WelshGraduates and
their Jobs
Employment and Employability in Wales
Claire Tyers, Helen Connor, Peter Bates, Emma Pollard, Will Hunt
Prepared for HEFCW by:
INSTITUTEFOREMPLOYMENTSTUDIES
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© Copyright Higher Education Funding Council for Wales (HEFCW). Where HEFCW copyright material is published or issued to others, the source and copyright status must be acknowledged.
The Institute for Employment Studies
The Institute for Employment Studies is an independent, apolitical, international centre of research and consultancy in human resource issues. It works closely with employers in the manufacturing, service and public sectors, government departments, agencies, and professional and employee bodies. For over 35 years the Institute has been a focus of knowledge and practical experience in employment and training policy, the operation of labour markets and human resource planning and development. IES is a not-for-profit organisation which has over 60 multidisciplinary staff and international associates. IES expertise is available to all organisations through research, consultancy, publications and the Internet.
IES aims to help bring about sustainable improvements in employment policy and human resource management. IES achieves this by increasing the understanding and improving the practice of key decision-makers in policy bodies and employing organisations.
Higher Education Funding Council for Wales
Our mission is to promote internationally excellent higher education in Wales, for the benefit of individuals, society and the economy, in Wales and more widely.
Working with partners, we deploy funds from the Assembly and others in order to:
■secure higher education learning and research of the highest quality
■maximise the contribution of higher education to the culture, society and economy of Wales
■ensure high quality, accredited teacher training provision across Wales.
Acknowledgements
The authors of this report acknowledge the considerable assistance given by other IES staff involved in the project delivery, Emma Diplock, Gill Howd, Polly Green and Denise Hassany, andalso Geoff Pike and his team at Employment Research, who conducted the survey of Welsh employers. Additionally, we would like to acknowledge the input of all stakeholders, including careers service staff within Welsh HEIs, and Welsh employers who gave up their time to speak to the research team. Finally, we would like to acknowledge the assistance given by the project steering group, Alyson Thomas, Roger Carter, James Dawson, Hannah Falvey and Frances Good, and members of HEFCW’s Third Mission Committee who provided comments on initial drafts of the report.
Contents
Research Summary
1.Introduction and Background
Research aims and objectives
Methodology
Definitions used in the report
Report structure
2.Background and Context
Introduction
Larger and more diverse graduate supply
Increased HE participation but rates vary
Other changes to the HE landscape
Changes in the graduate labour market
Starting salaries vary markedly
Longer-term graduate outcomes
What is a graduate job?
Graduates in small firms
Recruitment methods
HE careers services
Overseas comparisons
Chapter summary
Chapter conclusions
3.Graduate Supply
Introduction
Student population
Demographics of the student population in Wales
Graduate population in Wales
Chapter summary
Chapter conclusions
4.Graduates at Work
Introduction
Economic activity
Graduate occupations
Graduate jobs
Industrial sector
Employment contracts
Graduate earnings
Returns on higher education
Early experiences of new graduates
Chapter summary
Chapter conclusions
5.Graduate Migration
Introduction
Overview of mobility data
Migration pathways
Stayers and leavers
Early leavers and returners
Early arrivers and passers-through
Later arrivers and the missed
Overview of flows in and out
What drives migration?
Chapter summary
Chapter conclusions
6.Graduate Recruitment and Demand
Introduction
The nature of the Welsh economy
Understanding the Graduate Labour Market
Profile of graduate recruiters
Jobs and vacancies
Recruitment methods
Wages
Chapter summary
Chapter conclusions
7.Graduate Employability
Introduction
Greater focus on graduate employability in HE generally
HEI approaches to employability
Employer contacts with HEIs
Use of labour market information
Drivers behind graduate recruitment
Potential barriers to graduate recruitment
Welsh-language issues
Chapter summary
Chapter conclusions
8.Conclusions
Overview
Graduate demand and employment in Wales
The structure of the Welsh labour market
Implications of employment patterns in Wales
Graduate earnings in Wales
Mobility and retaining/attracting graduates
Employability
Graduate views of Wales
Employer involvement with graduates in Wales
Summary of conclusions
Recommendations
Appendix 1: Stakeholder Participants
Appendix 2: Details of Employer Survey
Appendix 3: Employer Questionnaire
Appendix 4: Additional Data Tables
Appendix 5: Earnings Equations
Appendix 6: Breakdown of Geographical Areas
Appendix 7: Confidence intervals
Bibliography
1
Research Summary
1.1The overall aim of this study has been to provide the Higher Education Funding Council for Wales (HEFCW) with an up-to-date and comprehensive set of research evidence on trends and developments in the graduate labour market. This is important, given the changing landscape of higher education in Wales, the attitudes and expectations of students and graduates about work and jobs, and the developing Welsh economy and its demand for graduates. This summary provides an overview of the research scope, and presents the key findings from the research evidence collected, and the main conclusions and recommendations made in the report.
