Graduate utilisation in British industry: the initial impact of mass higher education.

Mason, Geoff

1. Introduction(*)

The recent growth in higher education participation rates in Britain has been so sudden and so rapid that there is now intense public interest in its effects on graduate employment and salary prospects. Particular concern has been expressed about the development of certain phenomena associated with US-style 'mass higher education', for example, an increase in the numbers of graduates who appear to be 'under-utilised' in jobs which have not traditionally been filled by degree-holders, and reports of apparent growth in variation in 'quality' of the graduates emerging from different kinds of degree course.

This paper focusses particularly on the initial effects of mass higher education on graduate utilisation in Britain. However, it will be argued below that there are close links between employers' perceptions of graduate quality and the ways in which firms choose to respond to the continuing growth in graduate supply. I draw on the results of a detailed study of new graduate recruitment and deployment in two very different British industries in 1994-95 to address the following questions:

* To what extent are graduates actually being substituted for non-graduates in employment?

* When this kind of substitution occurs, to what extent is it associated with potentially productivity-enhancing developments such as job enrichment and a higher quality of work performance?

* To what extent are the skills and knowledge acquired by graduates in the course of their degree studies being genuinely 'under-utilised'?

The paper is ordered as follows: Section 2 sets the recent expansion of British higher education in international context and briefly describes the debate on graduate utilisation which has taken place in the United States and other countries. Section 3 outlines the main findings of the British graduate study and argues the case for a more restrictive definition of graduate under-utilisation than has traditionally been employed. Section 4 considers some new evidence on graduate labour market developments in the 12 months since the earlier study was carried out. The paper then concludes by drawing out some of the implications of these research findings for British policy-makers responsible for higher education.

2. Graduate supply and utilisation

The speed of change in higher education participation in Britain since the late 1980s has been remarkable: the proportion of young (under 21) home initial entrants to all types of higher education courses expressed as a proportion of the relevant age group rose only gradually from 13.1 percent in 1983 to 15.1 per cent in 1988, then increased sharply to 30 per cent in the academic year 1993-94. Government projections are for this proportion to remain steady at about 30-31 per cent between 1995-98.(1) The increase in higher education participation by under 21 year olds has been parallelled over the same time period by rapid growth in the (albeit much smaller) numbers of mature students, particularly those in the 21-24 age bracket.(2)

One consequence of these developments is that, in the five years from 1988 to 1993, the share of graduates in the British workforce jumped by almost four percentage points to reach 12.9 per cent (see Table 1). As is well known, international comparisons of educational qualification rates are bedevilled by inter-country differences in institutional arrangements and definitions (DES, 1991; Williams, 1992). However, if one abstracts from inter-country differences in degree course lengths and standards, it appears that the current upsurge in higher education participation in Britain will soon lift graduate output and employment levels well above those of other European nations of a similar size. At the same time, the annual output of new graduates per head of population in Britain is still well below that in the United States (see Appendix A for further details). Similarly, as shown in Table 2, the share of graduates in total employment in Britain is only just over half the US level which has built up over several decades. Concern about under-utilisation of graduates in Britain, therefore, has developed at a relatively early stage in the transition to mass higher education.

Table 1. Highest qualifications held by workforce in Great Britain,
1988 and 1993

 percentages
 1988 1993

Degree or above 9.0 12.9
Higher intermediate vocational 6.5 8.7
Lower intermediate vocational 17.4 21.0
Basic vocational 7.0 6.2

A level or equivalent 6.1 6.4
O level or equivalent 17.9 16.9

No vocational qualifications
or general qualifications higher
than CSE grade 2 or equivalent 36.2 27.9

TOTAL 100.0 100.0

Source: Labour Force Surveys.

Refers to economically active population (employed plus
unemployed).
Percentages may not add up to 100 due to rounding.

Notes on classification of qualifications: Graduate and above: All
Higher and First degrees and professional qualifications of degree
standard; plus 5 per cent of Other Qualifications.

Higher intermediate vocational: BTEC/SCOTVEC Higher National
awards,
sub-degree qualifications in teaching and nursing and equivalent
awards; plus 5 per cent of Other Qualifications.

