CIPD report highlights the scale and implications of the UK’s graduate over-qualification problem

by Ben Willmott, Head of Public Policy

The CIPD’s report on graduate over-qualification which was published this summer has sparked an overdue debate on the value of higher education (HE) and its relationship with further and vocational education in the UK. Perhaps not surprisingly, our report, Over-qualification and skills mismatch in the graduate labour market highlighting the scale of the country’s graduate over-qualification problem, generated some particularly strong opinions from representatives of the HE sector.

Bill Rammell, former Minister for Higher Education under Tony Blair, and now Vice Chancellor of Bedfordshire University, dismissed the findings of the report on Radio 4’s Today Programme. He suggested tha,t because some of the data in our report was from 2010, our findings were not worthy of any consideration. He also said that because most commentators, including the UK Commission for Employment and Skills (UKCES), predict that much future job creation in the UK will be in high-skilled occupations, we don’t have a problem.

This was followed by Universities Minister Jo Johnson suggesting that statistics from our research, showing that about 58% of UK graduates were in non-graduate jobs, exaggerated the problem in a speech at the Universities UK Annual Conference in September. The Minister went on to say ‘official statistics show that in fact only 20% of recent graduates did not find a graduate level job within 3 years of leaving college.’

Reinforcing our findings
Let’s take these criticisms one by one. Firstly, the accusation that one of the headline findings from our report, that 58% of UK graduates are in non-graduate jobs, was from 2010 data and therefore not relevant. This data is the most up-to-date available from the European Social Survey, which gives us a Europe-wide perspective. Trends like these tend to change slowly and the authors of our report, Professor Ken Mayhew and Dr Craig Holmes, believe that, if anything, graduate over-qualification is likely to have increased since 2010 because, in a tough labour market, graduates are likely to have to have out-competed non-graduates across the jobs spectrum. But if something more up-to-date is required, there is the finding from the OECD's 2012 Survey of Adult Skills that '… 30% of workers in England and Northern Ireland reported that they have higher qualifications than was deemed necessary to obtain their job – the highest rate of over-qualification after Japan.’ Or, indeed, the results of our own Employee Outlook survey, conducted in autumn 2014, which found that 42% of first degree graduates and 44% of higher degree graduates thought they were over-qualified for their current job.

Secondly, there is no dispute over the projected increase in high-skilled jobs in the UK or the fact that we will, of course, continue to need hundreds of thousands of graduates to fill these roles in the coming years. What our report highlights is that the supply of graduates in the UK has consistently outstripped the creation of high-skilled jobs since at least 1996, and while this trend is prevalent across the OECD, it is particularly pronounced in this country and has some negative consequences which need to be considered.

Evidence from the IPPR suggests this trend is unlikely to change and could get more pronounced. Its 2014 report Winning the Global Race finds that between 2012 and 2022 only about a third of jobs created will be in high-skilled occupations with two thirds in medium and low-skilled occupations. Given that the current HE participation rate is 43% and probably set to rise given the removal of the cap on student numbers, the incidence of graduate skills mismatch in the labour market is set to rise. The IPPR analysis finds that, currently, about a fifth of all low-skilled workers have a higher education qualification and that the increasing prevalence of graduates in non-graduate roles was having a bumping down effect, disadvantaging non-graduates in the labour market.

Finally, let’s turn to the figure cited by the Universities Minister Jo Johnson that just 20% of recent (2011 graduates) had not found a graduate-level job within three years of leaving college. Analysis of the same official statistics by the independent education charity the Edge Foundation shows that, after accounting for non-working graduates, around half of all 2011 graduates failed to get a graduate-level job within three and a half years of completing their degree. And this is an average figure: for people with arts, humanities and social science degrees, the situation is significantly worse.

The uncomfortable truth is that vast numbers of graduates struggle to get onto the professional career ladder when they leave university. David Habourne, chief executive of the Edge Foundation commented: ‘So many of the professional occupations listed by the Higher Education Statistics Agency (HESA) can be accessed by people without degrees, who have vocational qualifications or who have worked their way up via an apprenticeship.’ So let’s be clear, the official HESA data on the destination of graduates has little or no relevance to the debate about graduate over-qualification. Instead, this BBC Newsbeat Twitter feed on the issue is a better barometer of the state of play.

We need a review of education funding
What was not disputed from our report was the finding that if you compare graduates to non-graduates doing the same job, in the majority of instances there is no resultant change to the skills requirement for that role. Simply increasing the qualification level of individuals going into a job does not typically result in the skills required to do the job being enhanced – in many cases that skills premium, if it exists at all, is simply wasted. This situation is unsustainable given that the Government estimates that 45% of student loans will not be repaid. In response to the findings in our report, CIPD is calling for a review of education funding to ensure the system is delivering desired returns to graduates, other learners of all ages, employers and the economy.

At a time when the UK’s further education and vocational training budget desperately needs more resources, we all have a vested interest to ensure our investment in education and training is delivering the right skills for individuals from of all backgrounds and at different stages of their working lives. Professor Alison Wolf, in her recent report Heading for the precipice, comments: ‘We are producing vanishingly small numbers of higher-technician level qualifications, while massively increasing the output of generalist bachelor degrees and low level vocational qualifications. We are doing so because of the financial incentives and administrative structures that governments themselves have created not because of labour market demand, and the imbalance looks set to worsen further. We therefore need, as a matter of urgency, to start thinking about post-19 funding and provision in a far more integrated way.’

Sir Keith Burnett, Vice Chancellor of the University of Sheffield, has also highlighted the need for the UK to re-think the current status quo, where university is too often simply the default option, and invest more in other more inclusive education and training opportunities. Writing in the Daily Telegraph, he says: ‘What future do I want to see? One with diversity and quality, where students choose courses of study because they are right for their futures, whether traditional or apprenticeships, by dreaming spires or in local FE colleges. I want to see a system of funding not built on privatised debt. I want students to be able to earn and learn, or to choose positively to apply for a job with training in a thriving economy.’

The University of Sheffield is already taking steps in this direction and now has 600 advanced apprentices on its books. Sir Keith comments: ‘These students don't sign loan agreements, they go to job interviews with companies who are committed to funding their education and who know they will benefit from such superb skills. They are gaining qualifications and experience without debt. It is what I call access.’

A more cohesive framework for vocational and academic training
The Government has stated its commitment to boost the number and quality of apprenticeships; however, we need a bigger debate about how to strike a better balance between academic and vocational qualifications and routes into employment and how to ensure the right support and incentives are in place to achieve this.

Just as importantly, though, we need a strategy focused on generating more high-skilled jobs. This means employers must also step up their efforts. Better engagement with academic and vocational education providers – right the way up from school to university – would help the education system to inculcate and develop the knowledge, skills and attitudes that employers say are lacking in those leaving full-time education. We also need more organisations where employees are able to develop and grow along with their jobs, rather than the job description being a straitjacket. This means more investment in developing leadership and management capability building more progression routes, improving work organisation and job design so that people’s ideas and skills are used more effectively in the workplace and – perhaps most important of all – building a culture and ethos based on trust, respect and the willingness to innovate and take and accept a level of risk.

Ben Willmott (132x106)

Ben Willmott

Head of Public Policy

Ben leads the CIPD’s Public Policy team, which works to inform and shape debate, government policy and legislation in order to enable higher performance at work and better pathways into work for those seeking employment. His particular research and policy areas of interest include employment relations, employee engagement and wellbeing, absence and stress management, and leadership and management capability.


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