Earlier this month, it was the turn of the CBI to join an international band of organisations, from the EU to the Harvard College, to raise fears that that something has gone seriously awry in the labour market. In a period when historic rates of unemployment and underemployment are still disturbingly high, there are clearly people with skills wanting work, but the argument goes, they the wrong ones.
The problem is framed as one of skills mismatch and it is spooking and challenging the assumptions of policy makers around the globe. According to the OECD’s Andreas Schleicher:
The coexistence of unemployed graduates on the street, while employers say they cannot find the people with the skills they need, shows clearly that more education alone does not automatically translate into better jobs and better lives. Skills mismatch is a very real phenomenon that is mirrored in people’s earnings prospects and in their productivity.
To Schleicher, skills mismatch is both an economic and social problem. It effects real people in real ways and demands that a fresh look is taken at the relationships between what education and training provision supplies and what employers actually demand. In the UK, to do this, we have to look at the collective decision-making of millions of young people because in our education system, it is the sum those very many decisions on what and where and how hard to study which, in very large part, determine the human skills which ultimately become available to employers.
These are decisions which reflect the ambitions, expectations and decisions of young people themselves largely between the ages of 10 and 18. If those aspirations are systematically out of step with actual labour market demand, skills mismatch must be expected. Worryingly, a growing body of research is clear: the career aspirations of very many young people are developed in isolation from any sense of actual labour market demand.
Mapping the aspirations of 610 Year 7 pupils against the UK labour market, a 2009 University of Westminster study found that 42 per cent of 11 year olds aspire to careers in just 7 highly competitive areas: performing arts, professional sports, teaching, veterinary science, law, policing and medicine.
A much bigger 2013 study by the Education and Employers Taskforce, UKCES and b-live, captured the career interests of 10,729 young people aged 13 to 18 and aligned them against 25 different occupational sectors used in the Commission’s Working Futures project which estimates where 13.5 million new and replacement jobs will emerge in the UK to 2020.
At all ages, statistically, the two datasets have nothing in common, with 52 per cent of under-16s’ career ambitions lying in just 3 areas (Culture, Media and Sports; Health professionals; Business, Media and Public Service professionals) and fewer than 1 per cent of young people aged 17-18 showing interest in seven occupational areas which collectively recruit millions of workers. It appears young people are responding very poorly to labour market signalling: 7 of the 10 least popular student choices pay more than the UK median salary, often substantially so, and include working as a locksmith, welder, surveyor, speech therapist, miner and audiologist.
Ralf St. Clair and colleagues at the University of Glasgow have looked in depth at the career ambitions of hundreds of teenagers in London, Nottingham and Glasgow and found ‘weak links, if any, to local labour markets.’
From another perspective, the Centre for Social and Economic Inclusion has looked at the match of supply and demand in the vocational qualifications of teenagers coming out of Further Education Colleges against job vacancy data across 12 occupational sectors and found systematic oversupply of people in 3 areas, undersupply in 4 and a reasonable balance in just 5. It is unsurprising that the UKCES’s National Skills Survey reports that the major reason why 30 per cent of employers had failed to recruit any young people to vacancies in recent years was simply that no one under 24 had applied.
In all these studies, labour market signalling is seen very clearly to be failing. The problem faced by young people is deeper than that, however. While aspirations are related to employment outcomes, there is no simple linear relationship between teenage ambitions and guaranteed entry to adult careers of choice.
Over recent years a series of important academic studies have explored what happens to teenagers whose career ambitions are misaligned with their educational expectations. Analysis of longitudinal datasets has shown that it disproportionately affects young people from lower socio-economic groups and that the misaligned at 16 are more than twice as likely to be NEET for 6 months or more by age of 19 and work less and are paid 8 per cent less than comparable peers at age 34. Studies in the US have found that teenage misalignment is associated with lower earnings at age 26 and lower rates of college entry.
The problem lies not in low aspirations, but in poor understanding of how education relates to employment. To the OECD, unless something is done, it is a problem which can only get worse:
More complex careers, with more options in both work and training, are opening up new opportunities for many people. But they are also making decisions harder as young people face a sequence of complex choices over a lifetime of learning and work.
The world has changed. Where once transitions into first employment were relatively straightforward and facilitated by family contacts, an ever more complex and fractured labour market demands significantly greater emphasis on effective careers provision, enriched, the OECD argues, by ‘strong links between schools and local employers.’
A new book published by Routledge, Understanding Employer Engagement in Education collects together new evidence from leading UK and international scholars on what difference teenage employer engagement can make to later outcomes and how its impacts can best be understood. New quantitative analysis of survey data shows, that young adults recalling higher levels of employer contacts while at school are less likely to be NEET (by up to 20 per cent percentage points), earn more (up to 18 per cent more) if in full-time employment, and show greater confidence in their navigation through their early working lives.
Such wage premiums suggest that employers are finding in these young people employees well matched to available jobs. As Elnaz Kashefpakdel shows elsewhere in the collection, young adults commonly perceive the different activities they undertook with employers during their education to be of high value to them in getting a job afterwards, getting into a university of choice or deciding on a career.
For young adults aged 19-24, something as fleeting as a careers talk or visit to a careers fair is often felt to be of lasting significance. The data shows, moreover, something very interesting: that it is the cumulative effect of interactions with employers over time which are strongly related with better outcomes in the youth labour market. Doing a lot of activities which may in themselves be short in duration, episodic and unintegrated into the curriculum makes a difference.
Drawing on the insights of sociologists Mark Granovetter and Pierre Bourdieu, the book’s editors offer an explanatory framework for understanding such impact. Employer contacts can serve to build social and cultural capital as well as human capital, whether technical or employability skills. People in employment offer first-hand information which is commonly felt by young people to be particularly authentic. It is more trusted than publically accessed information and broader than what families can provide.
And so the greater the exposure, the greater likelihood of useful information being received and applied to decision-making journeys through education. In essence, it is the simplest form of labour market signalling, but without the intervention of schools and colleges, it will happen in only a haphazard, insufficient manner and it will be those whose backgrounds provide least access to the breadth of information about the world of work who have most to lose.
If we picture the labour market as an actual marketplace where one group of sellers (young people) spend years producing their product (themselves) investing time, energy, money in creating a combination of knowledge, skills and experience which they can sell for the highest wages or the most emotionally gratifying working experience, then it becomes easy to see a market place that is currently failing.
Young people are making their investment decisions which begin at a young age far too often without access to reliable information about what the potential buyers of their labour actually want. At the same time, they are deafened by advice from colleges, universities and training providers looking to fill their places, intrusive and unreliable media images of success, family caution on what ‘people like us’ do or don’t do. In all of this, a growing body of evidence shows that by connecting people who are well-placed to give authentic, relevant information, we can start to make a difference.