1. Introduction

The relationship between higher education and employment has long been a central focus of public policy and academic research. Tight [1] argued that since the 1990s, the government has aimed to transform higher education from an elite privilege into an opportunity accessible to a broader segment of society, thereby promoting social equity and meeting the knowledge-based economy’s demand for a highly skilled workforce. In recent years, economic downturns have had a profound impact on the labour market, particularly reducing demand for traditional white-collar occupations [2]. Meanwhile, an increasing number of individuals are entering university and obtaining degrees. According to the UK Parliament [3], the higher education participation rate among 18-year-olds in the UK rose from 24.7% in 2006 to 30.7% in 2015, peaking at 38.2% in 2021. This trend suggests that the expansion of higher education has significantly increased the supply of graduates in the labour market. However, the tension between economic stagnation and a growing number of graduates has intensified challenges in the labour market. As the number of graduates continues to rise, the job market struggles to provide sufficient graduate-level employment opportunities, exacerbating competition. According to the latest report from the UK Office for National Statistics [4], the unemployment rate among individuals aged 16 to 64 has risen to 4.4%.

This essay critically examines the relationship between higher education expansion and the labour market. Firstly, it explores the policies implemented by the UK government regarding higher education expansion and employment, assessing their effectiveness and limitations in promoting educational equity and enhancing graduate employability. Secondly, it discusses the challenges posed by the expansion of higher education and economic downturns, such as credential inflation. Finally, this essay identifies the key factors that influence the relationship between higher education and employment - namely, social class, ethnicity, and gender. These three factors are likely to perpetuate inequalities between higher education and employment.

2. Higher education system and labour market in the UK

Education has long been regarded as a mechanism for enhancing individual productivity and increasing competitiveness in the labour market [5]. From 1945 to the early 1990s, the UK higher education system was characterised by an elite structure, where university education was primarily accessible to the middle and upper classes, with limited enrolment opportunities. However, since the 1990s, the government has implemented a series of expansion policies, shifting higher education towards mass participation, thereby enabling broader social groups to access university education [1]. Within the framework of human capital theory, education has traditionally been viewed as a means of improving workforce skills. Higher levels of education are expected to enhance workers’ productivity, particularly in cognitive and interpersonal tasks, ultimately leading to higher wages [5].

However, recent economic conditions challenge the assumption that higher education guarantees better employment prospects. According to the Office for National Statistics [6], the UK’s real Gross Domestic Product (GDP) growth rate in 2024 was 0%, indicating economic stagnation. This often translates into a lack of business expansion, reduced hiring, or hiring freezes. Consequently, employers may adopt more cautious recruitment strategies, such as cutting full-time positions and shifting towards short-term contracts. Furthermore, with limited economic growth, businesses may struggle to provide significant salary increases. Lastly, a weak economy increases the risk of job cuts, particularly in industries sensitive to economic cycles, such as financial services. In 2024, the ‘Big Four’ accounting firms (KPMG, PwC, Deloitte, and EY) collectively cut thousands of graduate positions and reduced 1,000 apprenticeship and early-career recruitment opportunities [2]. Thus, the assumption of human capital theory - that higher education necessarily leads to better employment outcomes - is increasingly being questioned. With rising university enrolment rates, the supply of highly educated workers in the labour market continues to increase. However, as employer hiring slows due to economic downturns, the demand for bachelor’s and master’s degrees has not kept pace with their supply. As a result, higher education has shifted from a competitive advantage to a baseline requirement.

Furthermore, Tholen [7] criticised traditional human capital theory for oversimplifying graduate employment dynamics, arguing that graduates should be understood as being shaped by social structures and relationships. Consequently, social capital (e.g., alumni networks) and cultural capital (e.g., soft skills and professional image) must be considered alongside formal qualifications. To conclude, in an era of economic stagnation and a weak job market, competition among graduates is intensifying. Not only are their academic achievements used as a point of comparison, but their individual skills and various forms of capital are also continuously evaluated.

3. Promises

Over the past two decades, the UK government has introduced and adjusted various policies to increase participation in higher education and respond to global competition and labour market demand, including the Aimhigher programme, Degree Apprenticeships and the Apprenticeship Levy, and reforms to higher education funding and vocational education linked to the Augar Review.

