Going to University in UK – So what skills ‘premium’, if any, do individuals gain from it ?

With nearly three-in-five graduates in the UK working in non-graduate jobs, the UK has one of the highest levels of self-reported over-qualification amongst its graduates in Europe. So what skills ‘premium’, if any, do individuals gain from going to university? And with the UK not producing enough of the highly skilled jobs for our graduates – and government figures suggesting 45% of student loans won’t be paid back – is the UK economy actually making a loss by having so many graduates in the labour market?

The CIPD commissioned research to explore various pathways into employment. The report looks at the extent of filtering down for a wide array of occupations and explores the debate surrounding five particular occupations – nurses, accountants, police officers, nursery nurses and teaching assistants. It documents the entry routes into these occupations that university education has replaced and show that entry routes in other European countries are sometimes very different; showing that alternative routes are possible.

Our CIPD report (Over-qualification and Skills Mismatch in the Graduate Labour Market, 2015) published capture-decran-2016-11-13-a-09-44-58last year attracted great interest and controversy. It documented the vast expansion of the UK’s higher education sector and asked what was happening to its graduates in the labour market. It is clear that graduates are occupying more and more jobs that were once occupied by their non-graduate parents. This raises the question as to what the graduates themselves, and what society at large, gains from their university attendance. The answer critically depends on whether their skills are being used by their employers. Our way of investigating this was to try to assess whether the jobs that had become graduatised had been made more demanding or had been upgraded. We explored this by examining how various dimensions of influence or discretion exercised in the job had altered and how the picture differed between graduates and non-graduates doing the same job. The story that emerged was a mixed one but suggested widespread under-utilisation of graduate skills and capabilities.

This report expands the discussion. It first responds to some of the criticisms made of the original report. Perhaps the most common of these is that graduate skills must be being used because
the graduate wage premium has remained pretty constant. This argument seems to ignore a simple statistical point. Imagine that the wage hierarchy of jobs has remained unchanged over time. Then, as the graduate population expands, graduates filter down this hierarchy, thus driving down the average graduate wage. But non- graduates are also driven down the hierarchy, thus reducing their average wage. The consequence could well be an unchanged graduate premium but the skills of many graduates would still be under-utilised.

capture-decran-2016-11-13-a-09-46-11The report goes on to document the extent of occupational filtering down since the 1970s. We then concentrate our attention on 29 occupations. These are occupations that have seen a pronounced increase in graduates working in them and they account for nearly 30% of all employment in the UK and for 30% of jobs held by graduates.

Our tentative conclusion is that the growth of graduates in these occupations in the UK has not systematically replaced other post-school formal routes. Rather, it has largely substituted for people leaving school without subsequently acquiring formal vocational education. We compare the routes taken into similar occupations in continental Europe, showing that some countries deploy the non-HE (higher education) route more intensively than we do. Before looking at costs, we discuss the debate surrounding five particular occupations – nurses, accountants, police officers, nursery nurses
and teaching assistants. In the case of nurses we document the controversy as to whether the switch to degree entry has in fact increased demonstrated competencies and capabilities.

Like nursing, accountancy is a profession which moved from non-graduate to graduate entry, but there are now signs of a ‘push- back’ against this. By contrast, there are proposals to make entry into the police graduate- only but, as with nursing, there is controversy about what exactly would be gained. The final two occupations were traditionally very much non-graduate ones but both have increasingly been populated by graduates. Concern has been expressed about how these graduates could progress to better jobs within the sector but it is unclear that their degrees will help them in this endeavour.

In assessing the relative costs of different pathways into occupations, we have used the work of KPMG on university costs and the work of the Institute for Employment Research and IFF on apprenticeship costs. It is apparent that the latter vary considerably by level and by sector. We have categorised school-leavers into several types and deployed the most appropriate apprenticeship cost as a comparator with the university route. In all cases not only is the cost of the non-university route significantly smaller, the individual bears a lower proportion of that cost. Thus, at least on this narrow economic calculus, for the higher cost to be justified, it would need to be shown that universities give people more human capital than the alternative route and that this human capital is used by employers. In the majority of the occupations this study has considered, this cannot be demonstrated.



Chosen excerpts by Job Market Monitor. Read the whole story at Alternative Pathways into Labour Market | Reports | CIPD


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