Bad news for graduates but worse for those without degrees
Authors: Andrew Sissons
01 November 2010
A career guide for graduates entitled What do graduates do? hit this morning’s headlines for its findings on what graduates don’t do. The guide, published by HECSU, reports that graduate unemployment had risen to 8.9% by January 2010, the highest level since the recession of the 1990s, and a 1 percentage point increase on the year before.
This finding will only add to the debate that is raging about the future of our universities. With the government apparently set to raise the cap on tuition fees to an eye-watering £9,000 per year, many of the old questions about the value of higher education will come to the fore once again. Do we have too many graduates for the jobs that need doing? Is it really worth doing a degree in the modern economy?
Before jumping to conclusions on these questions, it’s worth taking a moment to set today’s figures in context. First of all, the numbers are taken from January 2010, almost a year ago, at a time when the UK economy had only just officially emerged from recession. At the same, the overall rate of unemployment in the economy rose faster (by 1.2 percentage points). Since January 2010, unemployment has fallen slightly overall, which might explain why HECSU’s Charlie Ball thinks that these figures mark a peak in graduate unemployment.
Second, it’s worth comparing the rate of graduate unemployment quoted by HECSU (8.9%) with unemployment among all 18 to 24 year-olds (a group into which many graduates fall), which was 17.8% in January. This comparison should be treated with some caution (the two figures are based on different definitions of unemployment), but it does reinforce our argument that young people are much better off with a degree than without one in the modern knowledge economy.
Third, the rate of unemployment among graduates is far lower now than it was in the last recession, despite the higher numbers of graduates coming through the system. In 1992, 11.2% of graduates were unemployed, despite that recession being less severe in terms of contractions in output.
The unavoidable conclusion must be that, although graduates are having a tough time in a difficult jobs market, they are still much better off than their peers without degrees. This is because, as in previous recessions, most of the job losses over the last two years have affected lower skilled workers, while most of the new jobs have been knowledge-based. Changes to the way university education is funded may cause many to question the value of a university education, but there can be little doubt of the value of a degree for employment prospects.
Yet behind the headline figure about graduate unemployment is a more interesting finding about differences in unemployment between different degree subjects. In terms of employment prospects, some of the worst performing degrees are (surprisingly) from engineering and technology related subjects. These include IT and Computing (16.3% unemployed), Electrical and Electronic Engineering (13.3%), Civil Engineering (11.9%) and Mechanical Engineering (11.8%).
It is a commonly held assumption that we should be promoting so-called STEM (Science, Technology, Engineering and Maths) subjects at universities, as they provide the skills that employers need most. In cutting £3 billion from universities’ teaching budgets, the government has retained funding for most STEM subjects, while removing funding for many arts and social science degrees. While we still believe that STEM subjects should be a priority for the knowledge economy, these high rates of unemployment among STEM graduates suggest that there is a problem that runs deeper than numbers alone. It is not simply a question of producing more STEM graduates; we need to get them into the right jobs as well.
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