The future of work is a degree

The latest projections of labour market change from the UK Commission for Employment and Skills (UKCES) sets out expected changes by sector and occupation over the ten years between 2014 and 2024. In many ways, it is a familiar scenario consistent with long established changes in the labour market especially around occupational changes. This is of course less exciting than some of the more imaginative claims about the future of work – for example, that the robots are taking all the jobs – but it is rather more likely to be right.

The projections show that there will be significantly more high skill jobs generated than low skill jobs, with the conventional “middle” of skilled manual and administrative workers shrinking as a share of total employment. This is the familiar story of employment polarisation. However, I am not convinced that this is the most helpful way of thinking about how the labour market is changing.

Employment polarisation has not been accompanied by significant wage polarisation. This suggests that the middle is being re-colonised by different jobs, and many of them are likely to be jobs which conventional analysis categorises as high skill but which attract a middle job wage. They are also more likely to require academic qualifications. Access to the new middle by those further down the skills ladder may therefore becoming more difficult than in the past.

Concerns have been raised about the UK producing too many graduates, leading to over-education. If you think we have too many people in jobs that don’t need degrees today, then these projections will reinforce your worries. By 2024 the number of people with degrees in work is projected to increase by an eye-watering 39 per cent compared with 2014 to 55 per cent of the workforce.

This are 5 million more people with higher education qualifications, while the number of jobs we think of as high skilled is projected to grow by just 2 million. However, we should be wary of treating this as a mechanistic exercise – labour markets do adjust and so far have absorbed large numbers of highly educated people without the problem of over-education getting significantly worse. Even so, this trend needs watching.

However, a bigger worry for me is what is happening in the rest of the workforce. The numbers of those with no qualifications drops dramatically to just 2 per cent, partly because of demographic effects as older cohorts drop out of the workforce. But there is no sign of any growth in the numbers holding an NVQ level 3 qualification – the level we would associate with a good quality apprenticeship and where returns to both individuals and employers begin to make a difference in terms of better wages and profits.

Pessimists would say that with well-educated labour flooding the labour market, many employers have little incentive to invest more in training for the rest of the workforce. No direct connection has been conclusively demonstrated between more graduates and lower training effort, but long run trends do show the volume of training has consistently declined over the past 30 years despite successive government’s resort to subsidy, tax-breaks, new structures, institutions and systems, exhortation, and threats.

We can only hope the current government’s more interventionist approach with the Apprenticeship Levy turns the tide and proves these projections wrong. However, the almost casual dismantling of the UK Commission for Employment and Skills – the institution will come to an end in Autumn 2016 – effectively removes the only public body likely to provide a strategic framework and evidence base from which a world-class vocational training system could emerge to complement the generally high quality of UK higher education. Like it or not, we are putting almost all of our eggs in the higher education basket.