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 own Working Lives Scotland survey data, to explore the extent of graduate overqualification and skills mismatch in the Scottish labour market and the impact this has on job creation and productivity in the workplace.

This research follows the publication of a UK-wide CIPD report on graduate overqualification, and although the statistical findings are similar, there are notable differences in Scottish public policy, which we also explore here.

Key findings

• The increasing number of graduates in the Scottish 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.
• The increase in the share of graduates in low and medium-skilled roles, as well as a recent drop in the so-called ‘graduate premium’ 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.
• Over a third (34%) of graduates feel overqualified for their jobs and are more likely to be underemployed, underpaid or working part-time, than graduates whose jobs match their qualifications.  
• Underqualified graduates experience considerably poorer job quality than graduates who feel their qualifications match their roles, with just 53% reporting being either ‘very satisfied’ or ‘satisfied’ with their current jobs, compared to nearly three-quarters (74%) of well-matched graduates. This has an impact on performance, individual wellbeing and staff retention, which, in turn, is linked to organisational productivity.
• Nearly a third (31%) of graduates who feel overqualified say that they are likely, or very likely, to quit their job voluntarily in the next 12 months, compared with just 9% of well-matched graduates.
• 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 Scottish government has recognised the need for a more balanced offering of both academic and vocational pathways. However, further actions are needed, as follows:

• Provide better careers advice and guidance to help young people understand alternative vocational pathways.
• Create a people-centred, coherent career development model that allows young people to think about their skills within the broader labour market.
• Expand Scotland’s existing modern, foundation and graduate apprenticeships to encourage vocational pathways and work-based learning.
• Re-evaluate the balance between academic and vocational education – both in terms of government budgets and the status attached to different pathways. A recent focus on lifelong learning and skills development is encouraging.
• Continue to support the improvement of people management and leadership skills in the workplace with programmes such as Skills for Growth, with a focus on small businesses. This will help to increase job quality and unlock the demand for skills.

The role employers play in this is of equal importance. Employers should:

• 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.

Download the report