Employment Earnings Performance for Graduates in the UK Labor Market

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It is believed that graduates are more productively capable. Graduates are highly anticipated by employers. This presumption is not always accurate, though. A significant portion of graduates fell short of what employers expected. Some people attend school in order to obtain a better job, while others do so in order to learn new information (Wadsworth, 2010, Pg. 126). This article uses trends from the previous five years to explain the employment earnings performance for graduates in the UK labor market. According to the national statistics, there were 12 million graduates in the UK labor market using trends in the past five years.

According to the national statistics, there were 12 million graduates in the UK labor market in 2013. This number of graduates has been increasing with an increasing rate. The national statistics indicates that most of the non graduates are experiencing higher rates of unemployment as compared to the graduates. More than 40% of graduates are working in the public institutions; some are working in the private institutions while the rest are self employee (Machin, 2006, Pg. 94). Annual earnings for graduates are higher than the annual earnings for non graduates in the United Kingdom.

As at April 2013, the national statics shows that UK graduates were more likely to find employment as compared to those who dropped out of school. Employers had more confidence on graduates than non graduates. Graduates were allowed to work in high skilled posts including teaching, engineering, medicine, nursing among others. Irrespective of the level of experience, no one can be allowed to work in such positions without presenting a proof of their academic qualifications. As 2013 was coming to an end, graduates with an undergraduate degree in medicine were more likely to be employed than all the other fields of study (Shimer, 2010, Pg. 88). This is because there were only few graduates in this field and the demand was high.

With the high demand for labor in the most technical areas, more students were enrolled in those fields. The other crowed areas of study included law, education, and engineering. The number of professionals in these areas started to increase with an increasing rate every year. People started to see the need for education and so the number of graduates increased not only in the mentioned areas but also in many others. As the number of graduates’ increases, the rate of unemployment has been increasing. Most of the graduates are currently reported to be working under non graduate roles. Some of these non graduate jobs include sales assistants, receptionists, and home cares (Barrell & Anderton, 2015, Pg. 312). Any individual with some basic education can perform such roles. For instance every individual has the capacity to work as a house care. Looking at several years back, house cares used to be those people who never went to school and those who dropped along the way. Currently, employers go through the process of recruiting and selection to choose for such roles.

This is an indication that the number of graduates has exceeded the need for graduates in the labor market. This demonstrates a higher supply of labor than the available demand. According to the law of demand the increase in supply has resulted to a decrease in the level of wages and salaries (price). Therefore, graduates are receiving lesser benefits than they used to receive previously. Employers are doing this so as to accommodate the higher supplied labor (Machin, 2006, Pg. 195). They are also take advantage of the higher supply as a way of maximizing their profit objectives. The following graph demonstrates how these changes happen in the labor market

Wages Demand



As demonstrated in the above graph increase in the number of graduates increases the level of wages or salaries. The value of labor or graduates has reduced in the economy. It has become cheaper to maintain a graduate than it was previously. The available opportunities are lesser than the people qualified graduates looking for jobs. As a result, the rate of unemployment amongst both graduates and non graduates is increasing in the United Kingdom. There is no more room for less qualified candidates in the available opportunities (Wadsworth, 2010, Pg. 174). With the need for higher productivity for profit maximization, employers are taking advantage of the increasing supply of graduates in the labor market.

Do Graduates Benefit?

A recent study has revealed that the benefits derived from attaining a degree in the United Kingdom are higher than the incurred cost. Irrespective of the lower wages and salaries due to the flooded supply of labor, graduates enjoy salary increases whenever they improve their education. For instance, once a diploma graduate goes for further studies, their level of salaries increase after graduating in the higher level. At the same time graduate employees enjoy much support from their employers including higher education loans among others. With these benefits graduates are able to advance in their careers and hence become more knowledgeable in their areas of study. Another thing, graduate employees have the power to influence their employees due to the higher level education attained in school (Shimer, 2010, Pg. 196). This enables them to develop good relationships with their supervisors and hence another benefit.

Another thing any opportunity that comes is given to those with higher educational qualifications before others are considered. Educational qualification is among the top factors considered in job assignment. Non graduates are normally given the last option. Therefore graduates are mostly working in the most senior positions such as directing, department managers among others (Barrell & Anderton, 2015, Pg. 125). Due to this reason, graduates are among the most paid employees in the market as compared to those who dropped out of school.

On the side of employers the increase in number of graduates has been so beneficial in the labor market. Having many graduates in the market is a great opportunity for growth. First, graduates have solid business skills. Treating them well highly contribute to business growth and development. As they bring in new skills and ideas business owners are able to meet their set objectives and goals and hence business success. Secondly, graduates have a higher speed to value as compared to those who dropped out of school. They can accomplish a task within a shorter period of time. Graduates have the ability to multitask. As a result, it becomes more profitable to work with graduates than non graduates (Machin, 2006, Pg. 147). This is another reason why the rate of unemployment amongst non graduates is increasing.

However, as the number of graduates is increasing in the market, the benefits derived from having a degree are also reported to be reducing. First, the demand for graduates is no longer high as it was previously. Employers are currently having higher powers over the job seekers given the high level of supply. Graduates are forced to accept the given conditions given that it is no longer easy for a graduate to acquire a job. The level of salaries and wages for graduates has been reducing. In fact, having a degree is no longer a guarantee of acquiring a job. Employers are now concentrating on other skills such as team working, etiquette, communication, and entrepreneurial skills in the recruitment processes. It is, therefore, hard for a graduate without such skills to obtain a job (Shimer, 2010, Pg. 265).

