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Graduates hit hard when university bubble bursts yet remain optimistic

Graduates hit hard when university bubble bursts yet remain optimistic and a degree proves worthwhile

Significant spells of unemployment for more than 1 in 10 graduates

40% working in non-graduate jobs

41% of graduates have worked unpaid at some point

60% increase in debt over ten years - 44% English graduates owe &pound20,000

Graduate earnings advantage slowly declined – estimated at 2% annually

Even in the face of adversity graduates would do it all again – 96%

Graduate transition into the labour market has been crippled by a harsh economy yet they are optimistic about their future and fair better than non-graduates, according to a &pound1.5m study launched at a conference today (7 November 2012) by the Higher Education Careers Services Unit (HECSU).

Futuretrack1, commissioned by HECSU and undertaken by the Institute for Employment Research at the University of Warwick, provides unprecedented evidence of student experiences and transition into employment. It has been tracking 2006 UCAS applicants and the final stage of the study2 reports their experiences six years on after they graduated into one of the worst recessions in history, comparing perceptions from previous stages of their journey.

More than one in ten Futuretrack graduates have experienced significant spells of unemployment, which for some, look set to continue. Black and Asian graduates and those with lower degree classes are particularly vulnerable3. There is also strong evidence that graduates are taking non-graduate jobs, in which they don’t consider their skills and knowledge to be useful.

The report cites the Class of & lsquo;994 study, which showed that 18 months after graduation 26% of this cohort were in non-graduate jobs. It is estimated that if Futuretrack graduates had experienced the same labour market conditions, around 23% would be in non-graduate jobs – the reality is 40%. White females with a 2:2 degree are more likely to hold a non-graduate position5.

Despite the tough labour market, graduates are remarkably positive. Sixty per cent of working graduates were currently satisfied with their job and this rose to 70% when asked about their future career options. Two-thirds of graduates were optimistic about their long-term career prospects and 96% would still do a degree if starting again.

Overeducated and underemployed?

There has been much debate about whether graduates are equipped with the skills necessary to access and fulfil a job. Between Stage 3 of the study (when respondents were finalists) and Stage 4 of the study (1&frac12- 2&frac12 years after graduation) graduates had become less likely to agree that their university experience had benefited their job hunt. Those who felt their subject had been an advantage fell from 77% to 60%, graduates who believed their institution had benefited them fell from 67.6% to 50% and those who felt learnt skills had been an advantage fell from 78% to 70%.

Futuretrack showed that while 75% of graduates believed that they had all the skills employers sought when recruiting for the type of job they wanted, only 62% believed they were using their course skills in their current job and 61% thought their job was apt for someone with their skills and qualifications.

Impact of debt

The average level of debt on graduation for the Class of & lsquo;99 was &pound7,960. Adjusting for inflation, this would be equivalent to &pound10,300 in 2009. Debt on graduation for the Futuretrack cohort studying at the same institutions as those who responded to the earlier survey was &pound16,000. This reflects increased tuition fees in England from 2006 to &pound3,000 and equates to a 60% increase in debt over ten years.

For those who studied at English institutions 44% graduated with debts of &pound20,000 or more. Only one in six of those graduating from Scottish universities had similar debt levels (tuition fees have been waived in Scotland). Despite high debts, approximately 60% of graduates agreed that their degree had been good value for money and only a quarter disagreed.

Work experience and unpaid work

Futuretrack shows that those who did work experience (79%) were more likely to say their job was appropriate for someone with their skill level and qualifications. Those who did no work experience at all (21%) were more likely to feel that their job was inappropriate for them, and were more likely to be in unpaid work or non-graduate jobs.

Most (59%) graduates did no unpaid work at all, but 30% did some during their course, and 6% did it both during and after leaving university. Those who worked unpaid only after graduating (5%), had a higher likelihood of being unemployed or in a non-graduate job. But unpaid work undertaken during the course increased the likelihood of gaining a graduate job by one and a half times.

Graduates v those who did not get a degree

Just 8% of the 2006 cohort did not graduate. Despite being in the labour market for longer, they were only slightly more likely to be in employment, less likely to believe they had skills that employers looked for and not as optimistic about their long-term career prospects as graduates.

Non-graduates also earned on average less than graduates: in their first job, 70% of non-graduates earned less than &pound15,000 compared with 45% of graduates. While a degree continues to provide a significant earnings advantage, the benefit appears to have been declining slowly over the past decade, possibly by as much as 2% per annum relative to average earnings in the economy.

Whilst male graduates continue to earn more than females (modal earnings categories &pound24,000-&pound26,999 and &pound21,000-&pound23,999 respectively), there is new evidence that the decline in earnings advantage has been slower for females than for males.

Jane Artess, research director at HECSU says: “Graduates’ perceptions of the value of their degree in finding work changes remarkably after they have been in the labour market for some time, which helps us to understand the magnitude of the downturn on this group. Students focus mainly on their studies while at university, particularly in their final year, so graduating into one of the worst recessions in history has hit them particularly hard. What’s gratifying is that even in the wake of the recession, the onset of higher fees and large debts, graduates remain positive in the face of adversity with great confidence that their degree has been worth it.”

Professor Kate Purcell who led Futuretrack at the Institute for Employment Research, University of Warwick, adds: “Futuretrack is the most ambitious study of the graduate labour market to date – we have unprecedented levels of data that warrant continued investigation. In particular we have a great deal of evidence about the impact higher education has, and doesn’t have, on social mobility.”

Professor Peter Elias, co-investigator at the University of Warwick comments: “One of the more continuing and disturbing findings, which underlies all of the salary analyses, is the gender pay gap in graduate earnings that we found in a study ten years ago has persisted and shows no sign of diminishing. Male graduates with similar qualifications, experience and in similar jobs earn more than females at the outset of their careers.”

This is a summary of an extensive report, which also covers the experiences of international students and the impact of extra-curricular activities6. For the full report visit


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