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New CIPD report on UK’s graduate over-qualification problem a wake-up call for employers, government and for young people

  • 19 Aug 2015

On the eve of GCSE results, CIPD calls for education funding review and national debate about how to create more high-skilled jobs as graduate over-qualification reaches saturation point

The UK has too many over-qualified graduates entering non-graduate jobs, not realising investment in higher education and creating an unnecessary debt burden for too many young people entering the labour market. This is according to a new report commissioned by the CIPD, the professional body for HR and people development.
The report finds that the increasing number of graduates in the labour market has significantly outstripped the creation of high-skilled jobs, and is leading to negative consequences. These include employers using degrees as a requirement when recruiting for traditionally non-graduate roles, despite no resultant change to the skills requirement for these jobs. This has led to a situation where many graduates are simply replacing non-graduates in less demanding jobs, or entering jobs where the demand for graduate skills is non-existent or falling. This trend has particularly affected occupations where apprenticeships have been historically important, such as construction and manufacturing. 
The report, Over-qualification and skills mismatch in the graduate labour market, also makes important international comparisons, suggesting that graduate over-qualification is a particular problem for the UK:
  • The UK has the second highest graduation rate in the OECD (54%) with only Iceland having a greater proportion. Germany, for example, has a graduation rate of just 31%
  • The growth of graduates significantly outstripping the growth of high-skilled jobs generated by the labour market is prevalent among most OECD countries, but is particularly pronounced in the UK
  • The UK has 58.8% of graduates in non-graduate jobs, a percentage exceeded only by Greece and Estonia. In contrast, countries such as Germany, the Netherlands and Slovenia, which have a history of strong vocational training, have 10% or less of graduates in non-graduate jobs
  • The UK also has one of the highest levels of self-reported over-qualification among graduates in Europe.
Peter Cheese, Chief Executive of the CIPD, comments: “The assumption that we will transition to a more productive, higher value, higher skilled economy just by increasing the conveyor belt of graduates is proven to be flawed. Simply increasing the qualification level of individuals going into a job does not typically result in the skill 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 university graduates will not earn enough to repay their student loans. It’s crucial we as a nation take stock now of whether our higher education system is delivering desired returns for graduates, for organisations, and society.
“Just as importantly, we need to start a national debate about how to generate more high-skilled jobs which means organisations investing more in developing their leadership and management capability, building more progression routes and improving work organisation and job design so that people’s ideas and skills are used more effectively in the workplace. The government needs to ensure its productivity plan includes a specific focus on creating more high-skilled jobs and work with employers, particularly SMEs, and with key stakeholders like Local Enterprise Partnerships and Business Growth Hubs to help build organisations’ capability to achieve this.
“In addition, efforts need to be redoubled to ensure young people who are making choices after receiving their GCSE and A level results can access good quality careers information, advice and guidance so they can make better informed decisions. Our report highlights why young people should think carefully about opting for university when, for example, going into an apprenticeship at 16 or 18 could be a much better choice.”
To help with this the CIPD is publishing a new guide for parents today to help them and their children with their education and training decisions, highlighting the different non-university routes open to them.
The CIPD is calling on Government to:
  • conduct a large scale review of initial, higher and further education to assess how the UK can ensure this crucial public investment achieves best value for learners of all ages, employers and the economy
  • ensure that its productivity plan includes a specific focus on creating more high-skilled jobs and improving skills utilisation in the workplace through an emphasis on enhancing organisations’ leadership and management capability, improving progression routes, job design and increasing investment in workforce development
  • continue its efforts to increase the quantity and quality of apprenticeships, particularly those at advanced and higher level, and improve careers information advice and guidance available to people of all ages
  Employers to:
  • review their recruitment practices to ensure that they are not using a degree as a screening process when recruiting for jobs that don’t require a university education
  • work with schools and colleges to build more routes into work for young people including school leaver programmes, traineeships and apprenticeships
  • invest in their leadership and management capacity and workforce development to create more opportunities for all employees to build and fully utilise their skills to boost productivity.
Parents to:
  • consider with their children alternative options to university in more depth, making sure they are making the right decision for their future based on as much information as possible.

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