Eden Heath, a high-achieving student from south-east London, has recently completed her final year of school with top grades in her A-levels. Despite her academic success, she, like many of her peers, views university as a last resort and believes it is a waste of money. Apprenticeships, on the other hand, are gaining popularity among her generation. Eden explains, “You come out with no debt and more experience – and you’re getting paid.”
The trend away from university degrees for entry-level professional roles is becoming more apparent. The Institute of Student Employers (ISE) found that the percentage of its members requiring a 2:1 degree fell from three-quarters in 2014 to less than half in 2022. Additionally, a Totaljobs analysis revealed that only 22% of entry-level job adverts in the UK mentioned a degree this year, marking a decline of almost one-third since 2019. LinkedIn data also showed a 90% increase in job postings that did not require a degree between 2021 and last year.
Companies such as Kellogg’s UK and the state government of Utah have already stopped requiring degree-level qualifications, while IBM and Accenture are investing in apprenticeships as alternative hiring routes. Despite this, Professor Joseph Fuller of Harvard Business School’s Managing the Future of Work programme believes that eliminating degree requirements is only the first step and that hiring managers must also change their behavior. He acknowledges that for some companies, eliminating degree requirements may be mere virtue signaling, but overall, he sees it as a smart move and an appropriate shift.
Although the value of a university degree might appear to be declining, graduates still earn a significant wage premium compared to non-graduates. According to a Financial Times analysis of OECD data, the “graduate premium” in the US increased from 75% to 81% between 2005 and 2020. In the EU and UK, graduates earn about 50% more than those without a degree, despite the rising number of graduates potentially diluting the value of degrees in the job market. In the US, 51% of 25 to 34-year-olds were college graduates in 2021, compared to 38% in 2000. In the UK, 57% of young adults had a university education in 2021, up from 29% two decades ago.
Stephen Isherwood, the CEO of ISE, believes that the graduate premium has remained strong because jobs have become more complex and require higher levels of education. He highlights roles such as nursing, technology, and internal finance, which all require degree-level education. The International Labour Organization also notes that the proportion of high-skilled roles, involving complex tasks and requiring advanced education or training, has been increasing in developed economies for over thirty years.
However, despite the growth in high-skill jobs, a significant number of workers, particularly in the US and some European economies, are overqualified for their positions. This can be attributed to employers advertising lower-skilled roles as requiring a degree when they do not. A Harvard Business School study found that two-thirds of production supervisor roles in the US asked for a college degree in 2015, despite only 16% of people in those roles actually having one. This mismatch leads to difficulties in recruitment, higher staff turnover rates, and increased costs for companies. This mismatch is one of the reasons why Eden Heath is considering a digital marketing apprenticeship over a university degree.
In some countries, policy decisions, such as the UK’s apprenticeship levy, have encouraged non-graduate recruitment. As a result, high-skill employment for non-graduates in the UK has increased by almost five percentage points. IBM has been hiring apprentices since 2010 and has seen success in expanding their non-graduate recruitment. While degrees are required for only 12% of advertised positions in the UK and less than half in the US, IBM has found that hiring apprentices brings numerous benefits, including earlier on-the-job training and the development of deeper technical skills.
Other companies, such as Penguin Random House UK, have dropped degree requirements to increase diversity in their workforce. Claire Thomas, the director of organizational development at the publishing company, explains that removing barriers to entry allows individuals with skills and potential to succeed. The demand for skills is expected to change rapidly in the coming years, with almost a quarter of jobs predicted to be disrupted. While lower-skilled roles are most at risk, transferable skills like creativity and analytical thinking will become increasingly important. Universities play a significant role in developing these skills and preparing graduates for employment, according to a report by Universities UK.
However, Professor Fuller believes that emerging technologies, such as artificial intelligence, could level the playing field for non-graduates. These technologies could help overcome deficits in skills historically associated with non-graduates and provide alternative ways for employers to assess candidates beyond relying solely on degrees. Ultimately, the landscape of education and employment is evolving, and the value of a university degree is being questioned.
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