UK graduate employment gap: Is university worth it?
The growth of the higher education sector in recent decades means that the UK population is proportionally the fifth most educated in the world. However, productivity and high-skilled job availability are not keeping pace and tuition fees are rising.
According to OECD figures the UK is ranked at just sixteenth place globally for GDP per hour worked, at $52.50 per hour compared to $66.60 in Germany and $66.30 in France.
Overall recent graduate unemployment remains low at 5%, but the figures vary between degree subjects. Almost 10% of computer science graduates are not in work six months after completing their courses, despite government calls to increase numbers of STEM graduates. This may be due to STEM courses lacking the “soft” skills training and work experience which are valued by employers.
Over-qualification is another key concern, with many graduates employed in low skilled jobs and roles that did not require a degree in the past. For example, 41% of new recruits in property, housing and estate management are graduates, compared with 3.6% in 1979. The proportion of recent graduates employed in graduate level roles is around 52%, when discounting technical occupations such as fitness instructing and IT support, and a third are in jobs paying less than £20,000 a year.
With rising university fees and the average UK student now graduating with £50,000 of debt, or around £57,000 for the most disadvantaged students, the value of university education has come into question. Douglas Webber writes in his article for IZA World of Labor that higher education returns “can vary substantially across institutional and individual factors, making some degrees a better financial decision than others.”
Webber suggests that “understanding how the returns to various disciplines differ is key to efficient pricing of tuition and has implications for relatively new policy instruments, such as differential tuition" whereby students are charged "different tuition rates according to field of study.” Student loan policies involving “interest rates, repayment plans, and debt forgiveness” could also be used to “incentivize students to pursue disciplines that have a relatively low financial return but a high social return.”
Read more articles about higher education and human capital.
Contact one of our topic spokespeople.