Lower intermediate vocational: BTEC National awards, City & Guilds
advanced craft and craft awards, completed trade apprenticeships
and
equivalent awards; plus 15 per cent of Other Qualifications.

Basic vocational: 1993: BTEC General and First awards; City &
Guilds
awards below craft level; SCOTVEC National Certificate modules; YT,
YTP certificates and equivalent awards; plus 75 per cent of Other
Qualifications. 1988:15 per cent of all City & Guilds awards and
BTEC/SCOTVEC Ordinary/General awards have been classified to this
category on the basis of detailed information derived from the 1993
Labour Force Survey, plus 75 per cent of Other Qualifications.

A level or equivalent: A level, A-S level, Scottish CSYS, Scottish
Higher and equivalent awards.

O level or equivalent: O level, CSE grade one and equivalent
Scottish awards.

Distribution of 'Other qualifications' category based on estimates
reported in Employment Gazette, July 1992.

Respondents recorded as 'No answers' have been excluded from base
population in each case; they represented 0.9 per cent of total
respondents in 1988 and 2.8 per cent in 1993.

Influential assessments carried out at the US Bureau of Labor Statistics (BLS) define graduates as under-utilised when they enter jobs that 'usually' do not require a four-year college degree, for example, in retail sales, administrative support occupations including clerical work and a range of shopfloor production jobs in factories. By this reckoning roughly a fifth of all college graduates in the US labour force were identified as either under-utilised or unemployed during the late 1980s, up from 10-11 per cent at the beginning of the 1970s (Hecker, 1992; Shelley, 1992). In Germany similar estimates - more tentatively expressed - suggest that in 1991 some 8-17 per cent of university graduates were employed in positions which 'probably did not correspond' with their level of qualification (Plicht et al, 1995).

Table 2. Estimated stocks of graduates in Britain, (West) Germany,
France and the United States, 1992-94

Graduates(a) as percentage of economically active population
(employed plus unemployed)

 Age-groups:
 Total Under 25 25-39(b) 40-plus(c)

USA (1994) 24.3 8.5 27.6 27.1
Germany (1993) 11.1 1.1 13.0 12.6
France (1992) 8.2 1.2 8.9 9.3
Britain (1993) 12.9 5.3 16.4 12.9

Sources: Britain: Labour Force Survey; USA: Current Population
Survey; France: Enquete sur l'Emploi de 1992; Germany: Mikrozensus.

Notes: (a) Refers to holders of at least a British First degree or
foreign equivalents defined as: US Bachelor's degree requiring four
or five years study; German Fachhochschulabschluss or
Hochschulabschluss; French License (Bac+3); see Appendix A for
further details. (b) 25-44 year old age-group in the case of the
US.
(c) 45-plus age-group in the case of the US.

However, this approach lays itself open to criticism on several different grounds. Among specific criticisms of the BLS methodology, for example, Bishop and Carter (1991) argue that the occupational classification employed is inherently arbitrary and that insufficient attention is paid to widespread evidence of individual errors in reporting both occupation and educational attainment.(3) More recently the findings of Tyler et al (1995) suggest that the conventional wisdom about the growth of US graduate employment in so-called 'high school jobs' may only be valid for male graduates in older age-groups rather than for graduates of all ages and both genders.

In the context of the rapid expansion of higher education in Britain, the most obvious limitation of the BLS approach is its static conceptualisation of the nature of 'graduate-level' work. In particular, it is unable to take account of potential changes in the degree of autonomy or complexity associated with some jobs traditionally not filled by graduates or of the possibility that employers may reorganise the way in which work is carried out to take advantage of the greater availability of graduate-level skills and knowledge.

Yet most advocates of increased higher education participation in Britain have implicitly assumed that industrial performance would be enhanced by employers having more graduates available to them (see, for example, CBI, 1994). Hence there is considerable interest in learning more about how the newly-expanded supply of graduates is actually being deployed by British employers. This was the background to the recent study of graduate recruitment and utilisation in selected branches of British manufacturing and services (Mason, 1995).