The following sections explore the relationship between higher education and employment through these three policies in different economic contexts. These policies reflect the UK government’s changing expectations for higher education during periods of prosperity and austerity. Despite their differences, all of these policies aim to expand tertiary education to help disadvantaged groups achieve better employment prospects and ultimately improve social mobility. However, the government faces ongoing challenges as it seeks to increase social mobility and meet the skills needs of industry through the expansion of higher education.

3.1. The Aimhigher programme (2004-2011)

The Aimhigher programme (2004-2011) was introduced during a period of economic prosperity in the UK, reflecting the government’s response to globalisation and the knowledge economy. The initiative aimed to increase university participation, enhance workforce skills, and strengthen the UK’s global economic competitiveness. At the time, Tony Blair’s Labour government committed to achieving a 50% higher education participation rate among 18-30-year-olds by 2010 to reduce socioeconomic disparities [8]. However, following the 2008 financial crisis, the government faced increasing fiscal constraints but extended the programme until 2011. The Conservative-Liberal Democrat coalition government in 2010 implemented austerity measures, reducing higher education funding and raising tuition fees to replace direct subsidies [9]. Eventually, Aimhigher was terminated in 2011 due to budget cuts [10].

Despite its ambitious goals, the Aimhigher programme failed to significantly reduce socioeconomic disparities in university participation. It did not address the persistent stratification between universities established before and after 1992, particularly the divide between post-1992 institutions and elite institutions, such as those in the Russell Group [11]. Furthermore, data from the HEFCE [12] showed that the proportion of students from low-income backgrounds in higher education institutions was 20.1% in 2016, up from 11% in 2013, highlighting the initiative’s limited impact. Ultimately, due to fiscal constraints, higher education budget cuts, and shifting government priorities, Aimhigher was formally discontinued on July 31, 2011.

3.2. Degree Apprenticeships (DA) and the apprenticeship levy (2015-present)

Introduced in 2015, Degree Apprenticeships (DA) were designed to reduce student debt burdens and address skill shortages [13]. In 2017, the UK government introduced the Apprenticeship Levy, requiring employers with an annual payroll exceeding £3 million to contribute 0.5% towards apprenticeship training [14]. This policy was implemented amid rising higher education costs [9], employer skill shortages [15], and post-Brexit labour market uncertainties. It aimed to enhance employment adaptability and promote vocational education [16].

The DA programme provided students with an opportunity to complete a bachelor’s or master’s degree (where an approved DA exists) without incurring the substantial debt associated with traditional degree pathways. This initiative contributed to widening participation [17] and improving social mobility [16]. However, several challenges in implementation emerged. Mulkeen et al. [18] highlighted the complexity of shifting teaching delivery towards online learning and managing employer-HEI collaboration, making the process time-consuming and administratively demanding. Additionally, Bath Spa University [19] identified that employers’ willingness and capacity to invest time and resources in apprentices’ skills development remained a critical issue. Smaller employers, in particular, lacked structured training programmes and dedicated HR support, posing further obstacles. Dawson and Osborne [20] further emphasised concerns regarding the quality of work-based learning experiences and mentorship support provided to apprentices. While Degree Apprenticeships offer a pathway that integrates higher education with workplace learning, ensuring long-term employer commitment and high-quality training opportunities remains a challenge.

3.3. The Augar Review (2019)

In 2019, the Augar Review was commissioned to reform the higher education funding system, enhance accessibility, reduce economic barriers, promote vocational education (such as Lifelong Loan Entitlement), and improve the alignment between higher education and labour market needs. At the time of the report’s release, the UK economy was experiencing sluggish growth, with GDP increasing by only 1.3%-1.4%, and fiscal deficit pressures remaining significant [21].

Given these economic constraints, the government chose to maintain the tuition fee cap at £9,250 instead of reducing it to £7,500, opting instead to reduce student loan interest rates to control public spending [22]. Additionally, while the report recommended providing a £3,000 maintenance grant for disadvantaged students, the government declined to reinstate maintenance grants, meaning low-income students continued to rely on loans for living expenses. This high tuition and loan dependency model preserved substantial financial barriers to higher education, potentially dissuading low-income students from pursuing university degrees, particularly those who were uncertain about the future economic returns of a degree. Applying Bourdieu’s [23] theory of cultural capital, middle-class and elite families are generally better equipped to absorb the financial burden of higher education and leverage cultural capital (such as professional networks and internships) to secure higher-paying jobs. In contrast, low-income students - faced with financial constraints and uncertain employment outcomes - are more likely to opt out of higher education altogether. Consequently, in an increasingly competitive job market, those without higher education qualifications face greater barriers to securing well-paid jobs, further reducing their social mobility and reinforcing educational and labour market inequalities.

