Can higher education single-handedly solve skills shortages?

The opinions of employers are often wheeled out by people seeking to criticise or reform higher education. Demonstrating that universities are not producing the right kinds of graduates with the right kinds of skills can be used to justify almost any change.

The Augar Review uses this trope to good effect, with lots of talk about skills shortages and structural problems, as well as lots of references to disgruntled employers.

The Institute of Student Employers talks to and conducts research with its employer members: many of them report issues related to finding the skills that they want, but they are specific rather than general. While employers are generally positive about recruiting graduates, and other types of skilled entry-level hire, they report difficulties in recruiting students for certain types of roles. These roles align closely with the kind of engineering, technical and IT skills shortages highlighted in the Augar Review, but this does not tell the whole story. Our survey results suggest that it can be unhelpful to use employers as a justification to urge the higher education sector to single-handedly solve skills shortages.

The good news

Our 2019 survey of the graduate labour market shows that ISE members, typically large graduate employers, are recruiting 10 per cent more graduates this year than last year. The survey also shows that they are recruiting 7 per cent more non-graduates (school and college leavers), although graduates still outnumber this group by about three to one. Moreover, employers are happy with the graduates they are recruiting: almost all respondents (96 per cent) said that they could fill all of their graduate vacancies and more than half (58 per cent) said that they could almost always find the quality of graduates that they wanted – with most of the rest saying that they were “often” able to find good quality graduates. There was a similar picture for school-leavers.

Our development survey published in April helps to explain why they were happy. Employers reported that they were satisfied with students’ ability to read, write, give a presentation, work in teams, think critically and present themselves appropriately. They had some concerns about new recruits’ abilities to manage workplace politics, deal with commercial issues and take on leadership roles, but these are areas that, without wanting to absolve the educational system of all responsibility, employers are happy to train and develop new staff in.

Employers are generally happy with the quality of new recruits that they’re getting from the education system; they’re recruiting young people in large numbers straight from education, paying them well and putting them to work.

Of course, there are some issues associated with transition, but employers know how to deal with these issues through training and development. If there was a fundamental or structural issue in the education and employment system, we would expect to see more employers reporting recruitment difficulties alongside much higher graduate and youth unemployment rates.

The bad news

Despite the generally positive picture, there are some areas of serious concern.

In the graduate market, 41 per cent of firms who want to recruit engineers are struggling to find the candidates that they need. A similar picture can be found with IT programmers and developers (39 per cent), general IT roles (36 per cent) and technical and analytical roles (35 per cent). The non-graduate market is very similar with 33 per cent of firms seeking non-graduate engineers finding it difficult to recruit, and difficulties with IT programmers (33 per cent), technical and analytical roles (29 per cent) and accountancy (29 per cent). When asked to look ahead over the next five years, employers concluded that these skills shortages were likely to get worse.

Employers provided insights into why they found it difficult to recruit to these roles: reasons included candidates not having the right skills, attitudes or behaviours and there being insufficient interest in these kinds of technical jobs, leading to insufficient applications. Other reasons they gave included difficulties in recruiting candidates to remote or non-urban areas and a failure in career guidance.

Time for change

Our research echoes the findings of many other reports, including much of what is argued in the Augar review. There are some areas where education and training are not producing enough entry-level staff suitable to go into key occupations, but this is a specific problem rather than a broad one. In general, employers are happy with what they get out of the education system – they would just like a few more engineers, IT specialists and analytical staff.

Ultimately, in a liberal labour market economy, we need to be skeptical about the capacity to solve these kinds of problems with large-scale structural reforms. We have degrees and apprenticeships that can train people in all the shortage areas. The problems are that young people are not choosing these courses, that they’re choosing other courses, and that once they’ve finished them, they’re not always working in the industries for which they’ve ostensibly been trained.

Better career education and guidance and a strengthening of the culture of placements, as well as employer engagement in the education system, will undoubtedly help to improve the relationship between education and employment. A combination of actively promoting under-studied areas and incentivising students to study them might also help.

But can all these problems be solved solely through changing the supply of students from universities? Increasing an employer’s capacity to train and retrain staff is also likely to be part of the answer, as is the boring old strategy of paying people more in occupations with shortfalls.

This is not to say that the Augar review has got it wrong, rather that we should be careful about implementing root and branch reforms of the system to solve very specific problems, especially when the solutions for those problems are likely to need more than just a change in the structures of higher education.

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