In the ongoing debates about further and higher education, “crisis” has become a ubiquitous term. It’s blared like a foghorn to highlight every challenge—from skills shortages to cash strapped universities to unpaid student debt.
Yet, amid the noise, some issues remain curiously under reported. Among the most insidious of these is the UK’s chronic overqualification problem—a quiet, slow-burning crisis that hides in plain sight and threatens both individual well-being and national prosperity.
Recent OECD data lays this bare. Their recent Survey of Adult Skills was published just before Christmas and has passed largely under the radar. But its findings are profoundly important and highlight another issue that threatens to become an unwelcome and embedded part of national life. The report publishes data on the level of qualifications of adults in the OECD’s member countries and whether these match the jobs that people do. A small number of people are underqualified for their jobs, they’ve managed to work their way into roles requiring a higher level of qualification than they hold. But it will be no surprise that a much larger proportion – 23% across all OECD countries - are overqualified. These people have gained qualifications that are higher than those required for the jobs they do. In England however, this figure is much higher - 37%, making us a conspicuous outlier. The data also highlights that the problem is not temporary or restricted to young people with good qualifications but limited experience. It affects people with qualifications of all levels and those in all age groups. It is not therefore something that will solve itself in time as people eventually gain the experience to do the jobs their qualifications prepared them for. The issue is multi-generational, deeply embedded and actually getting worse with time. Our rates of overqualification have risen substantially since the last time the OECD surveyed adult skills ten years ago.
A quiet, slow-burning crisis that hides in plain sight and threatens both individual well-being and national prosperity.
The Human and Economic Toll
Being overqualified is not a harmless quirk of the labour market. And it certainly does not result in big sections of the workforce outperforming the normal requirements of their jobs as you might expect.
In fact, the opposite is true; it fosters frustration, disengagement, and a diminished sense of purpose among workers. Overqualified individuals are more likely to experience mental health issues, more likely to chop and change jobs and much more likely to eventually leave the workforce altogether. This adds to the UK’s already troublingly high level of economically inactive adults. The opportunity cost to the country is enormous.
Although not a uniquely university problem, this does raise important questions about the degrees our students gain and the alignment of the Higher Education sector to the needs of our employers. The mismatch arises partly from dearth of higher skilled and better paid jobs outside London, coupled with an “over-supply” of graduates, and partly from the lack of work preparedness amongst those graduates. It’s an overqualification problem but it’s a skills problem too.
On a macroeconomic level, the consequences are stark. Taxpayer investment in higher education is predicated on the promise of a “graduate premium”—the higher salary that graduates enjoy compared to those who do not go to university. This premium is obviously important for the individual – it is the financial return to them on their investment in their higher education. But it is important for the taxpayer too.
Overqualified individuals are more likely to experience mental health issues, more likely to chop and change jobs and much more likely to eventually leave the workforce altogether.
The graduate premium should be generating higher taxes and ensuring that the loans made by the taxpayer to students to fund their studies are repaid. The gradual erosion of the graduate premium over the last decade is directly linked to this overqualification problem. In fact, that premium has all but disappeared for those with degrees in the arts or creative subjects, or for those with 2:2 degrees or below. This means that graduates in some subjects can now expect to earn no more, over their lifetime, than their non-graduate colleagues in the similar jobs. When graduates fail to achieve this premium, as many overqualified workers do, the financial burden shifts back to the taxpayer. Student loans are left unpaid for decades and eventually written off, and the hoped for higher rates of income tax do not materialise. Everybody loses.
And, as is often the case, those that lose most, can least afford it. Students with the highest debt tend to be those that need to borrow more to get through university – i.e. those who cannot rely on the bank of Mum and Dad. If these same people then fail to secure the better jobs, the graduate premium and the economic security they were promised, we may eventually face another national reckoning. A generation of young people failed by a system that promised something different and left them with huge debts in the process. It has the potential to be a miss-selling and subprime lending scandal rolled into one.
A Structural Contradiction
We have managed to create a workforce that is overqualified and under-skilled at the same time.
