Graduate destinations: working out the value of a degree

Introduction

The following viewpoints are often aired in the media:

• Higher education expansion has reduced the value of a degree.
• There is an over-supply of graduates in the labour market leading to vast numbers of highly qualified individuals unable to use their skills and qualifications.
• Student debt is a huge burden on future career choice and development.

Do recent surveys of new graduates bear this out?

Starting points

• What is a graduate job?
• New definitions of graduate work
• Are graduate employment prospects changing?
• Recent research findings
• The impact of student debt
• Conclusions

What is a graduate job?

Elias & Purcell - Warwick Institute for Employment Research (IER) - have defined graduate jobs as those requiring at least one (and normally more than one of the following):

• Expertise deriving from higher education and subsequent employment experience
• The ability to play strategic or managerial roles
• High level interactive skills

Occupations in the more traditional areas of graduate employment (e.g. doctors, solicitors etc) tended to score highest on expertise. Those in newer areas (e.g. marketing & sales managers, management accountants, probation officers etc) are likely to have a higher strategic/managerial component.

New definitions of graduate work

The IER has taken this further to include the following definitions of graduate work (these are used to publish destinations league table information):

Traditional graduate occupations	The established professions, for which, historically, the normal route has been via an undergraduate degree programme	Solicitors, medical practitioners, HE and secondary education teachers, biological scientists/biochemists
Modern graduate occupations	The newer professions, particularly in management, IT and creative vocational areas, which graduates have been entering since educational expansion in the 1960s	Directors, chief executives,& software professionals, computer programmers, primary school and nursery teachers, authors/ writers/journalists
New graduate occupations	Areas of employment, many in new or expanding occupations, where the route into the professional area has recently changed such that it is now via an undergraduate degree programme	Marketing & sales managers, physiotherapists, management accountants, welfare, probation officers, countryside/park rangers
Niche graduate occupations	Occupations where the majority of incumbents are not graduates, but within which there are stable or growing specialist niches which require higher education skills and knowledge	Leisure and sports managers, hotel/accommodation managers, nurses, midwives, retail managers

Are graduate employment prospects changing?

• Yes: employment in traditional graduate occupations is remaining static; the increases are in modern and new graduate jobs which have accommodated the higher numbers of graduates entering the labour market in recent years. However, this is somewhat dependent on the UK continuing to have a strong economy - i.e. supply equalling demand.
• The likelihood of experiencing longer periods of unemployment vary by class of degree awarded; arts graduates were more likely to have experienced significant unemployment while law, business and education and medicine graduates were least likely to have done so.
• Increasing numbers of 'non'-graduate jobs are requiring degree level skills and knowledge

Recent research findings

The IER has undertaken two longitudinal surveys of leavers from 1995 (*@ 3� years) and 1999 (*@ 4 years).

Relevance of work/career satisfaction:

• Both surveys report high percentages of graduates are in full-time employment related to their career plans (65-70%).
• There is a high career satisfaction rating as well (85% of 1995 cohort and 80% of 1999 being reasonably or very satisfied with their career to date).
• 80% are in appropriate jobs - as managers and senior officials, professional or associate professionals and technical job holders.
• Although nearly half of those entering employment in 1999 were employed in non-graduate occupations, this fell to 15% four years after graduation.

Graduate earnings

• Employers continue to be prepared to pay a premium to employ graduates, even in jobs that also employ non-graduates.
• However. the rate of earnings increase of the 1999 cohort has not kept pace with increases more generally in the economy - this may be the first sign of a decline in the excess demand for graduate skills and knowledge of the 1990s.
• There is evidence of a significant gender gap in the earnings of recent graduates. Women graduates working full-time reported earnings approximately 15% lower than those reported by male graduates.

The impact of student debt

• 92% had undertaken paid work while studying (47% during term time).
• Those who worked during term time were approximately a third less likely to have gained a 'good' degree compared to those who undertook no paid work.
• Quarter of those with repayable debts indicated their choices following graduation had been limited in some way by their debts (eg lower levels of participation in further full-time study).
• Those with debts were also more likely to be in non-graduate work.

Conclusions

Is a course in Higher Education worth it?

• 96.5% of 1999 graduates felt it was; most also felt higher education was not just about improving their employment prospects, citing social and personal development aspects too.
• High levels of career satisfaction.
• Through economic restructuring and the creation of new and modern jobs, the graduate labour market has been able to accommodate increased numbers of graduates.

However.

• What will the graduate labour market be like in two to three years time? Will the economy be as buoyant as it has been in the last decade?

It's important that students:

• check destinations information for job titles, salaries, numbers in graduate work for their subject areas and that they look at the longitudinal surveys as these give a better picture of longer term progression.
• fully engage with Career Management Skills programmes and other schemes which offer work experience/shadowing (e.g. Reading Experience Programme) to enhance their employability.
• look for opportunities which enable them to develop their personal skills as well (good personal skills can compensate for lack of vocationalism in a course).
• take on board the findings about term-time working and the negative impact on degree classification and career choice.
• be prepared for an unpredictable career path!

References

This article is based upon research undertaken by Kate Purcell and Peter Elias from the Warwick Institute for Employment Research (IER):

• The Class of '99, A study of the early labour market experiences of recent graduates, Purcell, Elias et al, October 2005.
• Seven Years On: Graduate Careers in a Changing Labour Market, Purcell & Elias, April 2003.

Chris Flanagan, IT & Destinations Survey Manager, November 2005.