Time to raise collateral to halt the slide in value

Malcolm Brynin suggests some ways for the government to address the declining value of a degree

We all believe in higher education, particularly those of us who are engaged in it professionally. Students believe in it, too, otherwise they would not mortgage a part of their lives to participate. Obtaining a university degree is a worthwhile lifetime investment. Yet there are several reasons to believe that the relative value of a degree is under threat.

First, employers' attempts to reduce labour costs have cut into the financial rewards of a degree. Even if rapid technological change has raised the demand for qualified people, employers are likely to force on graduates flexible work practices that, for instance, widen their roles, require them to become Jacks of all trades or demand more unpaid overtime.

Second, because the number of university graduates has risen so rapidly, it has become harder, not easier, to match supply and demand. The range of skills required has increased while qualifications have become less and less differentiated. The result is a mismatch between jobs and applicants.

Third, even if there is a rising demand for graduate skills - and there probably is - there may still be too many graduates around because many young people go to university simply for the social status associated with a degree. The jobs market probably works rather poorly as an indicator of demand for university places. The decision to go to university is made early and on the basis of a distant view of the economic value of a degree.

There are several consequences of this. One is overqualification: people can have more education than might be necessary for the jobs they do. This is the case for a large proportion of the labour force in a number of countries.

Another consequence is the decline in the relative value of a degree. A number of social scientists have argued this. My own research suggests that the social status of first jobs has been falling and that male graduates who work in a sector relatively saturated with other graduates will earn less than otherwise. (Women, in contrast, gain from working in a sector of high graduate density.) Finally, there are mismatches lower down the scale, at least in the public sector. We need nurses, but we encourage people to take "higher" level degrees, which perhaps leads them to become medical administrators. Many students will enter teaching under no illusion that the profession pays particularly well. But they will perhaps become disillusioned if they see this graduate profession prey to frequent changes, often imposed externally. It may no longer seem worth the candle.

The degree is becoming a catch-all qualification because, in the past, we underinvested in vocational or medium-level non-vocational skills. We are now locked into "gold standards" such as A levels and degrees, which are inflexible exchange mechanisms. Both are imperialistic and have gradually overtaken other qualification levels. We worry about relative value, but erosion is happening whether we like it or not (witness the recent A-level scandal). Our inflexible system is coping poorly with the expansion of education.

There may be no simple solutions to this situation, and any that there are would probably have to address not solely education. But there are some things the government could do.

In education, there is a strong case for greater flexibility. Some moves have been made in this direction, but progress is slow. We might do well to abandon many of the excessive controls on school education, such as national testing, and work instead towards giving young people more information on educational and job prospects and more freedom of choice. And we should continue to reduce the seams between the late school years and further and higher education.

The government could also end stop-go management in the public sector, whether in health, social work, teaching or the civil service. It cannot make the graduate into a factotum who can turn his or her hand to almost anything, pay rather little for this and then throw in long-term uncertainty for good measure. If the degree's value is being eroded, some collateral is needed to make the investment worthwhile.

Malcolm Brynin is principal research officer at the Institute for Social and Economic Research at the University of Essex.