Employability in a Knowledge-Driven Economy

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Working Paper Series
Paper 26
Employability in a Knowledge-Driven Economy
May, 2002
Phillip Brown, Anthony Hesketh and Sara Williams
ISBN 1 872330 67 3

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Employability in a Knowledge-Driven Economy1
Phillip Brown, Anthony Hesketh and Sara Williams

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Abstract
This paper examines the concept of employability. The recent policy emphasis
on employability rests on the assumption that the economic welfare of individuals
and the competitive advantage of nations have come to depend on the
knowledge, skills and enterprise of the workforce. Those with degree-level
qualifications are seen to play a particularly important role in managing the
‘knowledge-driven’ economy of the future. But the rhetoric that shrouds the idea
of employability has been subjected to little conceptual examination. The purpose
of this article is to show that the way employability is typically defined in official
statements is seriously flawed because it ignores what will be called the ‘duality
of employability’. It also introduces ‘positional conflict theory’ as a way of
conceptualising the changing relationship between education, employment and
the labour market.

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Introduction
Employability is a notion that captures the economic and political times in
which we live. Political and business leaders consistently tell us that
efficiency and justice depend on people acquiring the knowledge, skills and
capabilities that employers need in an increasingly knowledge-driven
economy (DfEE, 2000; CBI, 2001). It is argued that national governments
can no longer guarantee employment in a competitive global environment.
As the developed economies come to rely on knowledge-driven business,
employability is seen as a source of competitive advantage as national
prosperity depends on upgrading the knowledge, skills and entrepreneurial
zeal of the workforce (Brown and Lauder, 2001). In this new economic
competition the role of government is limited to providing the opportunity for
all to enhance their employability, which has led to the rapid growth in
higher education.2
Employability is also seen to reflect the shift away from the bureaucratic
career structures of the past that offered stable career progression to
significant numbers of white-collar workers (Collin and Young, 2000). The
large corporations have become leaner, flatter and prone to rapid
restructuring making them incompatible with the expectation of a
bureaucratic career. This led companies to highlight the need for employees
to not only remain employable within their current jobs but in the external
labour market, if they should find themselves in the category of ‘surplus’
employees (Sennett, 1998). A feature of work reorganisation in the last
twenty years has been the democratisation of insecurity. Redundancy is no
longer restricted to semi-skil ed and unskil ed workers. Technicians,
engineers, managers and professionals, have all discovered that the long-
tenure career bargain is dead (Cappelli, 1999; Peiperl, et al. 2000).

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For some business gurus such as Drucker (1993), employability also
represents a powershift in the nature of global capitalism. There is less
need for those with initiative, energy or entrepreneurial flair to commit
themselves to the same organisation for decades in order to make a decent
career. If organisations depend on the knowledge and skills of the workforce
then power rests with those that have the knowledge, skills and insights that
companies want (Micheals, et al., 2001). The shift away from long-term
company careers has given the educated classes greater economic
freedom. This has enabled young knowledge workers to short-circuit
organisational hierarchies to arrive in senior managerial positions often in
their thirties.
This view of employability has informed much of the contemporary debate.
It is also the starting point for a recent study that is examining the social
construction of graduate employability in a knowledge-driven economy.
Graduate Employability in a Knowledge Economy (GEKE)
The focus of this study has three dimensions:
Firstly, there is the question of how employability has arisen as a policy issue.
This addresses the politics of employability. What assumptions are being made
about education, occupational change and the labour market? What are the
dominant ‘voices’ in this debate and what vested interests do they harbour? How
does it relate to the legitimacy of labour market outcomes and inequalities in
future life chances? To what extent can the political commitment to employability
fulfil its policy objectives? Do the human capital assumptions on which
employability policies are premised offer an adequate framework for policy
formation and analysis?

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Secondly, there is the question of how students construct and manage their
employability as they enter the labour market. Are there any discernible
difference in the way graduates understand and manage their employability in
terms of social background, gender and educational biography?
Do differences in human, cultural and social capital lead graduates to see their
futures and approach the job market in different ways? Equally, how do those
with similar forms of capital seek to win a positional advantage in the process of
elite recruitment?
Thirdly, the large employers have dominated debates about employability
(Hesketh, 2000). This raises the issue of how companies are redefining the skills
and personal characteristics of the knowledge workers of the future. What makes
a successful manager or future leader and how do companies seek to select
them? How do employers differentiate between the employability of graduates,
and to what extent is social background, gender, ethnicity or education profile a
key factor? To what extent do the assessment centres used by most large
companies allow them to ‘objectively’ identify the star performers of the future?
Do employers believe that there is an expanding talent pool of knowledge
workers or a more intense ‘war for talent’? This will inevitably have implications
for the way employers seek to recruit graduate labour. These are issues of
increasing importance because it is difficult to assess personality, drive,
creativity, or leadership potential in an objective matter. This problem has
become more acute with the rise of mass higher education which is creating a
mass market of potential knowledge workers. Therefore, how they attempt to
manage an efficient and legitimate recruitment process will shape the
(re)production of social and occupational elites.
Using a range of qualitative methods, this study is examining how these
three dimensions are interrelated. It includes interviews with ten policy-
makers, fifteen public and private sector organisations and over seventy
graduates from various universities. Some of these graduates were rejected

