Best way to a plumb job

Young people should be warned that doing a degree can damage their employability, says Ruth Lea

Among the main concerns of the Institute of Directors, as a business organisation, are the educational standards and skills levels of the labour force, which is vital for the competitiveness of individual businesses and the overall economy. The UK is in many ways a very competitive country, but when it comes to overall educational standards and workplace skills, we are not world class. This holds back productivity, economic growth and prosperity.

One of the most serious problems business faces is that of skills shortages (especially intermediate craft skills shortages). This arises because the labour market cannot satisfactorily overcome some very fundamental basic skills deficiencies in literacy and numeracy and because far too many able school-leavers are siphoned off into higher education and not enough into tough and challenging vocational training.

With regard to the first issue, we support the government's policies of improving the literacy and numeracy of school children, though we do have some concerns - not least the considerable failure rates. But the policies are a step in the right direction. The second issue is a different matter. Here we would argue that the government's policy of "more and more graduates" is fundamentally mistaken.

The overall balance of the educational system between "academic" higher education and genuinely vocational training is badly out of kilter and will deteriorate further as the government struggles to reach its ludicrous 50 per cent target of young people going into higher education by 2010. The country is short of skilled craftspeople such as plumbers. It is not short of media studies graduates.

We are not persuaded that the proposed expansion of higher education will help business's problems with skills shortages. Indeed, the problems are likely to worsen as ever more able people are diverted into higher education.

We are also concerned about the effects on the many young people who are encouraged to study for a degree because they are led to believe it will help their job prospects. They may be under pressure from schools, parents and peer groups to go to "uni" - with training for craft skills being seen, quite wrongly, as a poor second. (It is very different in many countries, including Switzerland, where they have superb crafts training.) They should, however, be given a health warning that "doing a degree can damage your employability". A degree is not always a road to a golden career, and students should know this.

If a graduate has a poor class of degree - increasingly infrequent, given the endemic grade inflation - in a "soft" subject not widely recognised by employers as relevant and from a less well-regarded higher education institution, then they could find themselves significantly disadvantaged in the labour market. There are two main reasons for this. First, some employers are wary of taking on graduates for "non-graduate" jobs because they think that they will feel frustrated that their raised expectations will not be fulfilled. And, second, any graduate will be disadvantaged by having less experience than a person of similar age who went into a job from school, although this will be less relevant as the would-be employees get older.

Of course graduates earn more on average than their peer groups - I would emphasise the word "average" - but many graduates do not. Moreover, there is evidence to show that some groups of graduates actually earn less than they would have done if they had gone into work at 18.

I have concentrated on our severe doubts about the 50 per cent target, but we have many other concerns about the higher education sector - not least of all its severe underfunding. Good universities should be given autonomy, freed from the dead hand of bureaucracy, allowed to charge full-cost fees (thus encouraging more private funding) and negotiate their own terms and conditions for the best academic staff. They must be able to compete more freely in the labour market.

Ruth Lea is head of the policy unit at the Institute of Directors. Her report Education and Training: A Business Blueprint for Reform was published by the Institute of Directors this week.