‘Generation crunch’ (or, what is happening to graduate jobs and the ‘graduate premium’ in the UK)

Early this week, the Centre for Enterprise (CFE) in the UK released their report Generation Crunch: the demand for recent graduates on SME.

The report is essentially concerned with the employment prospects for university graduates in Small to Medium Enterprises (SMEs) and makes for particularly interesting reading.

Focusing on SME’s as sources of employment is important because, as they note;

While there is a relatively clear picture of this demand from the public sector and larger businesses, much less is known about the demand from SMEs. This matters, as there are an estimated 4.8 million SMEs in the UK, employing 23.1 million people and together they account for 99% of all enterprises.

Several findings stand out in their report. The first is that the CFE’s survey of over 500 SMEs in the East Midlands region of the UK highlighted confusion over the graduate ‘brand’ with 29% incorrectly identifying A-Levels (that is an upper or senior school exit qualification in the UK) as a graduate qualification.

Even when furnished with the correct definition of a graduate level qualification, it is clear that the recruitment of Generation Crunch graduates is a minority pursuit — just 11% of SMEs had taken on a recent graduate in the past 12 months and only 12% indicated they would do so in the next 12 months.

Almost a third (32%) of those firms that were not hiring graduates reported that nothing would make them recruit a graduate in the next year and the reason for most was a lack of demand, rather than an inadequate or unsuitable supply of graduates.

In an interview this week with the Guardian, James Kewin, joint managing director of the Centre for Enterprise, is reported as saying:

There is not a clear or shared understanding of the term graduate among small and medium size businesses. There is a clear need to rationalise the plethora of qualification frameworks, levels and agencies that currently litter the education and skills landscape and to develop an easily understandable summary of what is and what isn’t a graduate-level qualification.

He said efforts to boost the proportion of graduates in jobs could have only a marginal impact. “Most small and medium size businesses that do not recruit reported that lack of demand, rather than inadequate and unsuitable supply, was their primary reason for not recruiting,” he said. “This suggests that the trend for increasing the employability skills of graduates will, in isolation, have only a marginal impact. The same is true of initiatives aimed at promoting, subsidising or improving access to graduate recruits. While they may lead to a short-term reduction in graduate unemployment, they do not address the fundamental barrier – lack of business need – that prevents most small and medium size businesses from recruiting.”

This is also particularly damaging news for the UK government at the current time, given that it is busy trying to encourage more students to enrol in university studies.

In the Foreword to the recent new ‘Framework for Higher Education’, Higher Ambitions, released in late 2009, the Minister for Business, Innovation and Skills – Peter Mandelson – promised that:

A university education can be an entry ticket to the best paid employment and a preparation for a globalised world of work (p. 24).

What makes the CFE’s research potential dynamite is the implications it has for the government’s review currently being led by Lord Browne, former Head of BP, on lifting the cap on university tuition fees in English, Northern Ireland, and Welsh universities with English students in them.

Image courtesy of Bianca Soucek

Lifting the cap on tuition fees is sold to students as compensated for by a  ‘graduate premium’. In other words, students who invest in university undergraduate studies (and with increased student fees they are investing more of their own funds in their studies) will continue to earn ‘considerably more’ over a lifetime than those who don’t.

Last year GlobalHigherEd reported on the OECD’s statistical evidence about declining graduate premiums, despite the OECD’s own strong claims about the positive economic returns from investing in university studies. We pointed out that the evidence is clear; the value of the premium holds only as long as its value as a positional good is secured. The greater the number of students entering university, the more the value of the premium reduces.

This, of course, is what is behind Lord Browne’s observations in early December, 2009 and reported by BBC news. Lord Browne  calculated the graduate premium as being  1/4  (£100,000) of the one claimed by government (£400,000); this inflated figure was also the one used by government when it justified its increase in the cap on university tuition fees (from £1,225 to £3,225) which was implemented in 2007. Had the value of a university premium declined, the press asked? No, said the government! The question, of course, is who are we talking about? Clearly everyone is not in the same boat, and some might not be in a boat at all.

In 2007 a study on the economics of a degree by PricewaterhouseCoopers for Universities UK produced a different figure for the ‘graduate premium’  –   of an average of £160,000. This study pointed out, however, that the ‘average’ concealed important differences between students – with medical and dentistry students earning a ‘graduate premium’ of around £340,000, humanities students around £51, 500, and arts students  £35,000. Now it is not difficult to do the maths on this one. Investing in an arts degree does not make for good economic sense.  Indeed PricewaterhouseCooper’s report that males with an arts undergraduate degree will earn 4% less than males who hold an A-level qualification only.

When faced with…

  • limited job prospects if the CFE’s data on SME’s and graduate employment is anything to go by
  • likely cuts in UK public sector spending as the government manages its worst financial crisis since the 1930s
  • knowledge that subject of study, gender, social class, income, non-traditional entry qualifications, and so on, can mediate the value of a ‘graduate premium’ (positively and negatively) and therefore should be placed into the mix of any hard-edged economic consideration
  • a poor return on investing in a university degree if studies are in areas like arts and humanities
  • a likely increase in the cost of university tuition after the election to inject funding into a limping university sector

…some students and their families could be forgiven for coming to the conclusion that a university education at all costs is simply not worth it as an economic investment in their future. This conclusion is likely to apply to families in other OECD countries, and not just the UK.

Governments might be better served if they came clean on the economic argument. Instead it should emphasize the value of university studies for social, cultural and political reasons (indeed the OECD’s recent Education at a Glance 2009, p. 176 cites figures which show that ‘political interest’ is enhanced by a 20 % point increase in probability when an individual has a tertiary education).