This investigation was based primarily on case study visits to representative samples of corporate and branch establishments in two different industries, namely, steel manufacturing and financial services (banks and building societies). Interviews were carried out with both appropriate senior managers and with individual graduate employees. Given limited time and resources, the decision was taken to sacrifice breadth of industrial coverage for in-depth investigations covering a mix of enterprise- and establishment-sizes which it was hoped would be able to dig beneath the surface of recent changes in graduate deployment in British industry. The two specimen industries - steel and financial services - were selected as being broadly representative of manufacturing and services, respectively, in terms of both new graduate recruitment levels and current graduate shares in total employment. In total the two samples covered eight steel-making companies and twelve financial service organisations (six banks and six building societies). The visits were all carried out between November 1994 and February 1995 (see Mason, 1995, Section 3 for further details of methodology and sample selection).

3. Graduate recruitment and utilisation in steel and financial services

Many British employers are now faced with increasing numbers of graduate applicants for a wide range of jobs at the same time as the higher staying-on rate at age 18 has reduced the availability of well-qualified school-leavers entering the labour market. A large and continuing increase in graduate supply clearly serves in and of itself, therefore, to increase employer take-up of graduate relative to non-graduate staff. However, this substitution process is being driven by changes in demand as well as by supply factors.

As in many other branches of both manufacturing and services, most steel and financial service enterprises now face growing pressures to reduce costs while simultaneously meeting higher quality standards and catering more and more to specific customer requirements. As a result of this intensified product market competition and of technological change, demand for First degree graduates relative to other levels of qualification was found to be increasing for strongly positive reasons. Possession of a degree (usually, but not always, in a relevant discipline) was generally taken as indicative of above-average intellectual capacity and of ability to investigate problems and develop creative solutions. These qualities were typically highly valued so long as they were combined with personal attributes such as good 'inter-personal', team-working and communication skills.(4)

This increase in demand for graduates partly reflected the rising share in employment of 'traditional' high-level jobs, for example, those associated with the design and development of new products/services and information systems. But in the context of a widening range of variation in their product mix, many enterprises also have a strong incentive to reorganise production, sales and administration processes in order to take more advantage of graduates' skills, knowledge and presumed greater analytical capacity and ability to undertake non-routine work. As a result many 'old' high-level jobs had been reorganised to ensure that their holders liaised more closely with production departments (in steel) and with customers (in both industries). At the same time some 'new' high-level jobs had also been created (with graduates displacing less well-qualified personnel, eg in production and sales departments in steel and in retail branches in financial services).

Given the many recent (and ongoing) changes in both the level and structure of total employment in each industrial sample - and the blurring of boundaries between many occupations and departments - it was not possible to quantify with any precision the mix between traditional high-level jobs, either reorganised or unmodified, and new, upgraded high-level positions. However, several very interesting examples of work reorganisation and associated improvements in work performance were identified, particularly in steel plants where, for example, some technical graduates were supervising shop floor production teams responsible for increasingly complicated mixes of high value-added products; and foreign language graduates had replaced clerical-grade sales staff in companies where exports had been rising rapidly. A rough estimate suggested that up to a fifth of all new graduates taken on by sample steel plants in a recent 12 month period could be described as filling new upgraded jobs (replacing less well-qualified personnel). All graduates in this category were reported to have salaries and career prospects which exceeded those of non-graduates of the same age in their departments.

These findings highlight the dangers of assuming that graduates are necessarily being 'under-utilised' if they enter jobs for which university degrees have not 'usually' or 'traditionally' been required. A more adequate definition would perhaps regard graduates as under-utilised in employment only if two further conditions apply: firstly, the jobs in question have not been substantially modified in any way to take advantage of graduate-level skills and knowledge; and secondly, no salary premium is on offer to graduates as compared to non-graduates in the same jobs.

