August 28, 2015

Many UK graduates are working in jobs that do not require a degree, says report

The rising number of university leavers and slow growth in the availability of jobs appropriate to their skills has left approximately 58% of UK graduates in non-graduate jobs, one of the highest rates in Europe, according to Chartered Institute of Personnel and Development (CIPD) research.

The CIPD’s report—Over-Qualification and Skills Mismatch in the Graduate Labour Market—examines the extent to which graduates are overqualified and overskilled for the current labor market, revealing that the UK has the second highest graduation rate in Europe, only surpassed by Iceland.

In the UK, as in Spain and the Netherlands, graduate numbers have outstripped growth in high-skilled jobs, resulting in significant occupational filtering down as graduates enter the types of jobs once undertaken by non-graduates—a situation that is common across Europe.

The employment of graduates in non-graduate roles suggests the underutilization of skills, raising questions about the size of the higher education sector in relation to the UK’s labor market needs.

The CIPD report proposes that government and organisations need to act to help graduates make better use of their skills, and also highlights that for young people choosing an apprenticeship instead of university could be a better option.

Peter J. Sloane has examined studies related to overeducation, skill mismatches, and labor market outcomes for university graduates for IZA World of Labor. He notes that although studies find that many college graduates are employed in jobs that do not require a university degree and in which the skills they obtained in university are not being fully used—identifying a wage penalty and reduced job satisfaction for overeducated workers—they make no allowance for individual differences and preferences. He proposes that “some workers may choose to work in jobs for which they are overeducated because they offer them compensating nonpecuniary advantages or better future job opportunities or because it was the only job that they could get because they have low ability.”

Gustavo A. Yamada has also looked into the boom in university graduates and the risk of underemployment. He recommends caution, as developing countries face pressure to expand the supply of university places. He warns that in a context of “weak job markets, low-quality university programs, and job–education mismatches,” more university graduates “could exacerbate unemployment, underemployment, and overeducation of professionals.” However, he states that extreme forms of quantitative control are inadvisable and instead highlights options ranging from “providing information on employability (by institution and career) to mandating quality assurance and licensing” for higher education institutions.

The CIPD’s report perhaps highlights that in order to draw meaningful conclusions about mismatch, its dynamics, and its relationship to wages, job satisfaction, and job mobility, more research is required.

Read more about this issue at BBC News and the Guardian, which has also published a counter-argument for the role of university degrees. The CIPD report can be found here.

Related articles:
Overeducation, skill mismatches, and labor market outcomes for college graduates by Peter J. Sloane
The boom in university graduates and the risk of underemployment by Gustavo A. Yamada
Does vocational training help young people find a (good) job? by Werner Eichhorst

Find more IZA World of Labor articles on education and human capital here