By recovering, valuing, and making prominent, these dimensions and outcomes of intellectual inquiry, we could then put such knowledge and capability to work on important global problems, like poverty, climate change, sustainability, and building more equitable and socially cohesive communities.

Susan Robertson

Smaller classes, bigger science, and the increasing need to engage

In the middle of checking with colleagues at a variety of peer institutions about the evolving nature of teaching loads, yesterday’s New York Times distracted me with two fascinating articles about forces that are pushing educators and researchers to work with both smaller and larger groups of people.

Small groups and quality learning

On the downward push side, the article ‘At M.I.T., Large Lectures Are Going the Way of the Blackboard’ by Sara Rimer, explores how physicists at universities across North America are:

pioneering teaching methods drawn from research showing that most students learn fundamental concepts more successfully, and are better able to apply them, through interactive, collaborative, student-centered learning.

The article, which primarily focuses on MIT and the discipline of physics, notes that students still take basic introductory classes, but:

today they meet in high-tech classrooms, where about 80 students sit at 13 round tables equipped with networked computers.

Instead of blackboards, the walls are covered with white boards and huge display screens. Circulating with a team of teaching assistants, the professor makes brief presentations of general principles and engages the students as they work out related concepts in small groups.

Teachers and students conduct experiments together. The room buzzes. Conferring with tablemates, calling out questions and jumping up to write formulas on the white boards are all encouraged.

The article reminded me of a day I spent in the Wharton School‘s lavish building at the University of Pennsylvania (see the pictures below, taken in 2005).  I was impressed with the dialogue-oriented classrooms, and the small semi-private meeting spaces for student teams in the hallways (to the left of the corridor) with more public computer desks on the opposite side; spaces clearly designed from the ground up.

wharton1 wharton2


At M.I.T., Large Lectures Are Going the Way of the Blackboard’ resonates with debates underway in numerous quarters about the learning process, classroom technologies, pedagogical practices, and so on. Yet one cannot help but wonder how the effects of the current economic crisis will restrain most public universities from moving in this logical direction, one that our institutions have long known about (witness the praise for colleges like Harvey Mudd), yet have resisted or been unable to act upon.  Indeed, as I noted to one of my colleagues in Minnesota yesterday, long term underfunding of public higher education systems generates structural forces that see faculty-student enrollment number balances tilt the exact opposite way – away from small group quality learning – as witnessed in Australia and Canada in the 1980s and 1990s (see some indicators here in ‘Analysing Australia’s global higher ed export industry’). MIT and Penn have the resources to do the right thing, but does the average university in most continents?

Big science, research, and the centralization impulse

The 13 January issue of the same New York Times included a guest column by Aaron E. Hirsh titled ‘A New Kind of Big Science’. This article, which is also getting a lot of attention, discusses what Hirsh deems a “very broad trend” in scientific research: the creation of huge international teams of researchers, and associated research infrastructures, that are enabled by the forces of centralization:

Across many different fields, new data are generated by a smaller and smaller number of bigger and bigger projects. And with this process of centralization come changes in what scientists measure — and even in what scientists are.


It’s not only scientific instruments, but also the scientists themselves who are transformed by centralization. If the 19th century was an age of far-flung investigators alone in the wilderness or the book-lined study, the 21st century is, so far, an age of scientists as administrators. Many of the best-known scientists of our day are men and women exceptionally talented in herding the resources — human and otherwise — required to plan, construct and use big sophisticated facilities.

In a way, centralization seems unavoidable. The governments that fund research have themselves become far more centralized, so perhaps science has been pulled along in the process. But even without that prevailing wind, science would, I think, head in the very same direction.

A young discipline is bound to move first through the data it can gather most easily. And as it does, it also defines more exactly what it must measure to test its theories. As the low-hanging fruit vanish, and the most precious of fruits are spotted high above, bigger investments in harvesting equipment become necessary. Centralization is a way to extend scientists’ reach.

I quote at length, here, for he raises some important issues worth pondering for those interested in the construction of new knowledge spaces. These include:

  • the degree to which collaboration and partnerships (many international) are becoming indispensable to the research endeavor.
  • the need to extend and guide heterogeneous networks to enable such research to be undertaken, and the double-edged role of centralization in enabling this extension/guiding process to function.
  • the rarely examined effects such collaboration, and such centralizing impulses, have upon the subjectivity of researchers (and of administrators, I might add).
  • the difficulties that exist in building an emotional attachment to what Hirsh calls Big Science, an issue ‘outreach’ and development planners in universities (including my university) are also concerned about.

Hirsh’s column, especially his idea of a national initiative in Citizen Science – to complement Big Science – in the US, has generated 100+ comments, some of which are insightful.

In closing, I can’t help but note that both pushes – smaller groups of people when teaching, and larger groups of people when researching – require greater, not less, social engagement, and of both virtual and face-to-face forms. Resource constraints aside, do we have the quality institutions, structures, technologies, programs, etc., in place, and knowledge about them, to enable and facilitate better quality social engagement in the local spaces of the classroom, and the broader spaces of Big Science?  Citizen Science might help resolve some problems associated with Big Science, yet we are arguably lacking up-to-date support systems to enable us to engage better, to be better partners, in the worlds of teaching and research.

In a future entry I’ll come back to the issue of inter-university consortia and associations (e.g., the US’ Committee on Institutional Cooperation) in providing one element of these needed support systems. Enough procrastination for today though…I have syllabi to finish writing!

Kris Olds