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.