Oversupply of graduates disputed

February 14, 1997

THES looks at reaction to the DFEE's fourth Dearing submission, which queried standards and expansion

FURTHER doubts surfaced this week about Government claims that graduate supply will soon outstrip demand.

Researchers on whose work the Department for Education and Employment's arguments were based joined captains of industry and Conservative higher education experts in questioning some of the DFEE's conclusions.

In its fourth and final submission to the Dearing inquiry, the department suggested that rates of return to the economy on investment in higher education may soon drop below an acceptable level because of an oversupply of graduates by the year 2000.

There could be "no assumption that higher education's share of the total education budget from public funds will increase or can even in the medium term be sustained at its present level," the submission paper says.

The DFEE cites the findings of a study from the Institute for Employment Research at Warwick University. This showed that on 1980s' trends demand for graduates would grow by about 40 per cent by the year 2000, while supply would rise by 50 per cent. But on recent trends demand would stay ahead of supply. More graduates will probably result in well-qualified people displacing the less well-qualified. "Better-qualified people may change the nature of the job being undertaken and so in a sense supply might create its own demand," said the study.

This is acknowledged in the DFEE's submission, which notes this is occurring in financial services. Rob Wilson, a member of the Warwick research team, said: "There is still considerable scope for worthwhile investment in education at the higher levels."

The Confederation of British Industry said DFEE's arguments were a "red herring". Margaret Murray, head of the CBI learning and skills group, said: "Rather than predict future demand and stifle individuals aspirations, the UK needs to plan for uncertainty and invest in ever higher skills levels." Iain Crawford from the Conservative Political Centre's higher education working group, said: "If we freed up the market rather than taking an old centralist planning approach supply and demand would look after itself."

* Figures from the Organisation for Economic Cooperation and Development suggest there is no direct link between participation in higher education and graduate unemployment rates. In 20 OECD countries in 1994 the average graduate unemployment rate was 4.7 per cent, against 6.4 per cent for the whole labour force aged between 25 and 64. Only Switzerland had a higher percentage of graduates (3.7 per cent) than non-graduates (3.6 per cent) out of work. It should be noted that the figures say nothing about the type of work those in employment are doing

Comparing higher education and unemployment rates

Countries with highest 18-21 university-levelparticipation rate

per cent

Greece 28.9

Canada 26.2

Spain 24.9

France 23.3

Netherlands 22.1

US 21.3

Australia 20.5

UK 18.7

Belgium 18.5

Ireland 18.3

Sweden 12.3

Austria 12.0

Countries with highest graduate unemployment rate

(workforce rate in brackets)

per cent

Spain 13.8 (19.8) Finland 6.6 (16.7) Greece 6.5 (7.2) Italy 6.4 (7.9) France 6.1 (10.8) Canada 5.2 (9.2) Denmark 5.0 (11.5) Germany 5.0 (8.7) Netherlands 4.3 (5.7) Turkey 4.1 (6.0) Belgium 4.0 (8.3) UK 3.9 (8.2)

Source: Education at aglance, OECD, Paris 1996

A summary of previous DFEE submissions is available on The THES Internet service, THESIS.

Leader, page 11

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