Adding value to UK graduate labour market statistics: The creation of a non-financial composite measure of job quality - Section 1: Introduction

Section 1: Introduction

It often seems easier for the general public to interpret composite indicators than to identify common trends across many separate indicators (Nardo et al. 2005).

The study of a topic that is multi-dimensional in nature will often lead to an array of variables being collected on the matter. While the rich data that is gathered can often be useful within academic research, one of the key drawbacks of this can be the difficulty in explaining key findings on the subject to the wider public. As noted by Mira (2021), this is one of the main benefits of creating a composite indicator. Job quality is a good example of a multi-faceted concept. Based on an annual survey of graduates, the aim of this article will be to present a composite measure for one dimension of job quality in the UK (the design and nature of work) - as defined in Irvine et al. (2018) by the Measuring Job Quality Working Group (MJQWG). We will then illustrate the potential relevance of this measure to key stakeholders in the UK higher education sector, such as policymakers and graduate employers.

The last few decades have seen growing international policy interest in not only the quantity of jobs available in nations, but also the quality of the employment opportunities available to citizens. For example, just before the turn of the millennium, the International Labour Office (1999) outlined that a primary goal going forward was to ensure there was decent work for all. This commitment has been reiterated in objective 8 of the United Nations Sustainable Development Goals (United Nations 2023), which apply to all Member States, including the UK. Naturally, this has led to increased academic focus on how job quality should be defined (Green 2006; Holman 2013) and how this concept might be best captured through data (Handel 2005; Mitlacher 2008; Ritter and Anker 2002). The general consensus that appears to be emerging in the literature is that job quality comprises numerous elements and relates to those aspects of an individual’s work that influence their wellbeing (Green 2006; Munoz de Bustillo et al. 2011; Holman 2013; Boccuzzo and Gianecchini 2015). That being said, researchers differ in their views on what the most appropriate job quality indicators are and whether they should be aggregated into a smaller number of dimensions (Mira 2021; Boccuzzo and Gianecchini 2015).

In the UK, the attention placed on job quality has particularly increased since the publication of Taylor et al. (2017) - commonly referred to as the Taylor Review. This was commissioned as a result of wider concerns around the quality of work following a decade of flattening wages and growing job insecurity. It was left to the MJQWG to advise what information on employment quality should be collected on a regular basis and the group concluded that there should be a total of eighteen job quality indicators covering seven broad dimensions, as summarised below.

• Terms of employment (job security, minimum guaranteed hours, underemployment)
• Pay and benefits (actual pay, satisfaction with pay)
• Health, safety and psychosocial wellbeing (physical injury, mental health)
• Job design and nature of work (use of skills, control, opportunities for progression, sense of purpose)
• Social support and cohesion (peer support, line manager relationship)
• Voice and representation (trade union membership, employee information, employee involvement)
• Work-life balance (over-employment, paid and unpaid overtime)

Despite the growing recognition in the academic literature and among those advising UK government that job quality cannot be fully understood through analysis of a single variable, the employment outcomes of graduates continue to be predominantly examined using just one of the job quality indicators identified by the MJQWG – (graduate) earnings. For instance, one of the primary pieces of information released by the Department for Education in England on graduates relates to what they are being paid a certain period after graduation based on administrative data that links education, tax and benefits records (Department for Education 2022). Yet, there is evidence to suggest that UK graduates do not see higher wages as the only benefit from studying for a degree. Rather, Terjesen et al. (2007) illustrate that graduates are looking for an employer that shows care for their workers, alongside allowing them to utilise their skills and progress towards their career ambitions. Indeed, all these alternative features are considered by the MJQWG to be indicators of job quality.

The other key metric through which graduate destinations are analysed in wider society is whether they attain ‘highly skilled’ employment, which as we shall discuss later, is defined as being in a professional or managerial occupation. This is not an indicator of job quality based on the work of the MJQWG, though it has been assumed that these are the roles where graduates will utilise their skills, as well as being aligned with their career aspirations (both of which form part of the ‘job design and nature of work’ component of job quality). To the best of our knowledge though, this assumption has not been empirically examined.