Scope of research
1.2HEFCW commissioned the Institute for Employment Studies (IES) to conduct a market research study of graduate employment and employability in Wales. The full research objectives are presented in Chapter 1 of the main report, but were primarily to:
■shed further light on trends arising from the three previous research studies commissioned by HEFCW, through a review of existing information sources
■explore the issues of retaining graduates of Welsh higher education institutions (HEIs), and of how Wales-based employers might attract Welsh graduates from HEIs outside Wales, where this would demonstrably be to the benefit of the Welsh economy
■identify any mismatches of supply and demand that exist in the Welsh labour market for graduate-level skills, and explore the notion of a ‘graduate job’
■consider what might be done at both the HEI and employer level to improve graduate career prospects
■compare the situation in Wales with that of other (similar) regions of the UK, Western Europe andNorth America.
1.3In order to fulfil these objectives, the research had five main components:
■a review of relevant existing literature and data sources, including analysis of student data from the Higher Education Statistics Agency (HESA) and other key sources
■interviews with a range of stakeholders in Wales, representing12 organisations
■interviews with representatives of all Welsh HEI careers services, 22 interviews in total
■an analysis of data from two large UK-wide datasets with specific data on Wales:the Destinations of Leavers from Higher Education (DLHE) providing a short-term view of migration patterns, and the Labour Force Survey (LFS), which gives a longer-term view of graduate outcomes
■a survey of 514 employers operating in Wales, with 23 additional face-to-face interviews with current graduate recruiters.
1.4The main findings from the research, in terms of key statistics, trends and issues, are outlined below.
Background and overview of general trends
1.5Welsh higher education (HE) is growing, as in the UK as a whole, and there is now greater participation by people from a wider range of educational and personal backgrounds. However, participation rates vary, especially between socio-economic groups, regions and local communities. Participation rates of lower socio-economic groups, for example, are slightly higher in Wales than the rest of the UK outside Scotland (which has the highest figure of any region of the UK). The balance of HE provision has also changed, including greater increases in part-time study with more individuals in postgraduate study in particular, and also shifts in the subject balance at institutions.
1.6There is a general trend across the UK in recent years towards studying at an institution nearer home, mainly due to financial considerations, but also the changing demographic student profile. Welsh-language issues also play a part in some Welsh regions, where there are more opportunities to speak Welsh in the HEI curriculum or stay in Welsh-speaking HEI halls of residence. This affects institution choices by Welsh-speaking potential HE students (but alongside many other factors usually). There also continues to be a significant cross-border flow which has an impact on Welsh HE.
1.7HE expansion has been driven by economic competitiveness and social arguments and the expected needs of the new knowledge economy. But there is also an argument that more attention needs to be given to the greater utilisation of the available talent and,therefore, making better use of the existing graduate workforce.
1.8Despite the larger graduate labour supply ‘pool’, there is little evidence to demonstrate that the demand for graduates has slackened off, or that graduate wage premiums are falling. Rather, the labour market for graduates has broadened and become more differentiated, including more variation by sector, type of job and starting salary; and the UK has some of the highest graduate-wage premiums in Europe. For some graduates, finding work of an appropriate level, however, can be difficult, and graduate employability has become an important concern for HEIs.
1.9Wales is seen as a leader, certainly within the UK, but also further afield, of approaches to graduate employability in HEIs. Despite this, as discussed further below, there is evidence that Welsh HEIs and their graduates have yet to make inroads into the majority of employers in Wales, especially the large number of small firms. This is a situation which also applies in the UK as a whole. Where contacts, via HEIs and with the help of the Graduate Opportunities Wales (GO Wales) Programme (an HEFCW programme), have been established between employers and graduates, the evidence does suggest, however, that this has had positive results. In particular, GO Wales has offered, through its range of services, a significant number of placements (over 1,600 between 2003 and 2005) and also supported over 1,600 businesses during that time. It is seen by employers as offering good value, and by students as enhancing their core skills.
1.10There have been various changes to graduate-recruitment methods used by employers and also to graduates’ job-search methods, the most significant of which is the greater use of the Internet. Students also use HE careers services in a more varied way than they did in the past, and many careers services have been changing their focus to become more integrated with their HEI in their advice and guidance services and in the development of employability skills as part of curriculum development.
Graduate supply
1.11Using HESA data on the student population in Wales and data from the LFS on graduates in the working population, we have presented an overview of the key characteristics of, and trends in, graduate supply. This shows that:
■In 2003/2004, around 110,000 UK-domiciled students were enrolled in Welsh HEIs and 42 per cent of these were studying parttime. The numberof non-Welsh students studying in Welsh HEIs has increased by around 4,000 over the last five years, although in overallterms the proportion has fallen.