Even by this more restrictive definition, under-utilisation of graduates in the steel industry appeared to be minimal. In the steel plants visited, new graduates accounted for a disproportionately large one-third share of all new recruitment and the graduate share of total employment was slowly edging up by an estimated 0.5 to 1 percentage point per annum. The great majority of new graduate recruits in this branch of manufacturing had gained degrees in vocational subjects - including foreign languages and business/financial studies as well as engineering and technology - and were appointed to jobs appropriate to their level of education (as reflected in starting salaries and career prospects).

Observations during other recent NIESR studies based on manufacturing sectors suggest that this positive assessment of current trends in graduate utilisation in the steel industry may broadly apply to manufacturing as a whole (see, for example, Mason and Wagner, 1994). However, as shown in Figure 1, manufacturing industries now absorb only a small fraction (15 per cent in 1993) of new graduates entering home employment. The bulk of job opportunities for the expanded supply of new graduates will arise in service sectors where the prospects regarding graduate utilisation appear to be rather more diverse. In the financial services sample, for example, new graduates were being recruited in increasing numbers to both high-level positions and clerical-grade jobs. In addition, available information suggested that the proportion of new graduates taking up newly upgraded high-level positions in financial services was very much smaller than in the steel sample.

The main contrasts between the two industries in graduate recruitment and salary patterns are shown in Table 3. Rapid growth in new graduate recruitment by the financial service enterprises was accompanied by increased differentiation in graduate starting salaries which had few parallels in the steel sample. Although median annual starting salaries in each industry were only [pounds]1000 apart, top starting salaries in financial services were some [pounds]10,000 higher than the lowest salaries on offer to new graduates in that industry. This compares with a differential of only [pounds]2800 in steel.

The relatively wide dispersion of graduate starting salaries in financial service enterprises was associated with marked disparities in task assignments and career prospects of different categories of graduate. Indeed, several different 'layers' of graduate recruitment could be identified. Within mainstream 'graduate entry' programmes, some of the increased segmentation could be seen as a further development of long-existing streaming systems, especially as regards the identification of 'high-flyers'. However, several large financial service enterprises have now begun to subdivide the mainstream graduate intake still further, with a lower tier of graduates being explicitly recruited to 'mid-clerical' jobs on salaries up to a third lower than most other mainstream graduate recruits to the same organisations.

Table 3. Overview of graduate recruitment in steel and financial
services samples in 1994-95

STEEL FINANCIAL SERVICES

Graduates 7 per cent of workforce Graduates 17 per cent of
 workforce (a)

New graduate recruits represent New graduate recruits represent
approx. 0.5 per cent of total approx. 0.65 per cent of total
employment and one third of all employment
new recruitment

Mainstream graduate recruits

Approx. 0.43 per cent of total Approx. 0.36 per cent of total
employment employment

75 per cent men, 25 per cent 50 per cent men, 50 per cent
women women

Average age early 20s Average age mid 20s

Nearly all vocational degrees Nearly all vocational degrees
in
(except 10-15 per cent new small and medium-sized
recruits in largest companies) enterprises; up to 50 per cent
 general degrees in large
 enterprises

Starting salaries: Starting salaries:
Median: [pounds]13K p.a. Median: [pounds]14K p.a.
Range: [pounds]12.0-14.8K p.a. Range: [pounds]9-19K p.a.

Graduate recruitment to basic clerical and other sub-graduate jobs

Minimal, est. 0.1 per cent of Approx. 0.29 per cent of total
total employment employment, equivalent to 45
per
 cent of all new graduates
 absorbed in recent 12 month
 period

 (Av. starting salary:
[pounds]8K
 p.a.)

Note:(a) In the absence of reliable information for sample
enterprises, this estimate is based on Labour Force Survey data for
the banking and finance industry as a whole (see Appendix Table
B2).

