Is the link between educational attainment and employment set to break?

8 April 2013

"The problem is not the number of new jobs — there are lots of those, confounding the sceptics, and could be even more if the labour market doesn't become over-regulated. The issue is that an obscenely large number of young people with a university education will not be able to find a job that matches their expectations." The Telegraph, 3 April 2013

This article was updated on 24 April 2013

With both employment and unemployment rising, questions are being asked about what young people should do to guarantee a steady professional future.

Could the answer come from across the pond?

In an article for the Daily Telegraph, City AM editor Allister Heath focuses his attention on a study carried out by an American economist, which was recently published in the public policy blog of the American Enterprise Institute.

Analysing employment projection data from the Bureau of Labor Statistics, Mark J Perry found that:

"Only five of the top 30 occupations expected to create the most jobs by 2020 require a college degree or more (nursing, post-secondary teachers, elementary school teachers, accountants and physicians), and ten of the fastest growing occupations don't even require a high school diploma. Moreover, of the top nine occupations expected to create the most jobs this decade, only one (nursing) requires a 4-year college degree."

According to Mr. Perry this confirms that the value of higher education has been over-estimated, a conclusion which Allister Heath argues is applicable to the UK's labour market.

So to what extent is this analysis applicable to the situation here in the UK?

What are the fastest growing professions in the UK?

A similar analysis to Mark J Perry's look at the US data was carried out last year by the UK Commission for Employment and Skills, a non-departmental public body which provides advice on employment policy to the UK Government.

The Institute for Employment Research at Warwick University developed projections of occupational employment akin to the ones put together by the US Bureau of Labor Statistics on the UK Commission's behalf. The projections are based on macroeconomic forecasts by the independent economic consultancy firmCambridge Econometrics (CE). The Goverment's Spending Review as well as other economic policies introduced by the Government were also factored in, along with data from, amongst others, the Labour Force Survey 2010, the Annual Business Inquiry of 2010. The results are published in their report, "Working Futures 2010-2020".

The table below provides projections of employment by occupational group.

However while this list gives us a view on which jobs are likely to experience the biggest growth by 2020, it doesn't explicitly comment on the level of education potential workers would need to enter each profession.

But all is not lost. Because the Working Futures report uses the ONS classifications for different jobs sectors, we can match these to the ONS's own grading on the average level of skills and qualifications needed in each, as set out in its 2010 Standard Occupational Classification report (page 3).

Here's how the ONS defines the skills and qualifications required for each level:

Level 1: "Equates with the competence associated with a general education, usually acquired by the time a person completes his/her compulsory education and signalled via a satisfactory set of school-leaving examination grades."

Level 2: "Covers a large group of occupations, all of which require the knowledge provided via a good general education as for occupations at the first skill level, but which typically have a longer period of work-related training or work experience."

Level 3: "Applies to occupations that normally require a body of knowledge associated with a period of post-compulsory education but not normally to degree level."

Level 4: "Occupations at this level normally require a degree or equivalent period of relevant work experience."

While these definitions cover the skills a particular person may have gained through work-experience as well as any academic qulaifications they hold, they do offer a useful proxy for the types of occupations requiring degree-level skills.

Using this information and the findings of the Working Futures report, we can look at the level of skills and qualifications that might be required in the jobs that are forecast to grow the most over the next seven years:

What the findings tell us is that most of the growth expected in the jobs market by 2020 falls within level 3 and level 4 careers (i.e. those generally requiring higher qualifications). Only three level 1 and level 2 occupations buck this trend; the remaining seven - which include scientists, researchers, health professionals, engineers and media professionals - potentially require a university degree, A levels and other higher education qualifications.

Overall, the Commission concluded that:

"the demand for skills as measured by formal qualifications is projected to rise as is the supply of people holding higher level qualifications. The number of jobs in occupations typically requiring a degree is expected to continue to grow but perhaps more slowly than previously forecast"

The report stresses that there are still "significant positive benefits" in investing in higher education and training, and while the report does pose questions about whether the increasing number of graduate professions may just be symptomatic of an increasing supply of graduates, it may be too soon to sound the alarm bell when it comes to the value of a university education.

Update: On 24 April 2013 the Skills and Employment Survey — carried out by the Centre for Learning and Life Chances in Knowledge Economies and Societies (LLAKES) based at the Institute of Education - published the findings of its six year study into the long-term trends in the job market. Jobs requiring degrees, it was revealed, have reached an all-time high - over 25% of all posts - while those requiring no qualifications fell to historically low levels.

Of course, this doesn't by itself address Allister Heath's concerns. In his editorial he admitted that there are plenty of graduate jobs, but also an "obscenely large number of young people with a university education" who won't be able to find a job "that matches their expectations." This is where the Skills and Employment Survey gets interesting. The findings of the survey in fact suggest that fewer graduates are now in jobs for which they are overqualified. Indeed the graduate 'over-qualification rate' fell from 28% in 2006 to 22% in 2012.

The net result is that the proportion of graduates who are matched in graduate jobs rose from 69% to 74%, suggesting that evidence of an "oversupply of graduates" may be, for the moment, weak.


Flickr image courtesy of ajschwegler

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