The way we’ll work – do we really need more graduates?
Authors: Libby Hackett
28 March 2012
The UK has ‘too many graduates’. Whilst this view is not one shared by our international competitors, this is a sentiment frequently captured in newspaper headlines and widely held by many in the UK. But is it true? And if so, does it matter?
Increasing the proportion of the UK workforce educated to degree level or above would be a waste of public (and, increasingly, private) funds if there really are ‘too many graduates’. Equally, strategies to increase other forms of education or training or encouraging moves straight into the workforce at the expense of higher education could be a disservice to individuals and the economy if the occupations that are growing and thriving would benefit from, and provide meaningful work for, many more graduates than we currently have. The latest University Alliance report, ‘The way we’ll work’, was launched yesterday at a roundtable event at The Work Foundation. It draws on the large body of evidence looking at labour market trends and the drivers behind them. Contrary to popular belief, the evidence points to a shortage rather than an over-supply of graduates in the UK.
Recent decades have seen sustained growth in high-wage, analytical, non-routine jobs. Jobs typically performed by graduates. And this growth is forecast to continue for at least the next decade. However, it isn’t the same success story across the labour market. There have been small increases in elementary and service occupations but the employment share of middle-wage occupations has dropped dramatically over the same period and this trend is set to continue. We are faced with an increasingly hollowed out labour market with growth at the poles: an hourglass shape – albeit a very top heavy hourglass.
The labour market is not the same as it was 30 years ago. Some of the industries that are now thriving and professions that are rapidly growing did not exist. The dominance of production in our economy has shifted to services – and knowledge intensive services in particular. It is predominantly advances in technology that are driving the hourglass effect and transforming work – what we do and how we do it. Routine tasks, highly concentrated in middle-wage occupations, are being automated or outsourced. Employment growth has been linked to the complementary effect of technology on occupations involving analysis, problem solving and complex communication: typically graduate attributes.
Our global competitors are continuing to invest heavily in expanding higher education despite their own budget deficits as they recognise that human capital is the primary indicator of future economic growth. In contrast, the government’s decision to cut around 25,000 university places for next year seems at odds with the future needs of the UK labour market. If the UK is to remain globally competitive we need more graduates in our workforce and must, therefore, continue to seek ways to increase investment, public and private, in universities.
If you see higher education as a luxury good it would make economic sense to limit or reduce the number of student places – an exclusive experience for the lucky, wealthy or very deserving few. However, as President Obama recently stated: "higher education is not a luxury - it's an economic imperative". And it is not just about economic growth. As workers are displaced from routine occupations we can either open up routes into higher education to facilitate upwards mobility or risk seeing increased competition at the low end of the labour market, contributing to increased unemployment, underutilisation of skills and competition for low wage jobs. There needs to be a focus on providing meaningful retraining and development opportunities as well as robust in-work and in-education progression routes, including rethinking corporate strategies and models of work organisation.
The implications of these developments on society and the economy are huge and higher education policy needs to respond if we’re to meet the challenges and capitalise on the opportunities an increasingly hourglass-shaped economy presents. This is why we are launching a new project, University_vision. Drawing together thought leaders from across the university sector, business and think tanks the project will explore, amongst other things, how the UK needs to be preparing itself now to deliver the workforce we'll need in the future to remain globally competitive.
You can find out more at www.unialliance.ac.uk
Director , University Alliance
All blog posts for this author