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The Work Foundation

Are graduate prospects really getting worse?

Authors: The Work Foundation Laurence Hopkins

12 May 2011

According to research published today by the Association of Accounting Technicians (AAT), university leavers are increasingly taking non-graduate jobs. Should we be worried?

Graduate unemployment and underemployment always makes a good headline and has done for at least the last 12 years, if not longer. However, if you are able to read more than 140 characters, within which we appear to increasingly constrain our media consumption, the reality of graduate employment is more complex.

Firstly, what indicators are being used? It is suggested by the AAT that 40 % of graduates are unemployed and that 55 % of the next wave of university students will be working in non-graduate jobs. However, the research published today is based on measuring employment outcomes six-months following graduation, a fairly limited indicator of the likely lifetime employment prospects of a graduate.

Secondly, what do we mean by ‘graduate occupations’ and ‘low-skill’ occupations? According to HESA data on graduate destinations six-months after graduation, 73 % of graduates in employment were in so-called knowledge occupations (managerial, professional and technical occupations) while only 4.5 % were in low-skill occupations (process, plant and machine operatives and elementary occupations) – nowhere near the figures of 32 % and 42 % given by the research. The skills demands of jobs have also evolved so higher education is now, due to technological change, a pre-requisite for many jobs which previously required vocational skills – for example, research laboratory technicians in chemistry and biological science departments.

This is not to say that there are not under-employed graduates, but the longer term trend in recent years has been a decrease, not an increase in under-employment. Looking at specific jobs, rather than broad occupational categories, data from HESCU shows that the proportion of graduates in graduate occupations increased from 60.9 % in 2004 to 65.7 % in 2008 before falling to 63.9 % in 2009.

Source: HESCU, What Do Graduates Do? 2009.

While it is true that graduate unemployment has increased during the recession, individuals with a degree are still significantly less likely to unemployed than those without a degree even for the 21-24 age group (13.4 % compared to 16.0 %). An excellent analysis by Jean Acheson for the ONS published last month concludes that low-skill jobs suffered more in the down-turn than high-skill jobs and the overall trend has been towards growth in hours for those with undergraduate and postgraduate qualifications. Overall, graduates in the UK also have a healthy earnings premium over non-graduates, although there is considerable variation according to degree discipline, suggesting that there is not overall an oversupply of graduates in the labour market. Indeed, the main shortage of skills in the labour market is for occupations requiring a degree level education or above, which is why the current immigration system limits migration for those outside the EU to those with graduate skills.

Does this mean that we should be content with the status quo of higher education provision to meet the future skill demands of the economy or that graduates face an easy road to employment? Not at all. Indeed, Charles Levy and I considered what skills would be required for the 2020 knowledge economy last year and concluded that while a focus on science, technology, engineering and maths (STEM) disciplines was imperative, our graduates need to be diverse enough to support the creative industries, which help drive innovation in the UK, as well as knowledge-intensive business services, which are central to the UK economy.

Laurence Hopkins, co-author of Shaping Up For Innovation: Are we delivering the right skills for the 2020 knowledge economy


Comments in Chronological Order (Total 2 Comments)


05 Aug 2011 1:59PM

Having recently got a job after a long while searching, I was inundated at Uni from the doom and gloom merchants saying how bad things were for grads, and of course I believed everyone, so my subsequent job search didn't really have the motivation it deserved as I didn't think anything was out there. Now being on the other side of the fence (in graduate recruitment) I realise that although not wonderful, the job market for grads certainly isn't as bad as everyone made out and if you're prepare to put the graft in, there are plenty of worthwhile careers out there for the determined.


23 Apr 2012 7:37PM

I went from a first class degree into unskilled work. My three years were pretty much wasted. I've just done the first year of AAT - something I would snobbishly turned my nose up a few years ago - now I've got a substantially better job than my degree got me.