Pathways to graduates’ employability: analysis of labor market outcomes in Ethiopian higher education and vocational training institutions

The employability of graduates is of great importance in educational institutions, the government, and industries, and is a growing interest among scholars and researchers, as graduates are expected to hold a strategic importance in nation-building. This study examined graduates’ employability at ISCED levels 5 and 6 by collecting primary data from 561 graduates using multistage cluster sampling. Methodologically, it is a cross-sectional survey study using PLS-SEM and PLS-MGA as the statistical and analytical frameworks. The analysis was run with the trial version of SMART-PLS 4. The analysis assessed both measurement and structural models. Bootstrapping method with 5,000 samples and 95% was used to assess the SEM structural model. The findings indicate that graduates’ employability is multifaceted, context-dependent, and heavily influenced by educational, institutional, and structural factors. More specifically, the results of PLS-SEM revealed that the relationship between program relevance and graduates’ employability was found to be statistically significant. Whereas teaching practices and institutional environment appeared to show a non-significant association with graduates’ employability. The study implies that educational inputs and processes are less likely to affect the employability of graduates at ISCED levels 5 and 6. Innovation partially mediates the relationship between program relevance and graduates’ perceived employability. Similarly, the mediating role of innovation in the relationship between institutional environment and graduates’ employability was found to be statistically significant, such that innovation fully mediates the relationship between the two variables. However, there is no statistical evidence that innovation mediates the relationship between teaching practice and the development of employability skills. The level of teaching practices has not impacted innovation in a way that enables graduates to develop employable outcomes in the market. The PLS-MGA result also reported that there is no significant statistical difference in the employability of graduates from the two levels and sectors of the education system. It can be concluded that there are no statistically significant differences in the educational and institutional dimensions in determining graduates’ employability. It indicates that possessing higher educational qualifications doesn't automatically relate to higher employability. The findings could provide solid theoretical, policy, and practical implications for both sides of the labor market. As for the academic institutions, they are propelled to pay due attention to designing a demand-driven curriculum, implementing teaching practices supported by innovative mechanisms, and focusing on skill-oriented academic programs that satisfy the labor market requirements of industries, considering the triple helix model, which proposes the cruciality of strong partnership and linkage among academic institutions, industries, and the government. A joint Endeavor of curriculum design, staff exchange, and internship programs is also instrumental in enhancing the employability skills of graduates for specific levels of education. This study will make several contributions to the body of knowledge on labor markets by addressing theoretical and practical gaps.