This multi-tier recruitment strategy was explicitly described by some of those employing it as a rational response to the relative lack of well-qualified 18 year olds entering the labour market and to the relatively poor quality and low salary expectations of many graduate job applicants in present labour market conditions. Although financial service organisations now typically receive several dozen applications for every graduate trainee position available, several reported failing to meet their recruitment targets at the end of a long selection process involving interviews and formal 'assessment centres'. Sometimes this reflected losses of potential new recruits to other employers at a late stage in the recruitment procedure but nearly all managers interviewed reported encountering large numbers of graduate job-applicants who appeared to lack either technical expertise of any kind or desirable personal qualities such as communications skills, numeracy, maturity, capacity for initiative, 'commercial awareness', etc.(5)

In each case managers were concerned to point out that individual graduates entering their organisations at a modest level would have the opportunity to 'prove themselves' and work their way onto higher-level career paths, and predictably such opportunities form part of the motivation for many individual graduates to reduce their initial salary expectations in the first place. However, it was clear that some of the weaker graduate applicants were regarded by employers as well-suited to routine jobs requiring very little training.

In addition to this increased segmentation of graduates entering formal graduate entry programmes, nearly all sample enterprises in financial services reported that graduates now constitute an increasingly large share of applications for jobs which have never required a degree, and where no salary premium is on offer to degree-holders. However, there was a considerable diversity in their responses to this phenomenon. The smaller building societies were typically still concerned about potentially rapid turnover of 'over-qualified' people who would get bored with routine work. By contrast, several larger organisations - both banks and building societies - had begun to take advantage of the new availability of graduates for basic clerical and similar jobs. One manager argued strongly that:

'Putting a higher grade of people in low-level jobs [such as on telephone help lines] gets a better standard of performance... They [graduates] are more articulate, they understand some aspects of the job better [eg cross-selling of different products]....'

And another dismissed any fear of rapid turnover of graduate staff in low-level jobs:

'Some of today's graduates aren't like graduates used to be anyway... They adapt quickly and pick up the skills [needed for their jobs] but they don't seem to have any urgency to move on....'

A full assessment of the total number of graduates entering sub-graduate jobs was hampered by the inability of certain large enterprises to provide detailed information about graduates recruited outside their mainstream graduate entry programmes and by the prevalence of fixed-term and temporary employment in lower-level banking and finance jobs at the time of the study. However, an estimate based on information supplied by ten of the twelve enterprises visited (accounting for 71 per cent of new graduate recruitment in the sample) suggested that as many as 45 per cent of all graduates entering employment in a recent 12 month period had taken up clerical, cashier and similar jobs rather than mainstream 'graduate-level' jobs.(6)

Indeed, for one large organisation, analysis of qualifications and other data for a sample (apparently representative in nature) of just under half the temporary agency staff currently employed in clerical, machine operating and other low-level jobs (paying [pounds]4.50 per hour) showed that some 14 per cent of such temporary employees were graduates, 40 per cent of whom had been in their current positions for 6 months or more.(7) In absolute terms these results suggested that at least as many graduates had taken up temporary clerical jobs in this organisation in the previous 12 months as had been recruited through its formal graduate entry programme over the same period.

Clearly, the influx of graduates into 'sub-graduate' jobs need not lead to permanent under-utilisation of the individuals in question. In some cases employers had begun to think about ways to upgrade jobs or even create new ones to take more advantage of the 'hidden potential' in their midst, and this process could develop further in the event of continued improvement in overall economic conditions. Individual graduates in low-level positions who were interviewed during this enquiry nearly all saw such positions as 'a foot in the door' to apply for internal vacancies or a short-term source of income and experience while they continued to search for something better. In some cases their optimism had been justified. However, the extent of positive responses by employers to the greater availability of graduates will partly depend on the perceived quality of new graduates applying for employment. The more graduates who are deemed to be weak in technical expertise and/or inter-personal and communications skills, the less will be the stimulus for employers to upgrade their job descriptions and salaries.

4. Recent developments in the British graduate labour market

As noted above with respect to both the industries investigated, in the majority of cases where graduates appeared to be under-utilised in some way this was clearly signalled through salary differentials. This suggests that many of the central issues regarding graduate utilisation may fruitfully be explored in future research tracking shifts in the dispersion of graduate salaries in Britain.

