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Charles Levy
Senior Economist
Charles  Levy

Do we really have too many graduates?

Authors: Charles Levy Charles Levy

06 March 2012

Today’s (6 Mar) release from ONS does rather suggest that we may have too many graduates. They lead with two stylised facts: “Recent graduates more likely to work in lower skill jobs than a decade ago” and “Over the same period the population of recent graduates who are no longer in education has increased by over 41 per cent”. From this it is not too much of a stretch to imagine this afternoon’s headlines and tomorrow’s comment pieces will claim that we should cut student numbers.

But closer scrutiny of the data suggests that this might not actually be the case: 

  • Recession – as the ONS notes in the body of the release, we would expect recent graduates to be struggling in today’s labour market compared to those with more experience. A phenomena known as ‘bumping down’ operates. Experienced graduates may be forced to take opportunities that would normally have gone to those emerging from universities. The only option for recent graduates may be to take lower skilled jobs. The trouble with taking a ten year look is that it spans a boom and a recession. Delivering graduates is a long-term investment in our future. We must be careful about drawing conclusions from looking at the weak demand for skills in many areas of today's economy;

  • Definitions – we have shown previously how modest changes in the definitions of what occupations we think of as ‘graduate’ can transform this analysis. Using a range of definitions we looked at the period up to the recession (2004 – 2008) and concluded that the percentage of employment in graduate occupations actually increased from 60.9% to 65.7%
     
    The trouble is that occupations are a blunt measure that include a diverse range of high and low-level activities. They are also changing as ICT and other disruptive forces transform the ways in which we work. This shift is hard to quantify, but for example being an office administrator in 2012 doesn’t mean the same thing as it did in 2001. While still bundled as an “administrative occupation” many of these positions are likely to involve far more advanced and highly knowledge intensive co-ordination and communication functions than a decade ago.

    It sounds like the ONS classification was generated on a sensible basis. But they haven’t published their classification and the decision matrix behind it so we can’t have confidence in it just yet – they have now promised to send it over, so more to follow on this; 

  • Migration – we know that many highly qualified migrants to the UK don’t end up employed in high-skill work, particularly those from the EU. Forthcoming research from The Work Foundation will argue that while approximately 45% of recent migrants have degree or equivalent, only 15% of migrants are employed in high-skill jobs. We don’t yet have figures for recent immigrants, but it is easy to imagine how an increase in immigration over this period could have skewed the results.

  • Skills utilisation – we know that the UK does not make the most of the skills we have. An excellent paper published by Paul Sissons, The Skills Dilemma explores this issue in detail. Rather than having too many graduates, we may just be getting worse at exploiting their skills in the workforce. 

  • Higher education quality – rather than the stock conclusion that there are ‘too many graduates’ we also need to review what we are teaching students and whether this is fit for the modern workplace. The recent Wilson review provides a range of recommendations to improve the links between HEIs and businesses to improve the type of graduate coming out of our universities and higher education colleges into the labour market.

In short, we shouldn’t look at these numbers and conclude that we have too many graduates. Instead we need to look forwards a decade and think ‘what do we want our economy to look like?’ ‘what could it look like?’ This was exactly what our recent Knowledge Economy research programme did. As soon as you take this forward perspective it becomes clear that rising demand for graduates is a trend that should be embraced, and we must sustain increasing graduate numbers.

 

Comments in Chronological Order (Total 1 Comments)

Charlie Ball

06 Mar 2012 3:08PM

Charles,

Some good points, but just to flag up, the ONS matrix is based on SOC 2000 to 2010 and then SOC 2010 thereafter, which introduces a disconnect. It also uses a different (and to my mind, less sensitive) classification of jobs level to the Elias et al classification commonly used to define 'graduate employment'.

Broadly put, these figures make no case that there are 'too many graduates'. Even if they did, we're in the prolonged recovery from recession and reducing education levels now would likely lead to the whole country experiencing the phenomenon that hit businesses who cut graduate recruitment in the 90s recession - not enough skilled people to capitalise on recovery.

We've put up a view here: hecsu.blogspot.com/2012/03/graduates-in-labour-market.html