A new report being launched today shows the UK needs more graduates. Contrary to popular belief, labour market indicators suggest that there is a shortage of graduates in the UK, not too many. Technology is changing the way we work and the structure of labour market, resulting in an increased demand for graduate attributes. In light of these projections, the Coalition Government’s decision to cut around 25,000 university places for next year could seriously hold back our capacity for economic growth.
The report, The way we’ll work, draws on the large body of evidence on the shape of the labour markets in developed economies. It demonstrates that if the UK is to remain globally competitive we need a greater proportion of graduates in our workforce. It also highlights the need to improve social mobility by creating genuine progression opportunities.
In response to the report, University Alliance is launching university_vision, a sector-led project being sponsored by Hewlett-Packard and bringing together a diverse mix of thought leaders to identify the big challenges facing the higher education sector.
Commenting on the findings in the report, Libby Hackett, director of University Alliance, said:
“The messages coming out of this report have major implications for government policy. Too often we hear it said that ‘there are too many graduates’ in the UK. It is important to look at the evidence behind this claim as our response to it will have serious consequences for the future wellbeing of our economy and society.
“Advances in technology are transforming work – what we do and how we do it. Sustained growth in graduate level jobs has been linked to the complementary effect of technology on occupations involving analytical, problem solving and complex communication activities: typically graduate attributes.
“Our report shows that the UK economy is not presenting any of the four labour market signals we considered in this report that might suggest there are too many graduates in the economy. Graduate vacancies continue to grow. Jobs in ‘graduate dense’ occupations are an increasing proportion of the total workforce. Graduate employment rates have been maintained despite the rapid expansion in the number of graduates. Added to all of this there is still a significant graduate premium.
“Youth unemployment is at record levels while demand for going to university is high. Social mobility is at a standstill, yet we know that in our changing economy it is a university degree that creates more opportunities for people than anything else. Applying logic would see the total number of university places increased. However, they have been quietly cut by around 25,000 places compared with last year. Budgets may be limited but we should be stating the case for increasing the capacity for higher education places in future years if we are to grow our economy and ensure a bright future for more young people.
“This is why we are launching a new project, university_vision. Drawing together thought leaders from across the sector, business and think tanks, the project will explore, amongst other things, how the UK needs to be preparing itself now to deliver the workforce we’ll need in the future to remain globally competitive. The sector has had many government-led reviews ‘done’ to it. This initiative is being led from within the sector and will focus on solutions and outcomes, identifying how the sector can drive its own policy agenda; serve society and the economy; and seek out new and innovative ways to anticipate, approach and tackle the challenges of the future.
“Our global competitors are continuing to invest heavily in expanding higher education despite their own budget deficits. In contrast, England has had to reduce the number of places available at university to control expenditure. To equip the population to find continuing opportunities in the labour market and to meet the growing need for graduate attributes, we must continue to seek ways to increase investment, public and private, in universities.”
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Notes to editors
Media contact, Sam Jones, on 0203 178 7491 or 07767673982 or sjones@university-alliance.ac.uk
1. How have we calculated a cut of 25,000 student places?
The January 2012 Grant Letter to HEFCE confirmed that 10,000 modernisation fund student numbers will not be consolidated and an additional 5,000 student numbers have been removed to reduce the risk of over spend resulting in 15,000 fewer HE places. Of the 20,000 Core and Margin numbers top sliced from the sector (the vast majority of which have come out of HE numbers in universities) around 10,000 have been allocated to universities and 10,000 to FE Colleges. The result is a further reduction of around 10,000 university places and a total of around 25,000 fewer places in English universities in 2012-13 compared with the previous year.
2. What are the key findings in the report?
The way we’ll workdraws on the large body of evidence on the shape of labour markets in developed economies and identifies the following:
- Since the early 1990s sustained growth in high-wage, analytical, non-routine jobs; an expansion of manual, lower wage jobs; and a contraction of routine, middle wage jobs has led to a ‘hollowing out’ of the labour market in developed economies – essentially creating an ‘hourglass’ shaped labour market.
- The strongest observed employment growth has been in the three occupation groups with the highest density of graduates, together accounting for three quarters of growth between 2000 and 2010.
- The observed reduction in the employment share of middle wage jobs is linked to the substitution of technology for routine tasks, highly concentrated in occupations in the middle of the earnings distribution.
- Other factors also work together to increase the hourglass shape of the labour market, including globalisation, offshoring, shifts in consumer demand and changing national demographics.
- A rich and growing supply of graduates is needed to support an hourglass shaped economy. The proportion of our working population at graduate-level will influence the nation’s productivity, pattern of economic growth and ability to meet the needs of business, individuals and the wider society.
- In an hourglass shaped economy effective progression routes through to high level qualifications and professional development are essential in order to tackle rising inequality and to ensure that people do not get trapped at the bottom of the employment market.
The report looks at the implications of these changes on society and the economy and makes recommendations of how higher education policy could respond to meet the challenges and capitalise on the opportunities an hourglass shaped economy presents.
3. About the Alliance
University Alliance is a group of 23 major, business-engaged universities committed to delivering world-class research and a quality student experience around the UK. Alliance universities educate over 26% of all UK students and achieve some of the highest graduate-level employment rates. Alliance universities offer a research- informed, academic learning environment and a culture of innovation and enterprise, equipping graduates who will help deliver growth to the UK economy. Our universities maintain a revolving door with business to help ensure graduate employers get innovative and thoughtful, professionally accredited graduates with the right skills to help grow their businesses.
4. Alliance universities
Bournemouth University, University of Bradford, Cardiff Metropolitan University, De Montfort University, University of Glamorgan, Glasgow Caledonian University, University of Hertfordshire, University of Huddersfield, Kingston University, University of Lincoln, Liverpool John Moores University, Manchester Metropolitan University, Northumbria University, Nottingham Trent University, Open University, Oxford Brookes University, Plymouth University, University of Portsmouth, University of Salford, Sheffield Hallam University, Teesside University, University of Wales, Newport, University of the West of England.