To address the decline in low-skilled jobs and the rising demand for high-skilled labour resulting from automation, deindustrialisation, and the dominance of the service sector [24], the UK government has adopted recommendations from the Augar Review (2019), emphasising continuous learning and workforce upskilling. As part of this initiative, the government has committed to launching the Lifelong Loan Entitlement (LLE) in 2025, which will provide financial support equivalent to degree-level funding for learners pursuing Level 4 (Higher National Certificate) and Level 5 (Higher National Diploma) qualifications. However, the effectiveness of policy in improving labour market skill alignment remains uncertain. Success depends on several factors, including whether employers recognise and value these qualifications, whether the government can provide sufficient financial support, and whether low-skilled workers can successfully transition into high-skilled roles. While these measures hold the potential to bridge the skills gap, their actual impact on labour market outcomes requires further evaluation.

4. Issues

4.1. The impact of credential inflation on higher education and employment

In recent years, higher education expansion, slow economic growth, and intensified labour market competition have collectively contributed to credential inflation - a phenomenon in which the increasing availability of higher education leads to a decline in the market value of degrees, forcing job seekers to pursue higher-level qualifications to maintain competitiveness [25]. Human capital theory suggests that education is directly linked to skill enhancement and productivity growth, thereby improving labour market outcomes [26]. However, as governments promote mass participation in higher education, the rapid increase in bachelor’s degree holders has led to an oversupply of graduates, diminishing the competitive advantage of undergraduate qualifications [27].

According to HESA [28], enrolment in taught master’s degree programmes doubled in the 2022/23 academic year, reaching 619,755 students, while enrolment in Higher National Certificates/Diplomas declined by 25% to 18,330 students. This trend suggests that an increasing number of job seekers are pursuing master’s degrees to remain competitive, as the market value of a diploma continues to decline. According to the DfE [29], there is a shifting employment trend: postgraduate employment rates rose by 2.1% (reaching 90.8%) in 2023, while employment rates for bachelor’s degree holders and non-graduates fell by 0.8% (87.4%) and 2.0% (72.2%), respectively. In conclusion, master’s degrees are gradually replacing bachelor’s degrees as the new minimum qualification threshold.

However, salary levels have not risen in proportion to educational attainment, leading to lower-than-expected earnings for highly educated graduates [30]. Credential inflation has led to an oversupply of highly educated workers in a job market unable to provide enough high-paying positions, exacerbating skill mismatches and disadvantaging low-skilled job seekers. The OECD [31] reports that 37% of workers aged 25 and above in England are overqualified for their jobs, up from 30% in 2012 - the highest rate among 31 surveyed countries. This indicates an oversupply of highly educated workers, with many bachelor’s and master’s graduates forced into low-skilled employment.

Furthermore, according to the DfE [29], the unemployment rate among non-graduates aged 21-30 rose from 5.7% in 2022 to 7.1% in 2023, indicating that rising qualification thresholds have further reduced employment opportunities for individuals without higher education. This suggests that, without a university degree, securing a job in today’s labour market is increasingly difficult, making social mobility more challenging. In conclusion, credential inflation not only diminishes the economic returns of higher education but also deepens labour market inequalities. It raises barriers for individuals with lower educational attainment and economically disadvantaged groups, further restricting their job prospects and limiting social mobility.

4.2. The role of social stratification in higher education and employment inequality

The UK government has introduced various policies to enhance higher education accessibility and employment opportunities for disadvantaged groups. However, structural inequalities continue to shape the relationship between higher education and employment prospects. Firstly, social class significantly influences access to higher education and employment prospects. Students from higher socioeconomic backgrounds often possess greater social and cultural capital, giving them an advantage in university admissions and career progression.

Although higher education expansion is often perceived as a pathway to social mobility, it may inadvertently reinforce existing class stratification. Brown et al. [32] argued that mass participation in higher education has intensified institutional stratification, where elite universities (e.g., Oxbridge and Russell Group institutions) attract high-achieving students, while regional and newly established universities produce graduates with lower labour market competitiveness. Archer et al. [33] described the UK higher education system as inherently hierarchical, with elite, regional, and post-1992 universities differing significantly in reputation, resources, and social recognition. This institutional divide interacts with students’ socioeconomic backgrounds, creating a compounding effect where middle- and upper-class students are more likely to access elite institutions, securing stronger employment prospects and reinforcing their social status.

