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Supply and demand for higher level skills

9 December 2015

In a report launched in parliament today by Universities UK​, we pose the questions, do we have too many graduates, are they studying ‘useful’ subjects and are they leaving higher education with the employability skills required by the labour market?

To examine the first question of whether we have too many graduates, we have to take a step back and ask what we mean by a graduate job.

Different definitions tell us very different things about the graduate labour market: the Chartered Institute for Personnel and Development (CIPD) recently indicated that nearly 60% of graduates are in non-graduate jobs, a figure based on self-reporting, while UCL’s Institute of Education estimate that this figure was only about 30%, an estimate based on an analysis of specific occupational skills.

Testing a number of different frameworks, the report today concludes that by 2022 the UK economy will require more graduates than will actually exist in the labour market. There is an indication that there will also be an undersupply of workers with higher but not necessarily degree-level qualifications.

Of course, qualifications aren’t everything: subject matters, too. So have too many graduates studied the ‘wrong subject’? Unsurprisingly, the answer isn’t very simple: while 27% of current higher education students are on courses related to science, technology, engineering and mathematics (STEM), a number of recent graduates from such courses have gone on to work in non-STEM industries, without specific skills shortages. The reasons for this blockage in the ‘talent pipeline’ are simultaneously varied and unclear, and need to be further unpicked.

The report also looks at the supply and demand for core (e.g. literacy, numeracy) and employability skills (e.g. communication, analytical and entrepreneurial skills). On the supply side, graduates of all subjects report having picked up a range of core and employability skills during their degree. However, the provision of these is unevenly spread: some subjects excel in providing entrepreneurial skills, but not necessarily logical thinking, and others prove beneficial for problem-solving but not necessarily presentation skills.

On the demand side, surveys indicate that although employers are largely pleased with recent graduates’ core skills, their assessment of graduates’ employability skills are mixed. This is a problem: research indicates that employers demand a wide range of employability skills and that graduates devoid of these often find themselves working in non-graduate jobs.

How are universities ensuring that students get a valuable education while equipping them with the skills that employers, and the economy need? Here at Hertfordshire, we have a strong record on graduate employment with 95.2% of graduates in employment after 6 months. Most undergraduates also get the chance to go on work placements and study abroad.

The university provides careers advice and support to alumni up to two years after they have graduated. There is dedicated support to build relationships with small firms and identify and develop employment opportunities for students. It also offers extensive support for student enterprise and start-up activity including events, competitions, workshops, mentoring and advice and facilities.

So, where next? First, as a sector, we need to better understand why some graduates become ‘mismatched’: to what extent can this be explained by a lack of employability skills? Second, universities and employers need to talk about these skills. What, exactly, do we mean when we talk about ‘employability’ skills and where best can they be practically developed and applied? We also need to better understand skill shortages and how they can be addressed: to what extent do they require a system of integrated pathways between further and higher education and how can we ensure that young people have the opportunity to develop pertinent technical knowledge, with a theoretical underpinning, that allows them to continuously upskill as required?

Beyond this, we also need to look at the ‘talent pipeline’. Why are graduates, with specific subject knowledge that is in demand, going on to work in other areas? And finally, we cannot ignore what goes on in business. There needs to be a heightened focus on skills utilisation: how can employers take advantage of graduate talent? Few countries have complained that they have too much talent; the question is how best to use it.

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