Employers face persistent challenges in recruiting candidates equipped with the technical acumen, practical expertise, and emotional intelligence required to thrive in an employment landscape marked by volatility and uncertainty. Many employers have to invest heavily in internal graduate schemes to convert the qualified university leaver into a productive employee with the skills they need. This mismatch hinders innovation and economic development, particularly in sectors critical to future growth, such as artificial intelligence, automation and green technologies.
Government responses have often exacerbated the problem. Successive administrations have oscillated between championing vocational training and vilifying certain university degrees as “rip-offs.” A one size-fits all tuition fee structure values all degrees the same, and a single Higher Education policy and regulatory regime assumes that all HE providers are delivering the same form of degree level education. Policy makers are far too obsessed with outputs - the number of people going through the system. As the current bias is heavily tilted towards vocational programmes and away from university courses, success is declared when there is an increase in those signing up for apprenticeships and a reduction in the numbers choosing to go to university. This completely fails to appreciate the importance of outcomes, such as the numbers actually successfully completing these courses and then enjoying the better lives that should follow. The overqualification outcome sits uncomfortably with the successful delivery of the target output for higher education – half of young people gaining a university degree.
All this creates a Kafkaesque paradox for universities: they are expected to adapt to a competitive labour market and reform themselves to meet market requirements, which vary regionally, while shackled by centralised controls on income and outputs.
Breaking the False Dichotomy
One solution could lie in finally and meaningfully abandoning the false binary between academic and vocational education. Instead, we need new models that properly integrate them both, aligning education with industry needs while preserving the pursuit of higher learning. Fortunately, some pioneering new institutions are now offering completely new approaches and very promising results.
NMITE: A Model for the Future
In Hereford, NMITE (New Model Institute for Technology and Engineering) has adopted an innovative approach to tackle the overqualification crisis head-on. By compressing degree timelines and incorporating industry-aligned, practical skills, it has achieved remarkable early results. Every graduate from its first cohort of students secured employment that matches their qualification level. This 100% success rate demonstrates that it is possible to produce highly skilled, technically proficient graduates without contributing to the overqualification problem.
NMITE’s model blends academic rigour with vocational relevance. It is not levelling down to reach a bigger audience by providing an easy route to an engineering degree for those without the qualifications normally required, nor is it levelling up by only selecting those students with good A level results and additional UCAS points gained by virtue of extra-curricular clarinet lessons. It offers places to students with the motivation and talent, but not necessarily the formal academic background, to succeed. A route for strivers that is both academic and hands-on. Its students then graduate not just with theoretical knowledge but with workplace confidence and practical expertise. They are, in essence, higher-qualified but not overqualified—a crucial distinction in today’s labour market.
NMITE (New Model Institute for Technology and Engineering) has adopted an innovative approach to tackle the overqualification crisis head-on, blending academic rigour with vocational relevance.
Why Higher, But Different, is Better
Addressing overqualification doesn’t mean levelling down educational standards to match the requirements of the current jobs market; it means recalibrating them.
NMITE’s early success underscores the potential of education models that emphasise the importance of practical outcomes and direct alignment with industry needs. This approach ensures that graduates are not just employable but can thrive in roles that allow them to realise their full potential.
The overqualification crisis is more than an educational anomaly; it’s an economic and societal challenge that demands urgent action. Those involved in regional economic development should lean in more to the educational providers on their patches and Whitehall should encourage this and reduce the centralised “one size fits all” approach to funding and regulation that has served our students and the taxpayer so badly. Eventually, a fundamental reform of funding models and university regulation is required, but a positive first step would be to support and possibly replicate the new models that could provide practical solutions at low cost and at a fast pace.
These new providers, like NMITE, could be a valuable option in changing a system that feeds the overqualification crisis to one that generates skilled, employable graduates who then enjoy the economic security and professional fulfilment that gaining a university degree used to promise. It’s not levelling up or levelling down, it’s levelling smart.
From James Newby, NMITE President and Chief Executive.
