23.3/wadhwa.html
16
Duke University: Framing the outsourcing debate
17
Chinese Statistical Yearbook (2010)
18
Gereffi, Gary, Wadhwa, Vivek, Rissing, Ben and Ong, Ryan, Getting the numbers right: International engineering education in the United
States, China and India. Journal of Engineering Education
11

Similarly in India (2010), the number of engineering graduates 793,321 (Table 1.1) was misleading as graduates
receiving awards in non-engineering subjects such as computing and telecommunications had also been bundled
under the engineering title. Therefore in 2010, of the 793,321, only 497,475 were engineering degree level
graduates and of these, only 124,400 (25%) would be considered globally employable.

Table 1.0: China supply of technically qualified talent (2005-2009)

China engineering graduates

Total engineering output foundation and 3 or 4

year degree course
Total engineering output, students on a 3 or 4 year
degree course
Total specialised (foundation) course output
Number of undergraduates who are globally
employable (10% of the total engineering output,
students on a 3 or 4 year degree course)
Source: Chinese Statistical Yearbook (2010)

Change
over
one
year

Change
over
five
years

2005

2006

2007

2008

2009

1,090,986

1,341,724

1,594,130

1,841,946

1,918,428

4.2%

75.8%

517,225

575,634

633,744

704,604

763,635

8.4%

47.6%

573,761

766,090

960,386

1,137,342

1,154,793

1.5%

101.3%

51,723

57,563

63,374

70,460

76,364

8.4%

47.6%

Table 1.1: India Supply of technically qualified talent (2005-2010)19

Change over
one year

Change
over five
years

497,475

10.1%

53.7%

312,200

342,705

9.8%

70.4%

133,600

139,500

154,770

10.9%

26.3%

219,000

233,100

268,622

295,846

10.1%

55.4%

117,400

142,800

153,500

185,515

203,642

9.8%

73.4%

Engineering IT graduates (diploma)

73,000

76,200

79,600

83,107

92,204

10.9%

26.3%

Total out output of technically qualified talent

514,000

591,400

625,500

720,322

793,321

10.1%

54.3%

80,900

93,100

98,100

112,925

124,369

10.1%

53.7%

India engineering graduates

2005-06

2007

2008

2009

2010

Total engineering graduate output

323,600

372,400

392,400

451,700

(4 year course)

201,100

244,500

258,800

(3 year course)

122,500

127,900

190,400

Engineering IT graduates (degree)

Technology
graduate
(Computer
Electronics, Telecom, etc.) output

science,

Number of undergraduates who are globally

employable (25% of the total engineering graduate
output)
Source: NASSCOM, (2005-2010 are estimates)

20

Table 1.2 shows that in 2009/10 there were 10,765 British Nationals achieving a First degree in engineering which
was 1.0% higher than the previous year, although it is down 1.5% on 2003/04. The same research by McKinsey (Fig
1.1) has shown that 80% of UK First degree graduates can be considered to be globally employable. This means
that in 2009/10 there were around 8,600 British National graduates who were globally employable.

19

2005-2010 figures are estimates.

First degree qualifications obtained includes integrated undergraduate/postgraduate taught masters degrees on the enhanced/extended
pattern, including those leading towards obtaining eligibility to register to practice with a health or social care or veterinary statutory regulatory
body, and first degrees with honours on the enhanced/extended pattern at level H; first degrees with honours/ordinary first degrees [including
those leading to qualified teacher status (QTS)/registration with a General Teaching Council (GTC), but excluding those from the intercalated
pattern]; first degrees with honours leading towards registration with the Architects Registration Board (Part 1 qualification); pre-registration
first degrees with honours/ordinary first degrees leading towards obtaining eligibility to register to practice with a health or social care or
veterinary statutory regulatory body; first degrees with honours and diploma; postgraduate bachelors degrees at level H.
20

Table 1.2: Supply of British nationals21 achieving a First degree in engineering (2003/042009/10)
UK engineering
graduates

2003/04

First degree
10,935
Number of
undergraduates who
are globally
employable (80% of
the total engineering
graduate output)
8,745
Source: HESA bespoke request

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

Change over
one year

Change over
seven years

10,410

10,145

10,625

10,925

10,660

10,765

1.0%

-1.5%

8,330

8,120

8,500

8,740

8,525

8,615

1.0%

-1.5%

The detailed underpinning issues that go some way to describe the drivers behind China and Indias growth in
Higher Education along with the related quality issues resulting from their rapid expansion are more fully described
in section 2.0 Annex.

