Are universities really churning out 700,000 jobless graduates on benefits?

Britain’s universities are thoughtlessly mass-producing graduates the economy doesn’t need, leaving more than 700,000 jobless and on benefits – or, at least, so we’re told.

That was the recent argument from the Centre for Social Justice, a right-leaning think tank founded by Conservative MP Sir Iain Duncan Smith.

So is it true? We looked at the detail.

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The claim:

An “obsession with university” is funnelling thousands to the job centre, the CSJ claimed in January. The think tank analysed the Labour Force Survey to identify working-age people who were out of work, whose highest qualification was a degree or above, and who were claiming any benefit – arriving at a total of 706,575.

Within that figure: more than 400,000 were on universal credit, and 240,000 were off work due to sickness. The release built on the think tank’s recent report Rewiring Education, which warned that treating technical education as a “second-class path” has left both the education system and jobs market “hopelessly distorted.”

The reality:

The picture is considerably more complicated, starting with that 700,000 figure.

“That raw number isn’t as important as the proportion of graduates claiming [benefits] as compared to the proportion of everybody else,” David Kernohan, deputy editor of Wonkhe, a higher education policy site, told Big Issue.

The 2021 Census found 16.4 million people with level 4 qualifications and above. Around 5% of these claim benefits. By contrast, of the 8.8 million working-age people with no qualifications at all, around 10% claim universal credit – more than twice the graduate rate.

According to the Department for Education’s Graduate Labour Market statistics, 87.6% of working-age graduates were in employment as were 90% of postgraduates, compared to 68% of non-graduates.

Basically, graduates are more likely to have a job, and less likely to claim benefits. 

However, many people counted in these figures are actually in work. “If you claim universal credit, it doesn’t mean you haven’t got a job,” said Kernohan. “Teachers, nurses, early career academics, civil servants – they often have degrees, they work and claim. That tells us not that it’s not worth getting a degree, but that it’s worth thinking about why we pay young people wages that are not enough to live on.”

The 700,000 figure also lumps together very different situations under the banner of ‘jobless’. Around 240,000 of those counted are out of work due to sickness, many claiming PIP – a disability benefit paid regardless of whether someone is working – rather than an unemployment benefit. Many disabled people find PIP essential to allow them to stay in work.

The data itself is also shakier than the headlines suggested. The figures come from the Labour Force Survey, a sample-based dataset whose response rate has collapsed from around 50% to just 21% in recent years, meaning statisticians now classify it as “official statistics in development” rather than gold standard data.

The report is right that expensive tertiary education isn’t always the best option for young people. But it’s misleading to suggest that a university degree is a one-way ticket to a job centre. 

“People read a number and accept it as a fact,” said Kernohan. “Numbers are incredibly powerful, exactly because they need context – and you don’t often get the context.”

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