University Degrees Now Essential for Young Britons to Thrive in Tough Economy

Over the last few years, how far a university degree is superior to vocational training and apprenticeships has been growing as an area of controversy in Britain.

The ruling Conservatives and the opposition Labour Party have focused attention on alternative routes into the workforce, such as apprenticeships, which had been left under wraps until then. Yet, recent analysis of Reed Recruitment data by Bloomberg indicates that despite these efforts, young people in Britain now require a university degree more than ever to succeed in an unpredictable economy.

The Growing Pay Premium for Graduates

Bloomberg's analysis of Reed Recruitment's job vacancy data highlights a significant trend: businesses are reducing job postings that do not mandate a degree, especially during economic downturns. During the UK's recession last year, there was a notable decline in job postings that did not require a diploma, whereas those requiring a degree remained relatively steady. This shift underscores a growing pay premium for graduates, making a university degree an increasingly valuable asset.

The statistics indicate a 40% increase in job postings that mandate a degree since 2016. This trend persisted despite a slight economic downturn in 2022, with job postings not requiring a degree dropping to nearly half of their 2016 levels by May 2023. Lizzie Crowley, a senior skills policy adviser at the Chartered Institute of Personnel and Development, noted that during economic distress, graduates are somewhat shielded from the downturn due to the demand for knowledge-based employment, which tends to hold up better.

Employers' Shifting Preferences

Due to the economic conditions, most businesses have become very selective in their recruitment and are therefore relying more on degrees as a prerequisite in order to control the influx of a large number of job applicants. This phenomenon is making the university diploma a requirement even in jobs that normally do not require academic qualifications, such as real estate agents and payroll managers.

Barney Ely, managing director at Hays in the South East, pointed out that higher-level jobs, which typically require a degree, are more crucial and less vulnerable during economic downturns. This sentiment is echoed across various sectors, with health, construction, and accountancy more than doubling their vacancies requiring academic qualifications since 2016. The demand for degree-holders is particularly pronounced in fields such as engineering and education, which have seen overall job postings increase, contrasting with sectors that require lower qualifications, where vacancies have shrunk.

The Limited Reach of Apprenticeships

While the government has driven initiatives to get more young people into vocational training-including the prime minister's funding commitment for 100,000 new apprenticeships annually-programs have fallen short of the expected status as a widely embraced alternative to higher education. Relatively disappointing, the take-up of degree apprenticeships being at 5% of all undergraduate degree speaks volumes about business sensitivity to the significant financial commitment entailed in each of the roles.

While major corporations like Cisco Systems Inc. have adopted degree apprenticeships, smaller businesses face difficulties in managing the financial and time constraints involved. Despite government financial assistance, many companies find it hard to keep apprentices on their payroll and provide them with study leave.

In practice, the majority of degree apprentices are aged over 25 and are already working, suggesting that these initiatives are not substantially aiding younger individuals entering the job market. Stephen Isherwood, co-CEO of the Institute of Student Employers, underscores that the economy is shifting towards a high-skilled environment where graduates are becoming increasingly indispensable.

Recent studies by Reed Recruitment and Bloomberg indicate a significant shift in the UK job market, highlighting the increasing necessity of a university degree to secure employment and higher salaries. It challenges the argument that vocational training and apprenticeship routes can successfully work as an alternative to higher education. In an economy where skilled workers are highly sought after ever more, the competitive advantage by way of holding a university degree has become more and more important in job markets.