Do the market research before you try to make the business case

Michael Thorne argues that the CBI task force's proposals are built on outdated thinking about graduates in a modern economy

October 29, 2009

The Confederation of British Industry asked a task force dominated by the chief executives of science and engineering companies to offer recommendations on how business, the academy and the Government can ensure that "future students have the best chance of success in an increasingly competitive world; that the capabilities of the higher education sector are fully utilised to equip our existing workforce with the skills necessary for today's and tomorrow's world; and that research and innovation partnerships between business and higher education have the best chance of success".

The resulting report, Stronger Together - Businesses and Universities in Turbulent Times, is now the subject of a round of consultations with regional CBI councils. I hope a key outcome will be that a great deal more homework is done before this report is put to the Government by one of our most powerful lobbying bodies.

Sadly, as Lord Mandelson's recent confirmation of new incentives for universities to increase the supply of science, technology, engineering and mathematics (STEM) graduates shows, it appears that the Government needs to do more homework, too.

Many of the CBI report's recommendations are hardly controversial: for example, "universities need to continue to address their cost bases, making efficiency savings where possible". Some are supportive of what we in the academy recognise as necessary for our survival: "Government needs to ... plan to raise student contributions over time."

However, there are three key themes that are unconvincing - and the consequences of implementing them would be potentially damaging to universities and business.

The first is that the UK has a shortage of STEM graduates (not to mention that teaching funding should be diverted to "enable the delivery of high-quality and relevant STEM education"). That such a shortage exists may be true, but the possibility is prima facie counter-intuitive. We can see that from two different sources.

On the one hand, according to the Organisation for Economic Co-operation and Development (OECD), the number of employed science graduates in the UK aged between 25 and 34 is getting on for double the US figure and is well above the OECD average. On the other, pick up any copy of New Scientist and you will typically find job ads seeking experienced PhD-qualified scientists for less than £29,000 a year - about the starting salary of a London-based mathematics teacher.

In some senses, the CBI report echoes this. Its table purporting to show that graduate jobs in STEM areas are among the highest paid has "managerial" jobs at the top (!), whereas jobs in IT, a STEM subject according to the report, receive below-average salaries: a hardly convincing table.

If there is a shortage of science graduates, surely market forces would reflect that in the "price", especially for those with doctorates? Of course, this line of reasoning could lead a cynic to suggest that by increasing the supply of such graduates, the price would be kept low.

According to the report, there are subjects that the CBI task force "values most highly". These are, you guessed it, STEM subjects. Of course, they should be valued highly, but so too should those subjects that feed into the creative industries. A Department for Culture, Media and Sport report states that they employ almost 2 million people (a figure that grew by 26 per cent in the past decade), the majority of whom are graduates, and account for 6.4 per cent of UK gross value added. Indeed, some would argue that creatives have contributed more to the UK economy than our steel industry.

And that's not all. For example, top consultancy firms recruit many history graduates and advertising departments hire psychology graduates. If there are subjects that the CBI thinks should be downplayed, then a proper case must be made.

The third and most controversial theme is the report's suggestion that the Government's target for a 50 per cent participation rate in higher education should be "postponed". Again, this is hardly supported by an analysis of headline figures: even if we achieved a 50 per cent rate, we would barely have caught up with the European Union average and would still be dwarfed by Hong Kong (69 per cent), Australian and US attainment.

Unless the CBI task force wants to trap us in a low-wage economy, it needs to modernise its thinking about the role of graduates in a modern high-wage economy. The evidence from the OECD is that graduates enjoy better employment prospects and get a good return on their investment in a university education. Moreover, recession apart, as the supply of graduates in the UK has increased, neither benefit has materially changed over the past decade. The market speaks and future students seem to know better than the CBI task force.

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