Over past decades enrolment in bachelor’s degree programmes has risen steeply. During the same period participation in Higher Technical Education (HTE, level 4/5 technical qualifications) has stagnated at best. There are different, overlapping, but also partly competing explanations for this pattern. There could have been an expansion in jobs requiring the high-level skills associated with degrees (but not HTE) and an increasing complexity of the job content. This changing mix of jobs and tasks performed in the workplace could, in turn, be triggered by recent technologies and management methods that drive up the demand for high level skills. It may also be that an increasing supply of highly educated workers contributes to job upskilling, so that, for example, when graduates (here meaning those qualified at level 6) take an administrative job, they find ways of using their higher-level skills, gradually changing the nature of the job and the expectations that surround it.

To shed light on the relative decline of HTE, this research study explores the labour market performance of HTE-qualified workers over the last twenty years in the context of a rapidly rising supply of degree holders and the spread of new technologies in workplaces, across and within occupations. In particular, it explores the interplay between qualifications, the tasks performed on the job and the skills necessary to undertake those tasks, and labour market outcomes.

Labour market outcomes are examined using the indicators of employment opportunities and wages, whereby wages are treated as an expression of individual productivity. The Mincerian wage function, explaining wages through a combination of educational attainment and work experience, provides a theoretical framework for this investigation. The research also looks at job tasks and the skills required to perform those tasks to evaluate the complexity of jobs.

The analysis draws on three datasets that provide information on occupational skills and labour market outcomes in the UK over time. They include: the UK Skills Employment Survey (SES), Labour Force Survey (LFS), Burning Glass Technology (BGT) data on job vacancies advertised online. The SES and LFS provide consistent worker-level data in different time periods, while the BGT contains information on millions of online job vacancies.

The findings point to a worsening labour market performance, on average, of the HTE-qualified over the last twenty years. They show how the HTE-qualified have been gradually displaced from many skilled occupations in response to an influx of degree holders onto the labour market. The research also describes how the growth of employment in more skilled occupations is associated with an increase in the number of graduates in the labour market. The research demonstrates that while on average, the level of tasks performed by the HTE-qualified has been relatively high, they have suffered from a downgrade in terms of skills applied on-the-job. In this respect the position of HTE holders as compared to other groups, and in particular graduates, has weakened over time in some occupations. This trend is observed in skilled professional and technical occupations (SOC major groups 2-3), occupations that have often been prepared for through HTE programmes. One possibility is that in these occupations, the relative productivity of individuals with HTE qualifications and therefore the relative demand for these qualifications fell over time. (This refers to the relative productivity and relative demand in relation to the HTE-qualified as a group with a changing composition, rather than to the changing productivity of individuals over their working lives). The research shows that HTE-qualified workers were particularly likely to have been displaced in skilled jobs by degree holders. Conversely, the share of HTE-qualified increased in semi-skilled trade occupations, in which their comparative advantage was the highest. The share of HTE holders also grew in quickly expanding service sector jobs, in which their comparative advantage was low.

The labour market performance of the HTE-qualified varies according to the area of specialisation. Specialisations in teaching and health saw a sharp drop in earnings, and experienced worsening employment prospects over the last two decades which may be related to the introduction of a degree requirement for entry into the teaching and nursing professions. Those with engineering and manufacturing HTE specialisations show the strongest employment outcomes. A case study of the engineering sector revealed that employers in this sector associate more productive tasks with degrees, but under some circumstances they are open to employing the HTE-qualified.

While the declining labour market performance of the HTE qualified, relative to those with degrees, is one of the findings of this study, the causal relationships involved are not entirely clear. Drawing on the findings from the analysis of on-line job vacancy data presented in this research, further analysis might usefully include an examination of the factors which encourage employers to prefer HTE qualifications, such as firm characteristics, company geographical location and proximity to universities.

The research sought to differentiate between demand for specific types of skill and certain qualifications, recognising that qualifications seek to package skills in certain ways, while individual occupations also require packages of skills. In principle, employers will be interested in skills rather than qualifications, but they use qualifications as signals of the skills which their recruits are likely to possess. This research study has highlighted the potential use of online vacancy data, (alongside other datasets), to capture the subtleties of employer demand in relation to both skills and qualifications. Regularly analysed data of this type would provide, in real time, an important guide for those developing and reviewing programmes and qualifications. More analytical research should allow for an exploration of the extent to which the skills demand of a fast-changing economy can be best met through packaged qualifications, as opposed to targeted training exercises concentrating on individual skills.