Destination Wales: the Welsh graduate labour market
- Summary
- Research details
- Growing numbers of students, graduates and postgraduates
- Welsh graduate employment matches rest of UK
- Graduates can still expect financial returns
- Graduate migration mirrors most other UK regions
- Welsh HEIs offer good links between graduates and employers
- References
Summary
Claire Tyers, from the Institute for Employment Studies (IES) and Alyson Thomas from the Higher Education Funding Council for Wales (HEFCW) discuss some of the issues raised in their newly launched report on graduate employment and employability in Wales. The overall picture for Wales is positive, and the country’s performance on a range of economic measures matches or exceeds the performance of a number of other UK regions. Employment rates are high, and there is still a clear graduate wage premium. Welsh higher education institutions are also at the forefront of employability initiatives in the UK.
Research details
This article provides a summary of research commissioned by HEFCW, and undertaken by IES to examine graduate employment and employability in Wales. The research analyses existing research evidence and national statistics to present the Welsh picture in a UK context, but also, uniquely, includes data from interviews with a range of key stakeholders in Wales. Representatives of all the higher education institution (HEI) careers services in Wales were interviewed and the views of Welsh employers sought through a telephone survey of 500 employers and face to face interviews with a range of employers and employer representatives. The broader findings have been published as a full research report and an accompanying summary of the key messages [1].
Growing numbers of students, graduates and postgraduates
Like the rest of the UK, Welsh higher education is growing and widening. Wales has seen substantial growth in both the number of students in Welsh HEIs and the number of graduates living in Wales, in line with UK-wide trends. Around 110,000 UK-domiciled students were enrolled in Welsh HEIs in 2003/2004, which is a growth of almost one-quarter since 1999/2000. Over the decade, the number of graduates in Wales has risen by 69%.
Fifteen per cent of the working-age population in Wales now have degree-level qualifications, a relatively high proportion when compared to many other UK regions (see Figure 1). Wales actually has a higher proportion of working age graduates than any UK region outside the South of England, with the exception of Scotland and East Anglia.
Source: Labour Force Survey
The greatest rates of expansion, however, have occurred among those with postgraduate qualifications. Labour Force Survey estimates are that a third of all graduates in Wales have higher-level degrees such as masters degrees or PhDs (using data for the period 2002/5) compared with a UK average of just 29%. This proportion is higher than for any other UK region.
Welsh graduate employment matches rest of UK
Given the increasing number of graduates in Wales, what is a realistic assessment of their employment prospects? The answer remains ‘good’. Not only do graduates in Wales have high employment rates (third only to the East Midlands and Northern Ireland, and therefore above the UK average, see Table 1), but their patterns of employment are also similar to those in the rest of the UK.
| Regions | Degree | Other HE or A-level | Below A-level | All |
|---|---|---|---|---|
| Northern Ireland | 90.6 | 81.3 | 62.4 | 72.9 |
| East Midlands | 90.2 | 86.2 | 71.2 | 78.9 |
| Wales | 89.6 | 82.5 | 66.2 | 74.9 |
| Scotland | 89.5 | 83.8 | 65.7 | 77.2 |
| South East | 89.2 | 86.1 | 75.3 | 81.6 |
| NorthWest | 89.1 | 84.1 | 67.7 | 76.3 |
| Yorkshire and Humber | 89.0 | 84.1 | 69.2 | 76.9 |
| East Anglia | 88.9 | 85.2 | 75.7 | 80.7 |
| London | 88.8 | 81.8 | 63.1 | 74.3 |
| West Midlands | 88.7 | 85.9 | 68.9 | 76.9 |
| North East | 88.5 | 82.1 | 63.4 | 72.8 |
| South West | 88.0 | 86.4 | 75.2 | 81.3 |
| UK | 89.1 | 84.5 | 69.3 | 77.7 |
The majority of graduates in Wales (84%) are employed in ‘higher-level’ occupations (ie managerial, professional and associate-professional occupations), and individuals with higher degrees are even more likely to be working at these levels. The economy has, therefore, absorbed the increased graduate supply well to date, mainly through the diversification and broadening out of the types of roles that graduates take on. Having said this, Wales actually has proportionately more graduates working in ‘traditional’ graduate jobs (i.e. established professions such as teachers, doctors, solicitors) than is the case in the rest of the UK (29% in Wales compared with 26% in the rest of the UK).
Graduates can still expect financial returns
Overall, therefore, graduates are continuing to find work in jobs appropriate for their skills. A further question, however, is whether there are now fewer financial reasons for individuals to take up degree-level study, given students’ increasing reliance on loans, and the requirement to pay fees (even if the fees in Wales (for Welsh students) are lower than in England from 2007). The answer from this analysis is a measured ‘no’. The analysis for Wales ties in with the majority of the evidence so far that despite concerns about the growth in the supply of graduates, the graduate wage premium has been maintained [2] . There is, however, other evidence that the relative financial rewards for graduates may now be starting to decline, although again the picture for Wales equates to the situation across the UK [3].
Graduates still have a positive return on their degrees, ie graduates can still expect to earn more money over their lifetime than non-graduates, even when compared with those who have the necessary qualifications to go to university but have chosen not to do so. There is a slight decline in the level of returns for those with first degrees, but individuals with higher degrees maintain higher returns. As there are now more of these higher qualified individuals amongst the graduate population, the economic returns, therefore, remain stable for ‘graduates’ if those with higher level qualifications are included.