The latest projections from the Institute for Employment Research suggest that future employment growth will continue to be concentrated in managerial, administrative and professional occupations where degree-level qualifications are increasingly sought by employers (IER, 1996). This is supported by a recent survey of 274 predominantly large employers in a range of industries which was carried out for the Association of Graduate Recruiters (AGR). It points to continued rapid growth in demand for graduates in 1996, with average graduate starting salaries rising almost twice as fast as average earnings. At the same time this survey also found that the gap between the highest and lowest graduate salaries was continuing to increase, with the differential at its greatest in service industries (AGR, 1996).

Another recent report by Industrial Relations Services (IRS) - based on a survey of 191 employers, including small and medium-sized firms as well as large companies - was more pessimistic about graduate job prospects as a whole. In common with the AGR survey, it found continuing concerns among employers about the poor standard of communication skills and 'business awareness' of many of the new graduates presenting themselves for employment (IRS, 1995).

Clearly, more research is needed before any detailed assessment can be attempted of the extent and nature of any recent changes in the quality-distribution of graduates. In the meantime it should be noted that many complaints about graduate quality voiced by employers pre-date the recent expansion of higher education provision. Indeed, until recently at least, the Department For Education has argued that 'increased [higher education] participation and a reduction in unit costs have been accompanied by maintained or increased quality'. The evidence cited for this has been the apparent continuance of relatively low drop-out rates and an increase in the proportion of British First degree graduates obtaining first and upper second class degrees (DFE, 1994a, 1995).

However, given that the expansion of higher education involves drawing on students from a wider academic ability-range than hitherto, it might be expected that - all else being equal - the maintenance of degree course standards would be associated with an increase in the previously low student drop-out rate in Britain. The latest information on drop-out rates suggests that they are indeed now outpacing the growth in student numbers: a new survey by the Committee of Vice Chancellors and Principals (CVCP) shows that drop-out rates are particularly high among mature students and that the proportion of drop-outs attributable to examination failure is starting to increase (CVCP, 1996). These developments - however regrettable for the individuals concerned - are consistent with the United States' experience of mass higher education where relatively high drop-out rates coexist with acknowledged variation in the academic quality standards associated with different types of higher education provision (Williams, 1992).

5. Implications for policy

For all the speed and suddenness of the recent growth in higher education in Britain, the annual output of new graduates per head of population is still much smaller than in the United States. It is therefore disconcerting that some of the negative phenomena associated with American higher education - under-utilisation of many graduates, apparent gaps in quality between the most and least prestigious degree courses - have started to rear their heads at a relatively early stage in Britain's own transition to a US-style mass higher education system.

The evidence presented above suggests that, for the foreseeable future, high demand for graduates relative to non-graduates in Britain will coexist with a growing polarisation in graduate salary and career prospects: while many new graduates will find high-level jobs where their skills and knowledge are valued, another large proportion of graduates will find themselves in poorly-paid clerical-grade and similar jobs. The increase in new graduate supply has been so rapid that many employers are still only just beginning to adjust to the new opportunities presented to benefit from a more highly-educated workforce. However, positive responses by employers in the form of work reorganisation and job upgrading may be constrained by concerns about widening variation in the quality of new graduates.

One advantage of an increased supply of First degree graduates is that it may compensate to some extent for deficiencies in higher intermediate (technician and supervisory) skills training. However, this is (in social terms at least) a rather expensive means of developing the required skills. Recent investigations in the US and elsewhere suggest that there are also limits to the value of such reliance on graduates who frequently lack the practical knowhow and production experience of those who acquire their skills through employment-based training as well as classroom study (Mason and Finegold, 1995). In both manufacturing and services industries, improvements in productivity and competitiveness will continue to depend on the availability of an adequate mix of graduate-level and intermediate skills.

In this context, the developing problems of 'quality control' in higher education and of under-utilisation of graduates in industry provide support for the proposition that limited educational resources should be more evenly shared between further and higher education. At present, for instance, part-time vocational education for over-18s in Britain receives much less financial support from government than does full-time higher education (Layard et al, 1994). There are no reasons in principle why this long-running disparity should be allowed to continue.