Education thus serves as both a mechanism for talent cultivation and a tool for social reproduction. MacLeod [34] argued that elite-dominated education systems frame academic success as a result of individual merit rather than socioeconomic privilege, making class reproduction more subtle and harder to detect. Bourdieu [35] introduced the concept of symbolic violence, where formal education reinforces social hierarchies by legitimising mainstream cultural values while marginalising working-class cultural capital. This implicit bias prioritises middle-class norms, forcing working-class students to assimilate. Bourdieu and Passeron [36] further argued that academic success depends more on social class than innate ability. High-income families provide their children with cultural capital, financial security, and social networks that facilitate academic and career success.

Despite gaining access to higher education, working-class students still face cultural barriers. Reay et al. [37] found that many struggle to integrate into university culture, sometimes feeling pressured to conceal their backgrounds to avoid discrimination. However, elite universities continue to favour middle-class social norms, such as linguistic styles, confidence, and networking skills, which working-class students may have had fewer opportunities to develop.

Therefore, higher education credentials have transitioned from being a career-advancing asset to a mere marker of positional competition [32]. Increasingly, social and cultural capital, rather than academic credentials alone, determine employment success. This point was proved by Pham et al. [38], who argued that graduate employability depends not just on academic performance but also on one’s social capital and cultural capital. Similarly, Bukodi and Goldthorpe [39] found that families with greater economic, social, and cultural capital actively leverage their resources to maintain their children’s competitive advantage in both education and employment. Furthermore, Meuleman and Kraaykamp [40] found that graduates’ success in the labour market is closely tied to family background, particularly in competitive industries where those with greater social and cultural capital are more likely to secure prestigious positions. Laurison and Friedman [41] highlighted that only 7% of doctors in the UK come from working-class backgrounds, compared to 80% from privileged families. Even when working-class individuals secure high-status jobs, they earn, on average, 17% less than those from privileged backgrounds - an annual earnings gap of £7,350 ($11,000 USD). This suggests that elite families leverage their social and cultural capital to secure success in both higher education and employment, thereby reinforcing their socioeconomic status and prestige.

Beyond social class inequalities, ethnicity and gender also play a crucial role in shaping graduate employment outcomes. Despite the UK government’s efforts to widen participation, ethnic minority students remain overrepresented in post-1992 universities rather than elite institutions [42]. This stratification within higher education has lasting effects on employment opportunities and salary levels. Additionally, gender disparities in subject choices and career trajectories continue to influence employment outcomes. Reay et al. [43] found that women are more likely to pursue careers in traditionally female-dominated fields such as nursing, education, and social sciences, while men dominate STEM disciplines, which are associated with higher salaries. Even when women enter high-paying industries like finance or law, they face greater barriers to career progression (ibid.). The following sections examine how ethnicity and gender perpetuate inequalities in higher education and employment.

4.3. Ethnicity

In recent years, the UK government has focused on expanding higher education to advance social equity and improve employment opportunities for ethnic minority groups. Universities UK [44] has set a target to increase the enrolment rate of double disadvantaged students from 30% to 50% by 2035, while the Office for Students [45] has pledged to eliminate degree attainment gaps linked to ethnic disadvantages. Participation in higher education has increased across ethnic groups, for example, the enrolment rate of Black students grew from 21.6% in 2006 to 50.6% in 2022 [46]. However, despite the rise in university participation, significant inequalities persist in elite university admissions, academic attainment, and labour market outcomes. This suggests that simply increasing minority participation in higher education has not eliminated racial disparities and may instead reinforce existing inequalities between higher education and employment.

Firstly, ethnic minority students continue to face barriers to gaining admission to elite universities. Boliver [47] found that even when ethnic minority applicants had academic credentials comparable to their White counterparts, they were 7% to 10% less likely to receive an offer. In highly competitive fields such as medicine, law, and economics, the disparity widened from 12% to 15%, indicating that White applicants have an admissions advantage (ibid.). Moreover, while ethnic minority graduates from Russell Group universities are less likely to enter non-professional jobs, they still face higher unemployment rates than their White peers [48]. These findings indicate that access to elite universities remains unequal and that even ethnic minority graduates from prestigious institutions encounter greater barriers in the labour market.

