Friday, 14 August 2015

The Scale of ‘Leakage’ of Engineering Graduates from Starting Work in Engineering and its Implications for Public Policy and UK Manufacturing Sectors

SKOPE Research Paper No. 122, January 2015 by Dr Matthew Dixon (SKOPE Fellow)


The fact that not all graduates from vocational higher education courses go and work in the ‘natural’ profession or ‘natural industry sector’ corresponding to the course content is recognised. However, the scale of the ‘leakage’ of those completing engineering courses away from working in relevant engineering companies comes as a considerable surprise. The fraction of those graduating from particular engineering disciplines who go into the corresponding industry sector (in particular within manufacturing) is not only not 100 per cent, but generally less than 50 per cent and, in some cases, less than 10 per cent.

This paper presents evidence from the Higher Education Statistics Agency’s (HESA) surveys, Destinations of Leavers from Higher Education (DHLE), over 10 years that shows just how invalid is the idealised ‘linear pipeline’ assumption that has prevailed (often by default) in much higher education skills supply thinking over recent years, and examines the implications. Any shortages, in a particular engineering manufacturing sector, of bright young people who might understand the engineering principles and technical details involved in that work, arise not from a lack of supply of such graduates as a whole but from the fact that most of them go and work elsewhere.

A default response focused on trying to get more (young) people to sign up for the corresponding higher education courses in order to tackle any shortages in individual manufacturing sectors would therefore generally be particularly wasteful from a policy point of view. An ultimately more effective response would rather be to work to significantly raise the attractiveness of the sector to students on the courses.

This paper also considers the natural response from a classical economics perspective – of urging engineering employers, if they perceive a supply shortage, to raise their starting salary offers to graduates. While plausible, this suggestion ignores the realities of the business model within the sector in the highly competitive market context in which these companies must trade. Their operating profit levels mean that engineering manufacturing companies cannot afford, as easily as employers in various other sectors can, to offer higher salaries: the market in which engineering employers recruiting graduates operate is not a level playing field’.

As well as examining aspects of the reported skill shortage context of the issue, the paper also throws light on answers to the questions that naturally follow a recognition of the comparatively large scale of leakage: Where do engineering graduates from particular disciplines go and work? What other disciplines are recruited by engineering firms? In addition, evidence from DLHE data on initial unemployment of graduates from different disciplines confirms that the shortages often asserted are not generally enough to put the corresponding labour markets into a particularly ‘tight’ state.

Evidence on role requirements from the Migration Advisory Committee suggests that such recent engineering skill shortages as are substantiated could not generally be directly resolved with ‘fresh’ graduates. The rather complex realities of engineering graduate recruitment outcomes uncovered by this analysis will help policy analysts realise the need for more robust evidence of market failure when considering possible policy responses attempting to link reported skill shortages in specific sectors to higher education flows into the workforce.

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