At the same time careful consideration needs to be given to the long-term determinants of graduate quality. As noted above, concerns about the deficiencies of many graduates in respect of numeracy, communications skills, capacity for initiative, 'commercial awareness', etc., are hardly new and cannot be attributed solely to the recent expansion of higher education. Nor is it likely that such deficiencies can be fully rectified by changes in the curricula followed by students once they get to university. The development of more 'rounded' graduates might be better served by a substantial broadening of the sixth form curriculum to ensure, in particular, that students are not able to drop core subjects such as maths, science and English at too young an age.(8)

This argument is supported by a recent study which found the relatively low industrial demand for post-graduate engineers and scientists in Britain (as compared to Germany) to be partly due to concern that British postgraduates are 'over-specialised' and 'too academic' - hardly surprising given the very narrow academic education path which most of the individuals in question have followed since the age of 16. Such complaints by employers were much less common in Germany where academic secondary school pupils typically follow a broad curriculum till the age of 18 (Mason and Wagner, 1994).

Indeed, the early experience of mass higher education in Britain suggests that the need for serious reform of A levels to ensure genuine subject breadth has now assumed a real urgency, even if many of the proponents of such reform have become weary of putting their case. Even when university places were reserved for a small academic elite, the premature specialisation inherent in the existing A level system arguably never served the real long-term interests of the students or of their future employers. Now as higher education is extended to a much wider academic ability-range of students and the range of skills and knowledge sought by industry expands, the need for a sound educational foundation for all university entrants appears to be stronger than ever.

* An earlier version of this paper was presented at the Conference on The Highly Qualified in the Labour Market, University of Warwick, in February 1996. I would like to thank Yvonne Stremmer for excellent research assistance on the graduate utilisation study. I am also grateful to the Employment Department (now part of the Department for Education and Employment) for providing financial support for that project; the Department is not responsible in any way for the views expressed in this paper.

NOTES

(1) DFE, Statistical Bulletin, 13/94, Table 3 and Departmental Report, 1995, Annex Table G. The 'relevant age group' is defined as half the total number of 18 and 19 year olds in the population.

(2) DFE, 1994b, Table 3. A recent estimate by Smithers and Robinson (1995) suggests that nearly 60 per cent of current 18 year olds in Britain may at some stage enter higher education, roughly half as school-leavers and half as mature students.

(3) Bishop and Carter also point out that the poor quality of some college graduates may make them well-suited to low-level 'non-college' jobs: however, as discussed below in the main text, this point raises quite separate issues of relevance to policy makers responsible for the allocation of public resources between different levels of education.

(4) This litany of desired personal qualities has been frequently identified in other surveys of employers (see Court et al, 1994). Close observation of the way many graduates are now utilised provides many striking examples of just why technical expertise needs to be combined with the ability to communicate freely and easily with customers and with fellow-employees at all levels. For examples taken from British steel plants, see Mason, 1995, Section 4.3.

(5) It should be noted that, in terms of specific 'skill shortages', difficulties in filling graduate entry programmes were of much less concern to employers than difficulties encountered in recruiting (and retaining) experienced specialists in such areas as IT project management and corporate lending.

(6) This estimate refers specifically to clerical-grade jobs where graduates were earning no more than non-graduate staff in the same jobs, typically [pounds]8000 for those without prior experience. Recruitment of this kind was additional to those graduates recruited as a 'lower tier' of mainstream graduate trainees. In all graduates accounted for about 10 per cent of total new clerical/cashier recruitment over the 12 month period in question.

(7) Some 79 per cent of these graduates were aged 25 or under. The gender mix was 38 per cent female, 62 per cent male. The mix of degree disciplines was as follows: 24 per cent Arts, Humanities; 23 per cent Science, Engineering, Technology; 19 per cent Business, Finance, Economics; 7 per cent Law; 7 per cent Maths, Computing; 20 per cent Other, Not stated.

(8) In respect of maths and science subjects, such a policy would also help to expand the proportion of each cohort of 18 year old school-leavers who were at least qualified, should they so wish, to embark on university studies in science, engineering and technology subjects.

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