Clark et al. (2021) illustrate in their research that inequalities in labour market outcomes are perhaps greater than an analysis based on earnings alone indicates. Though there have been a number of papers looking at pay disparities among early career graduates (examples include Crawford and Vignoles 2014, as well as Cornell et al. 2020), the same level of focus has yet to be given to non-pay related outcomes for this group. Indeed, until relatively recently, there had been a paucity of work assessing the quality of jobs undertaken by graduates more broadly. Okay-Somerville and Scholarios (2013) hypothesise that this may have been due to the presumption that, in an era of increasing job polarisation, these individuals sit on the favourable side of this phenomenon and are thus in well-paid employment with indefinite contracts. However, papers are emerging that reveal this group are facing increasing difficulty in the labour market (e.g. in the form of underemployment and less secure work), alongside some evidence suggesting that the graduate premium may also be falling (Green and Zhu 2010; Schmitt 2008; Mavromaras et al. 2007; Boero et al. 2021). For UK policymakers aiming to meet the United Nations Sustainable Development Goal of decent work for all, these trends indicate a need for the quality of jobs undertaken by graduates to be given closer attention.

This paper will explore a dimension of job quality that goes beyond earnings. In particular, we will concentrate on the design and nature of work component defined by the MJQWG, which encompasses skills utilisation, progression opportunities and the extent to which employment provides a sense of purpose. Our first contribution will be to create a composite measure using these indicators that has the potential to help facilitate enhanced discussion about graduate job quality in the public domain. Secondly, since the survey we utilise to conduct our work also contains questions on wellbeing and earnings, we illustrate how our composite measure has a positive and linear association with wellbeing (as would be expected given what the definition of job quality entails), but also that such a clear trend is not apparent when examining the correlation between income and wellbeing for graduates. If there is no evident pattern between pay and non-monetary outcomes, this in itself brings into question why earnings are given so much focus when it comes to graduate destinations, given the recognition after the financial crisis that societal and individual progress cannot be understood solely through a monetary lens. We also illustrate that – contrary to the assumption that those jobs classified as ‘highly skilled’ are the ones which use graduate skills and line up with their objectives – there are employment opportunities outside of these categories which score highly on our design and nature of work measure. Taken together, these findings indicate that our composite measure could complement existing variables used to assess graduate outcomes and thus enable policymakers to develop a better understanding as to how they are faring within society and the labour market.

Finally, through a regression analysis, we attempt to show how our measure can be useful in examining inequalities in employment outcomes. The study by Clark et al. (2021) highlights that there are greater variations in outcomes by ethnicity when non-monetary factors are also taken into account. In the graduate labour market, it has been found that there is little difference in earnings by ethnicity, though no similar work has been conducted for non-financial job quality indicators. Given the findings of Clark et al. (2021), we look to see whether disparities by ethnicity do emerge when considering a non-monetary component of job quality (i.e. our job design and nature of work measure). Our model demonstrates that – contrary to the results for earnings – all ethnic minority groups have lower design and nature of work scores. These differences are statistically significant and remain so even after controlling for personal, study and employment characteristics. Such findings again illustrate the need to look beyond earnings and are likely to prove useful to both (graduate) employers and policymakers aspiring to design interventions that aim to ensure decent work for all.

The structure of this paper will be as follows. Section 2 will provide a brief overview of the dataset we use to conduct our analysis with this being followed by a discussion of the method utilised to form our composite measure. In section 4, we will consider how our measure correlates with wellbeing and the current ‘highly skilled’ employment variable utilised within the sector, before presenting a quantitative exploration that is designed to showcase how the measure can also help with identifying inequalities in outcomes by ethnicity. We close the study with concluding remarks.

Next: Section 2: Data