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Last Updated: Tuesday, 27 January, 2004, 11:29 GMT
Do we need more graduates?
By Hugh Pym
BBC News Business Correspondent

More graduates may not benefit the economy
While the government urges higher tuition fees to expand university places, BBC News has been finding out what business thinks of graduates and their degrees, and asking if the economy actually needs more of them.

In one of the biggest aircraft hangars in the world, one of the bigger success stories of British engineering goes about its daily business.

Marshall Aerospace in Cambridge is involved in aircraft design and conversion work for defence and civilian customers.

If any company needs the education system to produce well-qualified recruits, it's this one.

There is a genuine question over whether the Government's 50% target is at all realistic or needed
Professor Robert Bennett, Cambridge University
But Terry Holloway, Group Support Executive of the Marshall Group of Companies, thinks there is already a big-enough pool of graduates, and there is a greater need for other skills:

"There are certainly sufficient graduates. What we need is a good mix of well-motivated young people, a good mixture of 16-18 year-olds who will come into us for vocational training who will provide the backbone of industry of the years ahead.

"They need to be complemented by a good and ready source of graduates, but we're not today having difficulty attracting those graduates," he told the BBC.

Surplus of graduates

It is a point of view endorsed by some academic experts on the labour market.

The government has argued that graduates will earn considerably more over a lifetime than those who start their careers after leaving school.

The 'knowledge based economy' ... needs more graduate-level skills to keep it going
Professor John Philpott, Chartered Institute of Personnel and Development
Professor Robert Bennett of Cambridge University has studied the long-term economic value of a degree.

He argues that the wage premium which graduates can expect has fallen.

"There is already evidence of falling earnings and falling returns, though that hasn't been that rapid at this stage. There is a genuine question over whether the Government's 50% target is at all realistic or needed," he says.

Needs of the economy

But there are many experts who take a different view.

Professor John Philpott is Chief Economist at the Chartered Institute of Personnel and Development.

He argues that higher education must expand to service a 21st century economy.

"What we've seen over the last couple of decades in all of the developed economies is a shift towards higher level skills of one kind or another. Many of these are problem solving skills or professional skills. In the jargon it's what called the 'knowledge based economy', and that sort of economy needs more graduate-level skills to keep it going," he told the BBC.

At a recent graduate recruitment fair in London, sponsored by the Jobscene organisation, graduates were busy visiting stands and hoping to bump into potential employers.

Public sector organisations like the Teacher Training Agency are prominent at the fair because of a shortage of recruits.

But the emphasis here is on persuading more people with degrees to consider teaching rather than boosting the numbers of graduates.

London's schools commissioner Professor Tim Brighouse said:

"It's absolutely essential to our society that teaching is seen as the major activity in creating our future ... It isn't that we need more graduates, we need more graduates from the existing pool to want to teach, particularly in some of the shortage areas like maths and science."

Growing disparity

Glen Crust runs a website setting out information for each university on their graduates' employment paths.

He says there is a wide disparity between different colleges and courses in terms of the jobs attained by their students:

"Increasing numbers of students are asking how they can avoid becoming trapped as graduates in call centre jobs or behind supermarket tills, while others dismiss these ideas as scare stories. A great deal of uncertainty shrouds graduates' employment destinations," he said.

Back to business at Marshalls, graduate recruits had mixed feelings about higher education.

Stephanie Church joined the company directly after graduating. She felt her engineering degree gave her a good grounding for a career but was sceptical about less vocational degrees.

"I think that there are an awful lot of degrees out there that give you very little reward in terms of job value. I don't believe engineering's one of them. More degrees aren't a bad thing, but more degrees in the right subjects is much more useful," said Ms Church.

Saleem Mughal, on the other hand, joined as an apprentice and later studied for a degree while working for the firm.

He feels this has given him the best all-round prospects:

"I feel a lot of graduates are not actually prepared to work in industry. Having done vocational training during my degree, it provided me with a huge resource of information as well as support from the company, and encouragement and of course funding. So from my experience I'd say its a better option to go for the vocation route than straight into university without any industry experience."

While debate will continue on shop floors and in senior common rooms, there is certainly some scepticism about whether more means better when it comes to the economic contribution made by graduates.

The BBC's Neil Drake
"The question has to be asked whether more... might be better off pursuing a more vocational training"

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