What if there isn’t a skills deficit?

In a classic episode of Yes Minister, the ever-cynical Sir Humphrey argues that “We didn’t raise the school leaving age to enable children to learn more. We raised it to keep teenagers off the job market and hold down the unemployment figures!” The same might also be said of higher education expansion. The size and shape of the education sector has always been dependent on the shape of the wider labour market.

Extensions of compulsory education and expansions of university numbers tend to occur at times of major flux in the economy, but it is often forgotten how education reform has been preceded by economic change rather than instigating it. Universal primary education was introduced in the 1880s after the abolition of child labour over the previous three decades. The school leaving age was subsequently raised as a response to a surplus of labour: returning soldiers in 1918 (to 14 years old); the entry of women in 1973 (to 16 years old); and a decline in unskilled work in the recent recession. Expansions in higher education have typically accompanied the extension of compulsory schooling.

The explosion of student numbers has proved a mutual convenience for universities, employers, and politicians, but it is not the perfect deal for many students themselves. Universities have expanded their size and funding, whilst employers have never had such a wide selection of bright young talent available for work. Politicians can celebrate the record numbers of young university entrants as a short-hand for enhancing social mobility in order to fill a six-second soundbite on the evening news. For middle-class children, university has become the only choice at 18. Alison Wolf’s assessment in 2003 is surely still true now:

What is driving current expansion [of HE] is more the correct perception by individuals of where their or their children’s own self-interest lies than any close relationship between overall student numbers, the particular subjects they study, and the requirements of the workplace… The question becomes less ‘Does a degree pay well?’ than ‘Can I afford not to have one?’

Yet despite being more highly educated than ever before, young people are now constantly derided for a lack of ‘work-readiness’. Regular surveys of employers bemoan the attitudes and aptitudes of school and university leavers. A lack of technical and general skills is frequently cited as an urgent policy issue. Since the 1980s, successive governments have set themselves to the task of better ‘aligning’ higher and further education with the needs of the economy and addressing the ubiquitous ‘skills gap’. Successive policy proposals have argued that graduates need to be more ‘employable’ and curriculums more ‘work-relevant’, whilst celebrating expanding graduate numbers as a means to economic growth. Universities and the wider education sector have been happy to indulge in this ongoing angst about whether they are meeting ‘market needs’.

However, there is an emerging body of evidence running counter to the complaints of business lobbyists. UK researchers have pointed to a “global cut-price competition for brainpower” slowly eroding the link between education and secure wages. The ONS recently reported that the number of over-qualified British workers surpassed the number of under-qualified employees for the first time in late-2012, and data on the number of UK graduates in non-graduates jobs varies from 44% to 58%, depending on how generously ‘non-graduate jobs’ are defined. It is simply wrong to state that the rate of expansion of managerial, executive and professional jobs has matched the rate of higher education expansion. Furthermore, the recent IFS study showed that HE expansion has hardly opened up the top jobs to the disadvantaged. Universities appear to have limited power in overcoming the forces of class, wealth and social capital.

Research commissioned by the Social Market Foundation has argued that skills gaps are being caused more by insufficient wages for the required talent, rather than short supply of able workers. This shifts the critical emphasis away from the education sector and instead onto businesses, and suggests that the sector has being doing a perfectly capable job of supplying work-ready graduates, but that the labour market has done a less perfect job of finding them appropriate work. The SMF report suggests that we should listen less to what employers say, and more to what they pay in the open market.

Nonetheless, UUK have recently presented their own argument that the economy will need many more graduates. The short-term incentive for education institutions is to promise the world: that more graduates are needed, and that more funding is needed to make them work-ready, and that they can deliver that mysterious quality called ‘employability’ that is the gateway to a secure middle-class lifestyle. Yet the real long-term security for the sector comes from the above-mentioned fact that aspirational young people simply cannot do without a degree, in spite of attempts to make apprenticeships an alternative route.

Alison Wolf has argued that the education sector has made impossible assurances to government about how it can fix what are fundamentally economic problems, and these problems only look set to worsen. Net job creation in the US was zero from 2000-2010, for the first time ever, and has stalled in the long-run in many western nations. Employment is becoming super-specialised, and also more unstable and insecure as automation moves into new sectors. Young people are finding it increasingly difficult to predict not only what they would like to do, but what they might be able to do. This is partly down to misinformation about where employment opportunities exist, but also because because it is nearly impossible to predict.

One group of researchers at Oxford suggest that half of all jobs are threatened by robotics over the next two decades, including white-collar graduate work such as law, medicine and accounting. Even if this prediction is only part-correct, what then? It would simply be disingenuous for the university sector to predict how many graduates we will need in which sectors, and then guarantee that all such graduates will find secure and fulfilling work. It would be ill-advised for the sector to allow public assessments of whether it is doing a good job or not to rest entirely on success in this endeavour, over which they have very little influence.

