New data released by the Office for National Statistics has shown that almost a third of graduates have more education than is required for their job.
Just under 22% of people who graduated before 1992 were overeducated for their roles, compared with 34% of those who graduated after 2007. Many continue to be in roles that don’t match their qualifications for some time, with 29% of graduates still overeducated for their role five years after graduation.
According to Bloomberg the figures raised questions about the extent of under-used talent in a labour market where employment was at record levels.
“Overeducation represents a cost to taxpayers and individuals, and has been cited as a reason for Britain’s poor productivity performance,” Bloomberg said.
The figures, for 2017, revealed that third (31%) of graduates had more education than was required for the job they were doing. People aged 25-34 and 35-49 were proportionally the most subject to overeducation.
London had the highest proportion of overeducated workers by far, with 25% of employed people between the ages of 16 and 64 being overeducated.
This could well be because of the concentration in the region of migrant labour, characterised as being well educated but accepting jobs requiring fewer skills so as to establish English language ability and homes. Non-UK born overeducated workers accounted for 15% of all workers living in London in 2017. Half of all people in London had an education exceeding A-Level standard, compared with 30% in the North East, which had the lowest proportion of overeducated people (13%).
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Although the ONS analysis also acknowledged the possibility that many graduates were overeducated for their roles because of personal preferences and personality traits. It concluded: “Some graduates may willingly refrain from maximizing their individual income due to hidden preferences. It follows that to fully depict the effect of overeducation on workers’ productivity it is not sufficient to concentrate exclusively on earnings.”
Senior ONS economist Dr Maja Savic said of the findings: “While overeducation is more prevalent in recent graduates, it is also common for those who left university some time ago.”
The ONS report details how the relationship between overeducation and productivity can be viewed through the prism of its impact on wages. It says there is evidence that overeducated workers are likely to earn lower wages relative to similarly educated individuals whose jobs match their education. It also points to evidence that overeducation is associated with lower productivity.
Reward, compensation and benefits opportunities
People who studied the arts, biology and humanities were the most likely to be overeducated, the ONS found. It was less prevalent for graduates with science, technology, engineering and mathematics degrees.
Overeducation was not a major factor when it came to the gender pay gap, the ONS analysis concluded, with the wage penalty for overeducation being somewhat higher for men compared with women. The report stated: “Instead the gender wage gap may be attributed to women’s labour market decisions and traditional gender roles as only males are granted breadwinner wage premiums, whereas women suffer wage reductions when they have dependent children.”
Ben Willmott, head of public policy at the CIPD, said the data reinforced the findings of the CIPD’s own research. He said: “We know that overqualification correlates with lower levels of job satisfaction and so people are more likely to want to leave their job. It has a negative effect on motivation and commitment. People feel their own investment in their education is not being met.”
He said to counter overeducation a shake-up was needed in careers guidance and with apprenticeships, far too many of which were at level 2; nothing like the equivalent of going to university. “We need to step up alternatives to higher education route. Also there are issues around how employers have responded to this surfeit of graduates… too many employers screen out non-graduates for no good reason.”
Willmott singled out Barclays and Random House for praise. Both companies have broadened recruitment practices to non-graduates. He added: “Something like 40% of bankclerks now have a degree – only 3% in the 1970s had one. Too many jobs require a degree.”
Refocus on technology
Meanwhile, a separate report by manufacturers organisation Make UK, and skills body Semta, has highlighted a steep decline in the numbers of students studying design and technology.
Tim Thomas of Make UK called for urgent reform of educational qualifications and attacke the English Baccalaureate. He said: “The world of work will be very different in the future and, as a result, the education system has to adapt to reflect this.
“However, far from fuelling the future talent pipeline with new skills in new technologies, the introduction of the English Baccalaureate has had a negative effect on the numbers of students studying design and technology in schools today.”
Jason Fowler, Fujitsu’s HR director for UK, said that the government needed to boost Stem subjects to match skills with educational levels. He said: “With the skills gap costing our economy billions a year, more needs to be done to attract talent into technology and digital roles. Digital technology has reshaped our economy, with entire markets disrupted by digital challengers and companies everywhere developing new business models to take advantage of these changes. Despite this, people’s knowledge and skillsets simply haven’t kept pace.
“A shortage of people working in digital and tech jobs has the potential to derail our journey towards a prosperous digital future.”