Recent statistics have revealed that about 50% of graduates are underemployed or completely jobless. The supply of graduates in the labor market has exceeded the demand for graduates. This is among the reasons why most of the graduates are underemployed, working on non-graduates roles. As a result, the earning benefits received by graduates are low as compared to their expectations when pursuing those courses. A graduate is no longer worthy what they used to be in the past five years. Other graduates are not working in their areas of study. For instance, an accountant may end up working as a receptionist (Barrell & Anderton, 2015, Pg. 238). Graduates have become desperate and they can now do anything as long as they can get obtain some money to cater for their bills. They are no longer choosy or specific with their areas of study.

The misplacements of graduates have contributed to low performance or productivity in the working environment. Working under a lower role can be discouraging and hence, the graduate lacks the motive to deliver the best they can. The lower salaries and wages are also another discouraging factor. Underemployment has resulted to low job performance and hence, graduates are not as productive as expected. Further research reveals that graduates are overqualified for the available job opportunities. According to the schooling model, students tend to enroll themselves for the well paying and most demanded qualifications in the market. As many students are enrolling in these courses, the supply in such areas becomes excess after some time (Akerlof & Yellen, 2011, Pg. 183). As a result, employers have to cut the level of salaries to cater for the excess demand. At the same time, some of the graduates miss employment opportunities which force them to start their own businesses for self employment.

Do the Benefits of acquiring a Degree Exceed the Costs?

In comparison, the benefits of attaining a degree are not similar to the cost associated. Irrespective of the reducing earnings while others remain jobless, the knowledge obtained is worth the cost. A jobless graduate cannot be compared to a jobless non graduate. Graduates have the ability to think and create their own jobs and make them successful than what non graduates can do. Graduates have the power to start business like pharmacies, private schools, private hospitals, colleges amongst other well paying opportunities. However, non graduates cannot venture in such businesses. A non graduate jobless people can only do unprofessional businesses such as farming other similar businesses (Wadsworth, 2010, Pg. 116). Another thing, an underemployed graduate has the ability to use the small earnings to invest in other personal projects. For instance, others can take loans and start their own businesses as they proceed with the formal employment. However, most of non graduates tend to get satisfied with what they get from their jobs.

According to the above graph, the level of unemployment has been reducing since July 2016. As at June 2017, unemployment stands at 4.4% as compared to July 2016 when it was 4.9%. This is an indication that graduates have positively contributed towards the UK economic growth and development. Irrespective of the reduction in earnings, graduates are in a position to use the knowledge gained and create more employment opportunities. In fact, more studies have revealed that graduates no longer work till their old age. A study was performed by Wadsworth 2010 to determine whether graduates still keep the trend of working till old age (Akerlof & Yellen, 2011, Pg. 168). From the study findings, the upcoming graduates are only working to obtain capital to start their own businesses. Some of the interviewed graduates reported to have their own businesses apart from the formal employment they are in.

The increase in investment due to the increasing number of undergraduates and underemployed graduates is creating more employment opportunities. Even the non graduates stand a chance to obtain casual jobs and other opportunities. As a result the problem of unemployment is reducing in the UK economy as demonstrated by the graph.

The above graph demonstrates how the level of Gross Domestic Product has been fluctuating within the recent three years. GDP was at its maximum in 2014 after which it has been fluctuating up and down. This demonstrates the effect that come along with the increasing number of graduates. As more graduates are produced and so making it hard for one to acquire a job, the economy is affected in the short run. As these graduates are trying to come up with new businesses, it becomes a challenge to the economy. At the same time the higher number of displaced non graduates from the job market has increased the rate of unemployment. Therefore, the benefits of acquiring a degree are still low when arguing based on these facts. However as more graduates are produced and so more employment opportunities created, UK is coming to a point of higher growth and development (Machin, 2006, Pg. 216). In the long run the level of GDP will be increasing as the new started investments catch up. The increase in graduates reflects to a higher reduction of illiteracy levels which will improve the other sectors including health agriculture, and many others.


The number of graduates is increasing with an increasing rate. Graduates are no longer worthy what they used to be. Most of them are underemployed while others are completely jobless. The labor market is currently flooded due to high number of graduates with less jobs opening. However, according to the above explanations, the benefits derived by graduates exceed the cost. As the number of graduates is increasing, unemployment rate is reducing. Graduates have invested in the private sector by starting businesses and mostly in the well paying sectors. Graduates have started private schools, private hospitals, and private insurance companies among other businesses. As a result, they have created more employment opportunities not only to the graduates but also to the non graduates in the society.


Akerlof, G. A., & Yellen, J. L. (2011). Efficiency wage models of the labor market. Cambridge [Cambridgeshire: Cambridge University Press.

Barrell, R., & Anderton, B. (2015). The UK labour market: Comparative aspects and institutional developments. Cambridge, England: Cambridge University Press.

Shimer, R. (2010). Labor markets and business cycles. Princeton, N.J: Princeton University Press.

Machin, S. J. (2006). Changes in the relative demand for skills in the UK labour market. London.

Wadsworth, J. (2010). Unemployment benefits and search effort in the UK labour market. London: Center for Labour Economics, London School of Economics.

April 06, 2023


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