The release of a new analysis from the Institute of Fiscal Studies has sent the higher education community into a frenzy of excitement.
The Longitudinal Educational Outcomes (LEO) data allows us to understand better than ever before the impacts of different qualifications, institutions and, to some extent demographics, on individuals’ earning potential. But, it is important for us to remember some of the things that LEO doesn’t tell us.
A lot of the debate following the new analysis of LEO has focused on recognising the various other benefits that higher education offers individuals and societies. Whether this is a defence of liberal education, social mobility, or the social or economic centrality of higher education and graduates, there are many reasons to believe that a simple measure of individuals’ salaries is insufficient as a basis for making a judgement about the value of higher education. But, there is a more fundamental concern that also needs to be addressed. How much of the salary advantages associated with higher education can be accounted for by the fact that graduates have better skills than other people, and that certain graduates are even more skilled than their peers.
Employer perspectives on graduates
At the Institute of Student Employers (ISE) we spend most of our time talking to large employers about graduates. They remain very positive about graduates, with most reporting that they continue to recruit graduates every year. Our research shows that these large employers spend substantial amounts on recruiting graduates (£4739 on average for every one that they hire) and developing them once they are hired (£5739 for every hire). They also offer good starting salaries (£29,000) and rapid increases in pay (£40,000 average salary after three years). In other words, the larger employers love graduates and their behavior contributes towards the kind of graduate premium that is discussed in the IFS research.
The question is why these employers love graduates so much. The answer doesn’t seem to be that they desperately want the degree qualification as such. The overwhelming majority (86 per cent) of employers say that they are not looking for graduates with particular degree subjects. Very few are interested in recruiting postgraduates with only 2 per cent of employers setting postgraduate degrees as a minimum requirement and only 15 per cent agreeing that hires with postgraduate degrees have better skills than other hires.
Most employers are looking to hire people who have certain skills and attributes rather than those who hold a particular qualification or attended a particular institution. Indeed, a growing number (22 per cent in 2019) are no longer setting any minimum qualifications and 38 per cent are changing the institutions that they target to increase diversity. Qualifications and institutions continue to hold a lot of symbolic power, but what employers are focused on is skills and other personal qualities. And the problem for those that love metrics is that no one really measures skills and LEO has no way of ascertaining whether those with more or better aligned skills actually do any better financially than anyone else.
Concerns about skills
It is easy for employers to complain about graduates lacking skills and other personal qualities. They can pack job descriptions with a long wish list, but it is far more difficult for students to develop these skills and questionable as to whether the development of skills should be the sole responsibility of universities. Nonetheless it remains interesting to see the discrepancies between what employers want and what students actually offer.
In our most recent report, we asked employers what skills and attributes they were looking for when recruiting graduates. We also asked them which attributes graduates have when they first start in post and what they go on to then train students in.
This tells us that there are clear patterns in the skills and attributes that employers are looking for from new graduates. They want applicants who can work in teams, have good interpersonal skills, can listen effectively, solve problems and manage their own time. In general employers are able to find candidates with these skills. There are then a group of skills and attributes where demand outstrips supply. These include the ability to taking responsibility, demonstrate self-awareness, communicate appropriately in a business environment and exhibit resilience. There is also an important category of skills and attributes which most employers don’t expect graduates to have but they do invest energy in developing through graduate programmes and other training. These include presentation skills, job-specific technical skills, negotiating and influencing, leadership, dealing with conflict, managing up and career management.
Taken together these skills and attributes describe what employers think enables an individual to do a job effectively and succeed in the workplace. It seems very likely that some degrees develop different skills more effectively than others. It is also likely that within different degrees there is considerable variety in how good different students are at each of these things. Some of these differences may account for the variations in salary, but nobody really knows whether this is the case or whether the differences reflect the symbolic capital attached to different degrees and institutions.
At the moment we have no way of measuring whether and which skills and attributes are developed within degree programmes nor any clarity about what the relative salary returns on them are. Are degrees that develop effective teamworking a better financial bet than those that develop numeracy or the ability to negotiate and influence others? What combinations of skills and attributes offer labour market advantages? Nobody really knows. Instead we are left with the blunt measure of the degree held and the institution attended. Increasingly these categories don’t offer a strong enough signal for employers when they are selecting talent, so it may be time to question whether they are a good enough basis for the measurement of the quality and value of higher education.