■The proportion of female students has increased over the past five years and women now outnumber men across the Welsh HE sector as a whole, though the gender balance varies between institutions and levels, and especially between subjects.
■Wales has also experienced a greater increase in older students (students aged over 25 at entry) than younger entrants, and among part-time rather than full-time students, also among those studying at undergraduate other than degree level.
■The number of graduates in the working-age population in Waleshas risen considerably over the last decade, by 69 per cent, although the upward trend has slowed in recent years. Graduates now make up 15 per cent of the working population of the country. This places Wales mid-table in a league of other UK regions.
■Despite recent demographic changes in the student population, male graduates still outnumber female graduates in the population of graduates of all ages in the workforce (as opposed to current students or recent graduates only). This reflects historical trends (the higher HE participation of men pre-1995).
■Younger peopleand minority ethnic groups in the workforce are disproportionately more likely to have a degree; this reflects the recent education supply changes.
Graduates at work
1.12Once individuals have graduated, there is a range of data from the LFS about the jobs they take up.This tells us that:
■employment rates for graduates in Wales are very high, especially for those with higher degrees, and rates are higher than for non-graduates. In all the UK regions, only the East Midlands and Northern Ireland have higher employment rates for graduates than Wales
■the vast majority, 84 per cent, of graduates in Wales are employed in managerial, professional and associate-professional (ie higher-level) occupations
■graduates in Wales are more likely than those in the rest of the UK to be employed in jobs classified according to the new standard occupational classification system (SOC (HE)), as traditional graduate jobs rather than the newer graduate jobs. This is likely to reflect the different employment structure of Wales, especially itscomparatively higher employment of graduates in the public sector (including education) compared to the rest of the UK, and lower employment in large commercial enterprises (few head offices)
■graduate earnings in Wales are lower than in most other UK regions, but this largely reflects the lower relative wages generally in Wales, rather than anything specific to the financial returns to education in the region
■graduates working in Wales earn on average around 46 per cent more per year than individuals with lower qualifications (A-levels or HE qualifications lower than degree). Taking inflation into account, earnings of both groups have increased over the last decade, but at a slightly lower rate for graduates (44 per cent) than for those qualified onlyto A-level or lower than degree-level (46 per cent)
■female graduates have higher returns: women with degrees in Wales earn considerably more than women with no qualification (101 per cent more), and this rises to 139 per cent for women with higher degrees. By comparison, male graduates earn an average of 97 per cent more with a degree than with no qualifications, and 130 per cent more when in possession of a higher degree.
1.13The economic returnsin Wales on holding a higher-level degree over a first degree were greater for women than men (19 versus 16 per cent), while the returnson holding a first degree over a lower qualification were only marginally higher for women than men.
Graduate migration
1.14Wales is a net exporter of graduates, but its performance in this respect mirrors that of many UK regions, and only London is a net importer.
1.15More detailed analysis of mobility was conducted using information from HESA on graduate destinations collected six months after graduation. The information provided a snapshot view of initial graduate migration, and allowed the complexity of the flows of graduates in and out of Wales to be mapped. This showed that:
■a relatively low proportion of Welsh-domiciled students studying in Wales leave after graduation. Men are more likely to leave; so too are younger graduates, postgraduate-degree holders and those with the highest degree classifications
■of the majority of those who study in an HEI outside of Wales, two-thirds do not return to Wales after graduation to work (initially at least); those who do return are likely to have lower degree classifications and are less likely to hold postgraduate qualifications
■almost a quarter of non-Welsh students who study at a Welsh HEI stay in Wales following graduation, but there is no clear pattern relating to the types of qualifications these individuals possess. But non-Welsh graduates from other UK HEIs who migrate to Wales to work are more likely to have postgraduate qualifications and to be working in higher-level occupations.
1.16It is apparent from studies elsewhere that most graduate migration is driven by the desire to gain access to better opportunities. Wales can be successful in attracting in high-level graduates, where suitable opportunities exist. The economic pull of London and more affluent regions is similar to those found in other countries within Europe, where more economically attractive regions dominate patterns of graduate migration.
Graduate recruitment and demand
1.17The economy of Wales is developing, offering a more diverse profile of employment, an expanding services sector and an increasing entrepreneurial and small-business culture. This has implications for graduate employment. The employer survey and careers services interviews undertaken as part of this research study found that:
■graduate expectations can be out of line with the opportunities available in Wales and overly negative. Perceptions on graduate opportunities vary between regions, with South and East Wales seen as offering more visible opportunities
■larger employers and those in the public sector are the most likely to offer graduate employment. The dominance of the public sector is seen by some private sector employers as an ‘unfair’ driver of graduate wages and demand
■Welsh-owned businesses are less likely to offer graduate opportunities than non-Welsh-owned, but this may be because many are smaller enterprises