In this report, we analyse the UK Office for National Statistics (ONS) Labour Force Survey data from 1992 and 2022 as well as the CIPD’s Good Work Index survey data to explore the extent of graduate overqualification and skills mismatch in the UK labour market and the impact this has on job creation and productivity in the workplace.

Key findings

• The increasing number of graduates in the labour market over the past 30 years has outstripped the creation of high-skilled jobs. This has led to a huge increase in graduates working in jobs where graduate-level qualifications are not needed.
• There has been a recent drop in the so-called ‘graduate premium’, which suggests that a saturation point has been reached for graduates in the labour market, with the economy no longer returning the additional value that has been long associated with a degree.
• Graduates who feel overqualified in their jobs experience considerably poorer job quality than graduates who feel their qualifications match their roles, with just 54% of overqualified graduates reporting being either very satisfied or satisfied with their current jobs, compared to three quarters of well-matched graduates. This impacts performance and individual wellbeing, which, in turn, is linked to organisational productivity.
• For many graduates, taking employment in non-graduate roles is not a temporary or short-term phase. Research also shows that a poor initial match when entering the labour market can have a long-term impact on an individual’s career and income. 

CIPD recommendations

The UK Government has recognised the need for a more balanced offer of both academic and vocational pathways. However, further actions are needed, including:

• providing better careers advice and guidance to inform learner choice and action
• reconsidering employers’ incentives to invest in their people and diverse career pathways
• increasing access to apprenticeships for young people
• renewing the focus on industrial strategy and inclusive growth to support the creation of high-quality job opportunities.

The role employers play in this is of equal importance. Employers should adapt recruitment behaviour to:

• focus on improving their recruitment process and people management practices to reduce the level of overqualification and mitigate the negative effects when it does occur
• revaluate entry requirements to roles when recruiting, rather than using qualifications as an easy way to screen applicants
• focus on job design, skills development and career advancement for existing employees.