Secondly, minority graduates today tend to achieve lower grade degrees than their White counterparts, which can undermine their competitiveness in the job market. Bhopal [49] found that only 63.4% of Black and Minority Ethnic (BME) students achieved a 2:1 or first-class degree, compared to 78.4% of White students, with Black students recording the lowest rate at 53.1%. Given that high-paying sectors such as finance, law, and technology often require a 2:1 degree as a minimum entry qualification [50], these attainment gaps pose significant barriers to the career prospects of ethnic minority graduates. Factors contributing to these disparities include differences in cultural capital [23] and a lack of institutional support or cultural inclusion within universities [37], both of which can impede minority students’ academic success. As a result, even though minorities have the opportunity to participate in higher education, their academic performance often remains lower than that of their White peers.

Therefore, while the expansion of higher education has increased access for ethnic minority students, persistent inequalities in elite university admissions and academic outcomes demonstrate that simply improving participation rates does not guarantee equal career prospects.

4.4. Gender

Gender disparities in STEM (Science, Technology, Engineering, and Mathematics) participation have persisted, limiting women’s access to high-income careers. University subject choices significantly impact graduates’ career opportunities and earnings potential, particularly in STEM fields, which are associated with high-paying jobs. Saeed’s [51] study found that girls in the UK are less likely to pursue STEM subjects due to societal norms, school guidance, and gendered career expectations. Additionally, HESA [28] data shows that in the 2021-2022 academic year, the gender imbalance was particularly stark in engineering and technology (47,000 male vs. 13,000 female students) and computer science (38,000 male vs. 12,000 female students). Conversely, women were significantly overrepresented in social sciences, law, and language studies. Therefore, university subject selection reinforces gendered labour market inequalities, with male graduates more likely to secure high-paying jobs in technical fields, while female graduates face lower economic returns.

5. Discussion & conclusion

This essay critically examines the promises and challenges within the relationship between higher education and employment. Drawing on the findings, it offers key insights for policymakers, higher education institutions, employers, and students, aimed at strengthening this relationship.

For policymakers, the growing number of university graduates and an increasingly competitive job market necessitate a closer collaboration between universities and industries. Governments should strengthen university-industry partnerships by incentivising practice-oriented curricula, internship programs, and mentorship schemes to equip graduates with skills aligned with labour market demands.

For higher education institutions, bridging the gap between academic knowledge and practical application is crucial. Universities should incorporate more experiential learning opportunities, such as professional certifications, work placements, and industry-led projects, ensuring graduates are better prepared for the workforce. For employers, there is a need to reform internal hiring and promotion policies to maximise the potential of their workforce and reduce the underutilisation of graduate skills. Companies should reconsider unnecessary credential requirements, eliminating excessive credentialism, and focus more on skills-based hiring rather than formal qualifications.

For students, alternative education pathways should be seriously considered to reduce student debt and enhance career readiness. Options such as degree apprenticeships, vocational qualifications, and online learning offer practical, cost-effective alternatives to traditional degree programs. Moreover, lifelong learning should be emphasised, as continuous skill development is essential for career adaptability and resilience in an evolving job market.

In conclusion, this essay has critically examined the relationship between higher education and employment. It is undeniable that at different times and in different economic contexts, the UK government has introduced a range of policies to help more disadvantaged people enter higher education and increase their employability, but they still have not been able to address the inequalities between higher education and employment. Moreover, this essay highlights how the expansion of higher education, coupled with a stagnant economic environment, has contributed to credential inflation. As more individuals obtain higher education qualifications, the value of degrees has diminished, intensifying competition in the labour market. Consequently, degree holders are increasingly required to pursue further qualifications to remain competitive.

Furthermore, this essay suggests that social class, race and gender continue to play a significant role in higher education and the job market. Firstly, social class makes higher education ineffective in changing social inequality, instead, it exacerbates class reproduction. Those who already hold privilege and resources continue to use education to maintain their employment prospects and their status and prestige in society; as a result, higher education becomes a system of social control that instils acceptance of existing power structures. Secondly, simply increasing the enrolment of ethnic minority students does not completely eliminate inequalities in higher education, and minorities continue to be treated unfairly in elite university admissions and the job market. Finally, gender polarisation in the choice of higher education majors has been proven to exacerbate pay inequality in the labour market.