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The Truth Behind Economic Strength And MBA Jobs

MBA applications increase each year and the MBA Jobs market is tough. Does economic strength influence your location choices? And which countries offer MBAs the best prospects?

By  Seb Murray

Sat Jan 18 2014

The next time you think about switching careers or beginning an MBA, the economic strength of the region may well influence your decision. After mustering (and expanding) considerable finances, time, effort and commitment to a career path, switching industries is often an off-putting decision.

And deciding to leave your career to begin an MBA program, even if you plan to stay in the same sector, can be an equally unpleasant thought. Yet it is one that crosses many a business leaders’ mind and applications to top MBA Ranking universities continue to increase each year.

Despite tough acceptance rates at some b-schools, the Graduate Admissions Council (GMAC) recently reported a second consecutive jump in MBA applications. 50 percent of full-time two-year MBA programs saw an increase in applications for 2013-14, compared with 43 per cent in 2012.

And MBA students too are switching sectors after leaving b-school – and in higher numbers. Lesley Zhang, an international MBA student at Henley Business School, switched careers from finance to start-ups after becoming inspired by the UK's creative scene: “I did always have thoughts of becoming an entrepreneur in the back of my mind. The knowledge and the network I have built up on an MBA is the first step,” she told BusinessBecause.

What’s more, most of these MBAs are staying in the regions they graduate in. A study by QS Top MBA predicts that Asia will see the biggest increase in MBA demand; a 29 per cent increase in MBAs joining Indian programs; and a 35 per cent increase in China.

At China Europe International Business School (CEIBS), 82 per cent of overseas students from last year's MBA cohort found employment in the Asia Pacific region. It is becoming clear that career location heavily influences where students chose to study.

And it is not just in emerging economies that the trend is being set. At HEC Paris, the majority (44 per cent) of their 2011 MBA class landed jobs in France after graduation. At London Business School (LBS), another leading European institution, 47 per cent of their 2012 MBA cohort stayed in the UK for work after graduation.  

But what’s fascinating about CEIBS’s case is that their correlation reflects a growing trend of MBAs migrating to Asia in search of better MBA Job prospects – in what are thriving economies. Many business schools in Asia have broken into top-ranking positions in recent years. China is considered the second biggest economy in the world and the Asia-Pacific region has not felt the burden of the debt crisis in Europe.

Indeed, BusinessBecause reported this month that MBAs were using business school to escape the financial crisis – and shrinking jobs market – in Europe.

Andrea Di Grado, an MBA student at MIP Politecnico Di Milano, was compelled to leave his career at top consulting firm EY because of a lack of opportunity to climb the corporate ladder. “I decided to join this MBA program because of the economic crisis here in Italy. It became difficult to advance my career at EY; during the crisis a lot of people became stuck in their positions.”

There was a light at the end of the tunnel, though, when GMAC reported a better outlook for MBA job prospects in 2014. They surveyed 211 employers in 33 countries and concluded that employment will remain the same this year, with 72 per cent of employers expecting to hire MBA graduates in the New Year (up a tad from 71 per cent in 2013).

When it comes to salary, however, MBAs have different considerations. At the moment, about 90 per cent of alumni across the world are in full-time employment within six months’ of graduating from business school. Yet in regions considered unstable by MBA employers, in the embattled Eurozone for example, MBAs are actually paid the most.

Lucas Mendes, an MBA student at IESE Business School in Spain, thinks a European MBA will help him land a job. “I felt like I needed more international exposure and an international MBA in Europe gives you a lot of that,” he said. “IESE gives you the chance to develop a lot of in-depth knowledge about the industries you are interested in, and to network with the senior management of top-tier companies.”

European graduates from one-year full-time MBA programs are the best paid, with GMAC’s survey citing median starting salaries of a meaty $101,093 - although a contrasting report by QS Top MBA suggests Australian graduates are paid the most.

When you consider that most MBA programs in Europe are just 12-months in length, compared to a two-year preference in the States, this is an attractive time-frame to see a return on your investment.

An MBA who completes a 12-month program at Lancaster University Management School, for example, can expect to pay around $42,000. Even at a modest European estimate, they will have more than doubled what they spent on getting an MBA in salary earnings within a year of employment. And this is despite the UK’s meagre economic advancement (currently less than 1 per cent GDP growth).

In India, for example, a country with an economy booming along at around 4.8 per cent GDP growth, starting salaries are shockingly low. Indian citizens who graduated from full-time two-year MBA programs earn an average starting salary of just $34,988, according to GMAC’s report.

In the Asia-Pacific region – including China, which has an even higher performing economy (about 8 per cent GDP growth) – the majority of companies plan to increase the starting base salaries for recent business school graduates at or above the rate of inflation, in-keeping with increased demand for these candidates.

When considering which b-school to attend, and which region to launch a new career in, these figures are paramount. Economic performance becomes a key element in many MBAs’ choice.

Jose Antonio Talleri, a South American who moved from Peru to begin an MBA at AGSM, one of Australia's best-ranked b-schools, agrees: "I think wages in Australia are higher than in Peru; a job in Australia would enable me to recover my MBA investment quicker. The possibility of finding a job here is what attracted me to a career in Australia," he told BusinessBecause.

For Kabeer Chaudhary, an MBA student at Nanyang Business School in Singapore, a strong economy was even more important. “Strong economic growth means there is an extremely strong entrepreneurial and enterprising spirit (in Singapore),” he said. “Because of the money, people are energetic, are happy to change the way they live and are open to new ideas.”

He is confident an MBA from a region with high economic output will land him a job in Asia after graduation. “If you come from a business school in the US or Europe which is not Ivy League and plan to apply to an Asian company, a home-grown MBA would be preferred over you,” he added. “Because we’ve studied here, we have the exposure to Asian business culture.”

There is a definite link between high-performing economies and MBA students of entering careers in those regions.

Yet salary statistics, a key consideration of any MBA Job, suggest that those from some of the weakest economies in the world will be the best paid.

But that doesn’t seem to be influencing MBA students’ decisions. The job market is still set to perform well and it is encouraging news that, even in troubled economies, MBAs are seeing a decent return on their investment.

Programs from all parts of the world still have their perks.