1.3 Engineering graduates per 100,000 of population

22

23

In 2009, Chinas population was 1.3 billion , whilst Indias population stood at 1.2 billion . The UK population in
24
2009 was 60.2 million ; 21.6 times smaller than that of China and 19.9 times smaller than India. When put into
consideration the sheer enormity of China and India, compared to the UK, it is no surprise that these countries can
turn out comparatively high number of university graduates. However, when you analyse the number of
engineering degree level graduates as the number of globally employable graduates per 100,000 of population, a
different picture emerges.
In China, the number of employable engineering graduates per 100,000 is 5.9 and in India it is 10.4. However, the
UK comes in with 14.3, which gives it the highest proportion of globally competitive undergraduates, of the three
countries examined. The UK can in this respect be seen as punching well above its weight when it comes to the
proportion of globally employable engineering graduates, where in respect of its size, it is two and a half times
China and one and a half times that of India (Figure 1.2).

Fig.1.2: Engineering graduates in China, India and UK, per 100,000 of population
16

14.3

14
12

10.4

10
8

5.9

6
4
2
0
China

India

United Kingdom

Total number of globally competitive engineering graduates per 100,000

Source: World Bank statistics/population/China (2009) and India (2009)

21

British Nationals was defined as nationals of the United Kingdom, the Channel islands and the Isle of man
World Bank statistics/population/China (2009)
23
World Bank statistics/population/India (2009)
24
World Bank statistics/population/United Kingdom (2009)
22

Annex: 2.0 Quantity over quality: The growth of mass education in China
and India
Growth in HE enrolment in China
The increase in Chinese engineering graduate rates can be traced to a series of government policy changes
25
beginning in 1999 . The goal of the policy changes made in China regarding the number of engineering graduates
has been summarised by two key objectives: to transform science and engineering education from elite
education to mass education by increasing enrolment; and to reduce engineering salaries.
The implementation of these policy changes has increased enrolment in engineering programmes by 47.6% over
26
the past five years ; however, China has been decreasing its total number of technical universities and the number
of associated teachers and staff. From 1999-2004, the number of technical universities fell from 4,098 to 2,884 and
during that period the number of teachers and staff at these institutions fell by 24%. A detrimental outcome of this
27
particular policy change has been the hefty increase in class sizes.
Despite the efforts to make science and engineering education available to the wider population of Chinese
students, the damages that the policy changes were having on the educators and students were not experienced
by elite universities, which had been exempt from the severe quality problems experienced by the dramatic
increase in enrolment due to the lowering enrolment rates. Nevertheless, the vast majority of Chinese universities
28
complied with government directives to increase enrolment.
Interviews conducted by researchers at Duke University revealed that companies felt comfortable hiring graduates
29
from only 10 to 15 university cities across the country. The list of universities varied slightly between companies,
but the majority of respondents agreed that the quality of engineering education dropped off drastically beyond
those on the list of the top ten university cities. The demand for engineers from Chinas top-tier universities is high,
but employers complained that the supply of good quality engineers is limited.

Growth in HE enrolment in India

The Higher Education system in India grew rapidly after independence. By 1980, there were 132 universities and
4,738 colleges in the country enrolling around 5% of the eligible age group in Higher Education. Today, in terms of
enrolment, India is the third largest Higher Education system in the world (after China and the USA) with 17,973
institutions (348 universities and 17,625 colleges) and is the largest Higher Education system in the world in terms
30
of number of institutions.
Much of the state of Higher Education in the country can be attributed to the system of governance and
regulation. One of the striking features of the development of Higher Education in India over the last few decades
has been the extent to which private institutions have attempted to respond to the massive demand for education
at post-secondary and tertiary level. This is particularly true in the fields of engineering, medicine, and
31
management.
Until the late 1990s, the expansion of Higher Education largely took place through affiliated colleges. However,
many promoters of private unaided colleges began to realise that the regulatory mechanisms of the affiliating
university and state governments were inhibiting their growth and did not allow them to fully exploit their market
potential. Eventually, many institutions explored the possibilities of branching out of the control of the state
governments and the affiliating universities, several acquired degree granting powers, which then brought forward
25

