Business calls for fewer graduates

October 3, 1997

THE INSTITUTE of Directors has opposed Dearing's key recommendation of raising the number of graduates in favour of fewer graduates of higher quality.

The IoD, a non-political organisation representing business leaders, says Dearing's economic justification for recommending more graduates centred on the Department for Education and Employment's calculation that the "social return" on student growth, that is, what society would get back from investing in education, would be about 6 per cent. This is the Treasury benchmark for deciding whether to invest.

But the IoD says this can result in resources being wrongly allocated if graduates are paid more merely because they are graduates, rather than because they are more productive. More graduates could lead to higher public spending and taxation, and probably also to a further erosion in quality, the directors claim.

Ruth Lea, head of the IoD's policy unit, said: "There has been a rapid expansion of people in higher education with the result that the business community has increasing doubts about the maintenance of standards."

Further expansion with participation rates rising from 33 per cent to around 45 per cent in 20 years' time, could dilute quality, she added. "Some consideration should be given to reducing the number of graduates and improving their quality rather than a further expansion."

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