Contrary to the trajectory of government policy, there is no clear consensus on the education needs of the economy. The evidence and forecasting is becoming increasingly contested, and this was further underlined by findings of the IFS report. Yet every government higher education proposal of recent times has been based on an underlying assumption that more and better education will create a high-skills, high-tech and high-wage economy, and the sector has been largely happy to align with this school of thought.

If predictions of mass automation and job insecurity are correct, the challenges for the university sector seeking to justify its place in the public sphere will be immense. We need to start thinking now about how higher education might adapt to these particular economic challenges, and rest not quite so easily on our usual assumptions about how HE will meet market needs.

8 thoughts on “What if there isn’t a skills deficit?”

  1. Dan Cook says:

    But what if we are relying on an outdated definition of what constitutes a graduate job?

    Where is the evidence that there is not a skills gap, and whether it is a gap in the preparedness of graduates or in the capacity of industry to leverage their skills?

    If the challenges of automation are real, the question is not whether we will need so much HE, but more about the qualitative nature of value and outcomes that HE will be expected to produce and demonstrate by policymakers.

  2. David Morris says:

    Hi Dan. Don’t get me wrong, I’m not saying ‘cut back’, rather, how HE positions itself and the ‘value’ it delivers will need to be reconsidered (which is why I’ve so enjoyed reading the consultation released today).

    On the evidence re. skills gap, I’d recommend the links provided in the article; particularly the SMF study, the ONS statistics, and the persuasive argument made in ‘The Global Auction’ by Brown, Lauder and Ashton. I also think Alison Wolf’s book, though 13 years old, has aged well.

    I’m sceptical of perception surveys complaining about graduates’ work readiness because taking it at face value fails to recognise that there are competing interests at play: a good labour market for employers is not necessarily a good one for employees (and by extension the institutions that train/educate them). Professor Tim Oates made a good comment about this at a conference I attended last year: “pay attention not to what employers say, but what they pay for”.

    1. charlieball says:

      David,

      There is much to like about the piece you have written but I think some of the comment needs putting into context. I agree with the broad argument that it’s not clear that, in the round, there is a great deal fundamentally wrong with UK graduates as a group that the sector could or should be judged on. I take issue with some of the assertions you make, however.

      We do need to be really clear about what we mean by ‘skills gap’ – which is something a lot of commentators, and even literature, has not always been. What is a skills gap? What does it look like? What effect does it have? What can be done about it? Is it a useful concept that we can work with?

      Likewise, we need to be very careful what we say about the graduate jobs market. You say

      “Data on the number of UK graduates in non-graduates jobs varies from 44% to 58%, depending on how generously ‘non-graduate jobs’ are defined.”

      This is only true if you consider the cited paper the only source or the last word on the subject. It is not. Here is not the place to discuss that particular paper in depth (or, more specifically, the way it was reported), but suffice to say it takes views on how ‘a graduate job’ should be measured that, whilst insightful and useful, do not always mesh well with other methods. Indeed, simply using the most basic measure of ‘graduate job’ on the most recent DLHE gives us a figure of 32% of graduates in ‘non-graduate’ employment using a metric based on occupation that, whilst not exactly perfect, does allow the possibility that the figures is too high as well as too low.

      We do also need to think very clearly about what we can reasonably expect graduates to do when they leave university, what proportion we should actually *expect* to be ‘underemployed’ or out of work (it doesn’t take long to realise that the answer is not ‘nobody’) at any given time and what we do about that, and take into account aspects of the labour market that have not been well considered – how jobs are distributed around the country; which subjects are required to access them and so on – before we can understand how the constant changes in technology and employment will affect universities (both as suppliers and users of skilled labour). I am increasingly of the view that we have to start by leaving behind the idea of a ‘UK graduate labour market’ and instead thinking of it as a series of overlapping local jobs markets with their own characteristics and needs. This is harder to negotiate but potentially more rewarding for students and graduates and, of course, more wonk-intensive. It would hold significant implications for how we think about graduates from different institutions and places and what we might expect them to do.