Where the engineers are: Seeing through preconceptions- A deeper look at India and China http://www.issues.org/23.3/wadhwa.html
Chinese Statistical Yearbook 2005-2010
27
Where the engineers are: Seeing through preconceptions- A deeper look at India and China http://www.issues.org/23.3/wadhwa.html
28
Seeing through preconceptions: Where the engineers are: http://www.issues.org/23.3/wadhwa.html
29
Chinas looming talent shortage-Diana Farrel, Andrew J Grant: McKinsey Quarterly
30
Higher Education in India: Concerns and issues http://legalsutra.org/1549/higher-education-in-india-issues-and-concerns/
31
Higher Education in India: Concerns and issues http://legalsutra.org/1549/higher-education-in-india-issues-and-concerns/
26

a commercially centred Higher Education system, primarily focused on vocational/apprenticeship type learning.
The commercial thrust is training for jobs and where possible placing students in paid jobs. The privatisation and
industry based education system in India may explain why engineering graduates in India are considered more
employable compared to Chinese engineering graduates.

2.1 Skills gaps in Chinese and Indian graduates

The expansion of Indias engineering education has come at the expense of quality. On one side there are reports
of unemployment among engineers and on the other side there are concerns of future unmet demand. Thus, there
is a significant gap between what the industry needs and what its education system is providing.
Furthermore, recent reports of corruption against educational regulations indicates that quality assurance and
regulatory mechanism have failed as some engineering institutions are finding loop holes in the requirements and
working around quality norms. This results in poorer quality of teaching, learning and corresponding lack of
competencies among engineering graduates.
In a report conducted by the Department of Business, Enterprise and Regulatory Reform, it can be seen (Fig.2.0)
that Chinese and Indian workers are identified as having mathematical and technical skills, but lack skills across
many other areas such as reliability, managerial, problem solving, team work and leadership. With the exception of
mathematical skills, Chinese workers fell behind Indian workers in all areas, predominately in technical skills, the
English language and problem solving skills.
When looking at the reported difficulties in attracting specific types of qualified workers (Fig.2.1), engineers are in
the top five occupations where workers have reported difficulties. Indian employers stated having more difficulties
attracting engineers (23%) than other skilled professionals (15%), whilst Chinese employers had the same level of
difficulty attracting skilled production workers and engineers (35%)

Fig. 2.0: Percentage of Chinese and Indian workers reported to be lacking skills in selected
areas
Mathematical

8%

14%
14%

Technical

38%

Reliability

30%

33%

26%

Managerial

38%

18%

Problem Solving

40%

13%

English

41%
25%

Team work

44%
30%

Leadership
0%

5%

10%

15%

20%
India

25%

30%

35%

China

Source: Department for Business, Enterprise and Regulatory Reform (BERR)

45%
40%

45%

50%

Fig. 2.1: Difficulties in attracting specific types of qualified workers (percent of executives
reporting difficulties)
50%

47%

46%
43%

45%
40%
35%

35%
30%

35%

30%

30%

26%
23%

25%
20%

15%

15%
10%
5%
0%
Managers

R&D

Sales/Marketing
China

Skilled production

Engineers

India

Source: Deloittes Manufacturing Industry Group

2.2 Dynamic vs. Transactional engineers

Contrary to the popular view that China and India have an abundance of engineers, recent studies also show that
both countries may actually face severe shortages of what are described as dynamic engineers, as the vast
32
majority of graduates from these counties have the qualities of transactional engineers. This is a further
contributing factor to the low number of Chinese and Indian engineering graduates that can be deemed as globally
competitive.
33

Dynamic engineers are described as being abstract thinkers with high levels of innovative and problem solving
skills. These types of engineers work well in teams and possess strong interpersonal skills, and are trained to be
34
globally competitive. In contrast, transactional engineers possess solid technical training, but not the experience
or expertise to apply their knowledge to larger domains. Transactional engineers are typically responsible for
routine tasks in the workplace, and are often produced by lower-tier universities, with a thinner curricula and
weaker emphasis on research, group work, applied engineering and interdisciplinary thinking.

32

Testimony of Vivek Wadhwa to the U.S House Representatives Committee on Education and The Workforce, May 16th 2006
http://www.cggc.duke.edu/pdfs/051606_Testimony_of_Vivek_Wadhwa.pdf
33
Gereffi, Gary, Wadhwa, Vivek, Rissing, Ben and Ong, Ryan, Getting the numbers right: International engineering education in the United
States, China and India. Journal of Engineering Education
34
Gereffi, Gary, Wadhwa, Vivek, Rissing, Ben and Ong, Ryan, Getting the numbers right: International engineering education in the United
States, China and India. Journal of Engineering Education