The graduate job market: why university is still worth it
Last updated on Wednesday 9 Nov 2022 at 2:15pm
The regular (and quite tired) attacks on the demand for graduates and the value of degrees for some seem to take on a passionate conviction. Almost every fact that contradicts their negative view is either ignored or treated as untrue.
A recent report from the Chartered Institute of Personnel and Development (CIPD) claims that too many graduates are overqualified for their jobs. It concludes that getting a degree no longer adds to a graduate’s employment prospects.
Our briefing on universities, skills and growth outlines key facts and statistics, including on graduate jobs. There’s a vital need to highlight these to better inform the graduate employment debate.
We need graduates to fill professional jobs
Are there too many graduates for the number of skilled jobs available? Let’s consider the facts.
Our recent report, Busting graduate job myths, highlighted that there were almost 1 million more graduate jobs than there were people with a degree or equivalent qualification in the workforce in 2020.
A recent report from the National Foundation for Employment Research (NFER) analysed the future labour market. It found that almost all of the new jobs created by 2035 will be in ‘professional’ and ‘associate professional’ roles (2.2 million, or 85%, of a total of 2.6 million jobs).
It also found that 100% of the top 20 roles in terms of fastest growth of opportunity are professional level jobs. Not only that, but we’ll need a staggering 6.6 million more graduates to fill these roles up to 2035.
Evidence from the Institute of Student Employers (ISE) also shows that the graduate labour market is still strong. It found that graduate vacancies in 2022 would increase by 22%, the biggest year on year increase in 20 years.
While the worsening economic situation is having an impact, 40% of employers are still finding it difficult to fill graduate jobs, and average applications per vacancy have dropped by a third.
So, are there too many graduates? In reality, we’ll risk serious economic harm if we don’t have enough graduates.
Graduates still earn more
The CIPD uses a recent report from the Higher Education Statistics Agency (HESA) to question whether a recent drop in the graduate premium – the amount more that graduates earn compared to non-graduates – means that getting a degree no longer leads to a higher paying job.
Again, let’s consider the facts. The government’s Graduate labour market statistics show that between 2020 and 2021, the median salary for graduates increased by £1,500 to £36,000. And in 2021, the median salary for graduates remained at £10,000 more than that of non-graduates – which is still a big premium.
In 2021, the median salary for graduates remained at £10,000 more than that of non-graduates.
Clearly, the current one year pause in the graduate premium cannot support claims of the death of the graduate premium because of there being too many graduates. The data shows that for those aged 21–30, there was a period between 2008 and 2015 where salaries for both graduates and non-graduates did not go up. But since 2016, salaries have been increasing year on year.
The ISE also found that graduate salaries in 2021 rose by 7%, with some employers increasing starting salaries by 20% – the sharpest rise in 20 years.
The CIPD quite rightly highlights the important issue of graduates working in jobs that don’t suit their skills, and the impact of this.
Evidence from the Organisation for Economic Cooperation and Development (OECD) shows that 27.7% of the UK workforce are underqualified for their current role, compared to 14% who are overqualified. This means we’re experiencing a massive brake on productivity.
Universities should support students to get the high skilled roles that maximise their talent, particularly those from less advantaged social backgrounds. For example, many already give graduates effective career support both before and after they enter the jobs market.
And it’s critical that employers look at recruitment practices, job descriptions, support while working and promotion prospects.
University is still worth it
The answer isn’t to put up a wall between future generations and the genuine opportunities university education provides, between employers and the graduate talent they need, and between facts and tired claims.
Some graduates are in jobs that don’t use their skills. But the answer isn’t to put up a wall between future generations and the genuine opportunities university education provides, between employers and the graduate talent they need, and between facts and tired claims.
Our efforts to help these graduates should be spent targeting the reasons for this and seeking solutions – not attacking all graduates and the value of degrees.