[PEN-L:29425] underemployment?

["Ian Murray" <seamus2001@xxxxxxxxx>]

Down the brain drain

Too many graduates are chasing too few high-skill jobs. Is the government's plan to increase
the number of university places sensible?

Simon Parker
Wednesday August 14, 2002
The Guardian

Remember the one about the three students? The science graduate asks, "Why does it work?" The
engineer asks, "How does it work?" And the student with a 2:1 in English literature asks, "Do
you want fries with that?"

That joke is wearing thinner than ever. New research suggests that England might reach a point
where its universities and colleges will be pumping out more highly skilled workers than the
country's economy knows what to do with, leading to underemployment and economic exclusion for
some.

Findings from Local Futures, an independent thinktank, show that the proportion of the
workforce with degrees and other high-level qualifications is growing far faster than the
number of jobs being created in the so-called "knowledge economy". Expanding this group of
graduate-intensive industries, including cultural, business and financial services, education
and science-based businesses, is one of the holy grails of government policy.

Ministers want to see more people going to university and coming out with qualifications that
suit the demands of the knowledge economy. By 2010 Margaret Hodge, the higher education
minister, wants 50% of under-30s to take a degree - seven times the proportion in the 1960s.

But the Local Futures research questions whether we need so many graduates. The thinktank
analysed the skills profiles of the nine English regions and found that even in Greater London,
the hub of these much-hyped, knowledge-driven industries, the number of high-skilled jobs is
failing to keep pace with rising qualifications.

Between 1994-2000, a period of healthier economic growth, the proportion of workers in the
capital who had a degree or equivalent rose by over 22%. The number of jobs in the most
graduate-intensive industries - those whose workforce contains at least 40% high-skilled
workers - rose at little more than a fifth of that rate. The number of jobs in sectors that
employ an "above average" number of graduates (25%-40%), including nurses, actually fell by
more than 10%.

The mismatch is repeated around the country. As a whole, the British graduate labour pool grew
by 23% between 94-00, while knowledge intensive industries raised their share of national
employment from 48% to 50%, an increase of less than 5%.

In the north-east, an area with a relatively poorly developed knowledge economy, the proportion
of the workforce with graduate-level qualifications rose by 17.5% between 94-00. In the same
period, the number of jobs in the most graduate-intensive industries rose by only 1.6%.

Mike Collier, the chief executive of the area's regional development agency, admits: "It's been
a persistent issue in the region. For many years we've created more graduates than can be
absorbed in our own economy."

The brain drain from the regions to London and its surrounding counties has accelerated. This
is happening to the extent that the government wants to build at least 43,000 houses in the
south-east every year until 2016.

This migration contributes to London's well-publicised house price inflation and pushes key
public sector workers, who often have intermediate skills levels, out of the market.

But London faces more serious social problems than that. The capital's workforce has become
polarised between the skills haves and have-nots. In 2000, when roughly a third of the
capital's resident workforce had degree-level qualifications, another third struggled to secure
a C grade GCSE pass.

Fortunately, the long-term trends show that skills poverty is decreasing, but this still leaves
a huge group being excluded from the affluent and expensive London being created by their
well-educated counterparts.

Mark Hepworth, the director of Local Futures, highlights a "Dickensian" gap between the
relatively highly skilled white workers of south London, with an employment rate of around 80%,
and the poorly skilled Pakistanis and Banglandeshis of the East End, who have an employment
rate of under half that figure.

Older workers could also be excluded. Across Great Britain, those aged between 45-64 are
employed in significantly fewer knowledge-intensive industries than those aged 25-44. This at a
time when a looming pensions crisis means the elderly might have to compete with their younger
counterparts long after traditional retirement age.

Does the government's target of 50% make any sense in economic terms? Many think not. In a
recent report, the Institute of Directors described the plans as "ludicrous". They want to turn
the clock back to the 1970s, with 15-20% of people going to university and many of the others
going into "tough vocational apprenticeships".

The IoD's Ruth Lea said: "The current obsession with sending as many young people as possible
into higher education undermines vocational training by making it appear a second best. This
helps no one, least of all the many students who study inappropriate higher education courses."

These trends are already changing the kind of jobs graduates go in to. Only a certain number of
people will ever become lawyers, civil servants and investment bankers, so as more graduates
enter the market, the benefits associated with a degree will be progressively diluted. This is
reflected in the fact that professions that once recruited at A-level, like the police and
accountancy firms, now take people from university instead.

Adds Mark Hepworth: "Aren't we devaluing degrees? What do we do about underemployment?"

· Simon Parker is local government reporter for SocietyGuardian.co.uk