Over the period of 2002/2005 (and grossed up to 2005 prices), graduates in Wales were earning around 46% more than individuals with higher education qualifications below degree-level/A-levels, with an average gross annual graduate wage of £27,900. The relative returns to Welsh graduates are higher than those in most other UK regions (Figure 2 presents the average graduate wage as a proportion of the average regional wage). Wales does have overall lower wage levels (including for graduates) but this again needs to be placed firmly in context, given the maintained returns to graduates and lower cost of living in the region (estimated at 6.3% lower than the national average, and with housing costs only around 80% of those of the UK as a whole [4].)
Source: Labour Force Survey (2002 to 2005)
There are some gender differences in earnings, linked to the types of jobs that women take up (particularly part-time work), but levels of gender segregation in employment in Wales are on a par with those in the rest of the UK. In fact, the earnings gap between men and women is actually smaller in Wales (male graduates in Wales earn approximately 38% more than their female counterparts compared with 43% more in the UK as a whole). Whilst men have higher gross wages, it is noticeable in all of the research that women generally benefit more, in relative terms, from higher education. Correspondingly, in Wales, women with a degree earn 57% more than females qualified to other higher education or A-level standard, compared with a figure of 43% greater earnings when this comparison is made for men.
Graduate migration mirrors most other UK regions
For any region, a key question is its ability to retain the right graduate level skills. How well does Wales exploit the cross border flows with England that characterise its higher education provision? The answer here is less clear. We have only fairly limited information on graduate destinations. The Higher Education Statistics Agencies (HESA) survey of graduates provides information on graduates for only the first six months following their graduation. What this does show is that only three regions - London, Eastern England and Northern Ireland - are net importers of graduates at this early stage in graduate careers [5]. However, we suggest that the latter two regions are not good comparators for Wales as Northern Ireland has a unique pattern of study in that many students leave to attend higher education in England and then return home on graduation, whilst the East is a very small region in terms of higher education output but includes counties bordering on London (Essex, Bedfordshire and Hertfordshire) where there is high demand for graduates. All other regions, including Wales, lose more graduates following graduation from HEIs in the region than they attract in to take up work opportunities. The net outward migration of graduates is, therefore, comparable in Wales to migration patterns in many other UK regions.
Also like other regions, Wales both attracts high achievers into the region and loses high achievers to other parts of the UK. Across Europe, around one-half of graduates will have experienced some mobility from the region where they studied within four years of graduation [6] , so this amount of mobility is not limited to the UK. Any concerns about the loss of talent for Wales, therefore, need to be considered in this context, and not overstated. Tracking of graduate destinations over the longer term (such as that planned by the HESA longitudinal study) will help to provide more definitive answers for all regions about the effect of graduate migration.
Welsh HEIs offer good links between graduates and employers
What role have Welsh HEIs in this overall picture? Wales is actually at the forefront of employability initiatives in the UK and this is worthy of greater recognition. The Graduate Opportunities Wales (GO Wales) Programme (an EU/Welsh Assembly Government funded HEFCW programme) is expanding the resources of careers services in Wales, and is well received by all stakeholders [7]. A recent review of higher education careers services (the Maguire review) highlighted GO Wales as a particularly effective mechanism for promoting excellent partnerships between employers and HEIs, and recommended that HEIs should be encouraged to assess the appropriateness of replicating this type of programme [8]. HEI careers services are an important link between students/graduates and employers, and many services have been changing their focus to become more integrated with their HEI and help provide employability skills as part of curriculum development.
The GO Wales programme is enabling closer links to be built and maintained between HEIs and the local community and employers. Thirty per cent of employers surveyed for this research had had some contact with their local HEI. The most common form of contact was running work placements or advertising vacancies through the careers service.
The views of graduate employers about the potential benefits that graduates brought to their organisations were much more positive than those of non-graduate employers. Reasons given for specifically recruiting graduates included their: greater communication and technical skills, enhanced capacity for learning, leadership potential, more developed analytical skills, ‘added maturity’, and, often greater variety of work experience. Initiatives such as GO Wales which, through work placements and career management support, are helping to bring a greater variety of employers into contact with students/graduates and are, therefore, potentially stimulating demand for and appreciation of graduate skills. As one Welsh graduate employer stated:
"We choose to recruit graduates to give us an edge on the competition and improve the quality of customer service."
Given the range of evidence about the relatively strong economic performance of Welsh graduates, the main issue for the country is to continue to promote the message that Wales is an attractive destination for graduates. There are challenges ahead, but these are no greater than those facing the majority of UK regions.
References
1. Tyers C, Connor H, Pollard E, Bates P, Hunt W (2006) Welsh Graduates and their Jobs: Employment and Employability in Wales, Higher Education Funding Council for Wales (HEFCW).
2. See, for example, Purcell K et al (2005) The Class of ’99, A Study of the Early Labour Market, Department for Education and Skills research report 691.
3. See Walker and Zhu (2003) ‘Education, earnings and productivity, recent UK evidence’, Labour Market Trends, Vol. 111, No. 3.
4. Ball A and Fenwick D (2004) ‘Relative regional consumer price levels in 2003’, Economic Trends, No. 603.
5. Regional perspectives on graduate destinations, Graduate Market Trends, Spring 2005.
6. Teichler U (2000) ‘Graduate employment and work in selected European countries’, European Journal of Education, Vol 35.
8. Maguire M (2005) Delivering Quality: Quality Assurance and Delivery of Careers Education, Information and Guidance for Learning and Work within Higher Education, DfES.
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