Detailed figures on graduate jobs

One-third of graduates are receiving no financial benefit from their degree as young people drawn in by Labour’s mass expansion of universities see the value of studying decline for the first time.

A study has identified a widening gulf between the highest-paid graduates, whose degrees have brought them soaring returns over the past decade, and those at the lower end.

Among male graduates, 33.2% end up in nongraduate jobs five years after leaving university, from 21.7% in 1992. The proportions for women are similar. These graduates now earn 40% less than if they had found a job where a degree was necessary. In 2001, before the market was swamped by university-educated applicants, those who had to settle for lower-paid jobs were only 32% worse off.

The worst affected were from the former polytechnics and other new universities which had been encouraged to expand under Labour.

“This is the first real sign the tide is turning,” said Francis Green, professor of economics at Kent University, who led the research. “If you are coming into university with not very good qualifications and do an arts degree at a low-ranked university, you are not really doing yourself any favours.”

Official data, to be published in next month’s Sunday Times University Guide, show there are many institutions where more than 40% of those leaving do not find degree-level jobs.

The lowest-ranked include the Welsh universities Aberystwyth, Swansea and Lampeter as well as the former polytechnics Derby, Plymouth and Thames Valley. Lancaster, where 42.7% of graduates are in jobs below degree level six months after university, is the lowest ranked of the longer established institutions.

Many are now questioning whether it was worth going to university. They include Vanessa and Olivia Flaxman from west London, unemployed graduates of the University of the West of England in Bristol.

“I was never interested in going to uni,” said Vanessa, 25, who graduated this year with a 2.1 degree in business studies and a debt of about £20,000. “But you are under the impression that if you have a degree you’re really employable.”

Olivia, 27, added: “I didn’t see it [university] could be massively useful, but my tutor said, ‘You’ve kind of got to go, so you may as well pick something that vaguely interests you’.” Labour has expanded university education from 32% of school leavers in 1997 to about 43% now. It justifies tuition fees of more than £3,000 a year by claiming that an average graduate could expect to earn £120,000 extra in a career.

Some employers are now recognising that potential high-flyers may decide not to study for a degree because they are worried about running up debts.

The management academy programme set up by HSBC, Britain’s biggest bank, is targeted at school leavers with A-levels and management potential. Its first 38 trainees are about to move into junior executive jobs, complementing the bank’s 230 graduate trainees.

“The programme is targeted mainly at those who made a decision not to go to university because of the debts they would incur,” said John Morewood, senior graduate recruitment manager.

Signs have also emerged that the job market for graduates is slowing. Allied Irish Bank has told its recruits who were offered jobs before they left university this summer, that the vacancies are no longer available, while Citigroup is cutting its graduate recruitment programme by 5%.

Vacancies for students graduating this year grew by 11.7% over 2007, but this is set to stall. Carl Gilleard, chief executive of the Association of Graduate Recruiters, said he did not expect a fall in the jobs on offer at this autumn’s “milk round” recruitment fair, but added: “I suspect the boom is over.”

Defenders of university expansion point out that despite the worries over debt and the financial payback to be expected from a degree, applications from students are still growing strongly.

Bill Rammell, the universities minister, said there were strong advantages to expanding higher education. “Having a workforce with graduate level skills has never been more important to economic success,” he said.

“There are also nonfinancial benefits for graduates, who tend to have better jobs and healthier lifestyles, be more involved in their children’s education and be more tolerant and active citizens.”

Additional reporting: Helen Brooks and Sian Griffiths

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