      You then go on to say:

      “It is simply wrong to state that the rate of expansion of managerial, executive and professional jobs has matched the rate of higher education expansion. ”

      I would be reluctant to show that level of certainty, and even were I certain about that, it is vital to remember that new entrants to the workplace are not just there to meet new role requirements (or expansion demand), but to replace leavers from the workplace (replacement demand). What matters in this context that we have enough graduates to meet economic needs. Working Futures projections suggest a close match between graduate supply and demand over the next decade. Data from the Annual Population Survey shows consistent significant job growth in managerial, professional and associate professional roles (those areas called ‘graduate’ in an occupation-based analysis), across the board. You can check the data on NOMIS if you like, but 2.25 million more people were working in ‘graduate level’ employment in the UK in 2015 than in 2005 (and again, that’s before replacement demand). The most recent DLHE shows an unemployment rate after 6 months of 6.3%, a very respectable figure in historic context – since the 70s, the longest period we’ve had where early graduate unemployment was below that figure was 4 reporting years, from 2003/4 to 2006/7. Further, it is clear that we have shortages – which have been worsening in the last 2 years – of graduates in a range of disciplines (and, crucially, not just STEM), as evidenced by employer commentary from the likes of the Chambers of Commerce (I heartily recommend the Quarterly Economic Survey for recruitment demand and difficulty information) and data from the UK Commission for Employment and Skills. With this in mind, I do not believe that the level of certainty that statement demonstrates can be supported.

      It is also important to remember that when you say that “young people are now constantly derided for a lack of ‘work-readiness’” you recognise this is not merely a new development, but one of the country’s oldest narratives about graduates. As a rather tedious individual, I have the rather niche hobby of collecting old quotes from employers about the work-readiness of graduates and I can assure you that this is a very, very old charge made by employers. I have quotes from a century ago that could be dropped into a modern broadsheet with very little editing. I am sure that in 1200, abbeys were complaining about the work readiness of their new scribes from Oxford. This narrative is entirely engrained in discussion about higher education and I am not sure that citing that it goes on really proves anything very much.

      That doesn’t mean we can dismiss what employers say, though. The UKCES Employer Skills Survey is recent and large in scope (the fieldwork is less than a year old, and it covers 95,000 businesses). It is clear from it that some employers – particularly small businesses – certainly feel that some graduates do not have quite the skills that they are looking for. Now, there is scope to discuss who, exactly, is responsible and what can be done about it and whether it’s very significant. As it happens, most employers seem pretty happy with most graduates, and that’s also borne out by other employer surveys like the AGR’s. But what is it not politically wise to do is argue that there’s no evidence that there is a skills gap. Indeed, it is clear that there are some issues with getting some groups of graduates into work in some subjects – the long-running issues in IT and computing are the reason the Shadbolt Review is taking place.

      I would also like to know where the ‘misinformation about where employment opportunities exist’ is coming from as I probably ought to be doing something about that.

      Ultimately, the UK university system looks at itself as producing flexible, adaptable individuals who can turn their hand to a range of challenges and as long as we can ensure that keeps happening, our graduates ought to be able to deal in the main with changes in the labour market. A lot of public and political discourse does seem to have struggled with the implications of the UK’s move from manufacturing to a higher-skilled service economy – in particular, the fact that a higher skilled service economy needs, er, more people with higher skills – and perhaps the first step to justifying our place in the country will involve making that point with rather more force and conviction that we have previously.

      1. David Morris says:

        Thanks for your thorough response Charlie. All very interesting. I’ll try to get round to a proper consideration of it all later, but just before I forget, the reference to ‘misinformation’ was (an arguably unclear) reference to the widely recognised deficit in careers information, advice and guidance and a lot of the misconceptions young people have, as outlined in the City and Guilds ‘Great Expectations’ report.

    2. Dan Cook says:

      Hi David, I think its a really interesting and engaging piece – and I think we are on the same page about the need for HE to consider restating its value proposition in a new way for a new set of circumstances. I will look at the references thoroughly – some I was familiar with, but others were new to me.

  3. ‘Social mobility’ once again features in the White Paper when what they mean is upward social mobility. Unfortunately, the limited upward social mobility of the last century has given way to general downward soc mob in this one. I shall be talking about this and wht it implies for all levels of education from primary to postgraduate schools at the launch of my new book ‘Betraying a Generation, How education is failing young people’ Policy Press Brief at the Institute of Education 5-6.30 Clarke Hall with launch in foyer after. (I also deal with the vexed question of ‘skill’ and its reduction to competence.)

  4. David Baume says:

    The failure, dear Wonkshe all, is not in our higher education system producing too many graduates, rather in our world not demanding enough graduates.

    Surely a good, a principled, a truly civilised world makes the best possible use of the (highly educated) talents of all its people. I stress “world”, not just “economy”.

    As to the particular required balance of graduate talents and qualities from time to time, that can be negotiated. To the usual lists, I would suggest adding “versatility”.

    1. Dan Cook says:

      I think it must surely be right to think beyond economy, which is why I was so glad the #NewDLHE review looked at alternative measures of graduate outcomes. Can’t wait to get to this part of the analysis…

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