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by companies at an early stage, others attended assessment centres but
were not offered appointments. It also includes those who were successful.
A number of individual case studies are being followed-up, in recognition
that individual employability is a process rather than an event. The research
design also involves participant observation at seven assessment centres
across of a range of organisations, to examine who gets recruited, how they
get recruited, and why they get recruited. This approach allows us to
examine the social construction of employability in action.
A major problem confronting researchers interested in issues of
employability is the lack of theoretically informed studies. The policy
discourse is dominated by employer and government concerns about the
supply of graduates, which has received little conceptual or empirical
analysis. At best, it is informed by human capital assumptions that are
problematic for a number of widely understood reasons (Ashton and Green,
1996; Brown et al. 2001). Therefore the purpose of this paper is to develop
a conceptual framework for the study of employability. Although much of
what is described below is applicable to issues of employability across the
occupational structure and to the changing relationship between education,
employment and productivity, here we are especially interested in how
employability is being shaped within a ‘knowledge-driven’ economy.
The view that we are entering a knowledge-driven economy is hotly
contested (Thompson and Warhurst, 1998). This debate takes us beyond
the scope of this paper, so we will limit ourselves to two points. Firstly, the
application of knowledge to the economy is hardly novel as it was central to
the industrial revolution. Its role in economic competition between nations
has a long pedigree as David Landes (1999) has observed, in the early
eighteenth century France sent out ‘explorers’ to acquire the secrets of new
British technologies, and in 1718 it ‘launched a systematic pursuit of British
technicians: clock- and watchmakers, woollen workers, metallurgists,

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glassmakers, shipbuilders’ (p.276). This led the British to pass laws
prohibiting the emigration of certain skil ed craftsmen. It is also difficult to
assess the economic value of knowledge as it can take many diverse forms
and not all forms are equally productive; ‘knowledge is extremely
heterogeneous in nature, and its value is not intrinsic but depends on its
relationship to the user, so it cannot be quantified in the same terms as
physical objects such as land or industrial capital’ (OECD, 1999:1). The idea
of a knowledge-driven economy clearly needs to be treated with caution.
The second point is that while many companies state that the intel ectual
capital of core employees is a major source of innovation, value and
competitive advantage, the majority of the workforce do not depend on high
skills to perform their occupational roles (Brown, Green and Lauder, 2001).
A recent survey of workforce development in Britain found that 57 per cent
of jobs required less than three months training, while 29 per cent required
two years. Over a fifth of employees also reported that it took less than a
month to learn the job wel (PIU, 2001:26).
In this article the idea of a knowledge-driven economy is restricted to the
labour market for those with graduate qualifications who represent an
increasingly large proportion of labour market entrants, as university
numbers have accelerated in the last decade or so. These are purported to
be the ‘knowledge workers’ of the future and are expected to command high
levels of general and specialist knowledge. They include professionals,
managers and future business leaders who are given ‘permission to think’.
But even within this restricted definition of the knowledge worker, there are
unanswered questions about the demand for those leaving universities with
graduate qualifications. There is evidence of serious market congestion that
may lead many of them to end up in jobs offering considerably less than
they bargained for.

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What is Employability?
The first issue is to clarify what we mean by employability. Hillage and Pollard
(1998:1) suggest that ‘employability is about having the capability to gain initial
employment, maintain employment and obtain new employment if required’. This
definition is ideologically loaded. It ignores that fact that employability is primarily
determined by the labour market rather than the capabilities of individuals. If
thirty suitably trained brain surgeons applied for ten vacancies it is inevitable that
twenty surgeons would not get jobs. Does this mean that they are not
employable? According to the above definition they are not because they have
not demonstrated their ‘capability’ to gain initial employment.3 Thus, this
definition of employability represents a classic example of ‘blaming the victim’
(those who cannot find jobs).4
Employability will vary according to economic conditions. At times of labour
shortages the long-term unemployed become ‘employable’; when jobs are in
short supply they become ‘unemployable’ because there is a ready supply of
better qualified job seekers willing to take low skilled, low waged jobs. In 2001,
one of our case study companies in a sector characterised by labour shortages,
received approximately 6000 applications for 300 jobs, an odds ratio of 20-1. A
year later, about the same number of applicants were competing for only 100
positions on their graduate programme. Hence, their relative chances declined
from 20-1 to 60-1, despite a consistent quality of candidates.
Employability cannot, therefore, be defined solely in terms of individual
characteristics. This is because employability exists in two dimensions – the
relative and the absolute. Virtually all policy statements on employability fail to
grasp the duality of employability. Policy debates have concentrated on the issue
of whether students have the appropriate skills, knowledge, commitment or
business acumen to do the job in question. This absolute dimension of
employability is not inconsequential. It relates to what Gellner (1983) termed the

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production of ‘viable human beings’. When most jobs are low skilled and workers
interchangeable, the skills and personal qualities of employees are of little
interest or relevance to employers (Braverman, 1974). But the increasing policy
emphasis on graduate employability, in part, reflects the increasing importance of
knowledge, skills and commitment of employees as a source of efficiency,
innovation and productivity. The personal is productive.
However, employability is also a relative concept that depends on the laws of
supply and demand within the market for jobs. If there were more jobs than
applicants for professional and managerial workers, this would be less of a
problem. We could assume that all candidates with the appropriate qualification
and skills would get appointed. But this is far removed from the realities of the
labour market, even when the economy is buoyant. In Britain, the expansion of
higher education has led to over a third of the age cohort entering the labour
market with advanced credentials. Over 300,000 graduates competed for less
than 15,000 elite jobs in 2001. These jobs are often with household name
companies that offer starting salaries averaging £19K in 2001.
Employability not only depends on fulfilling the requirements of a specific job, but
also on how one stands relative to others within a hierarchy of job seekers. This
pecking order is not always explicit and will depend on the job being applied for.
But an individual’s employability depends on the employability of others. If
everyone has a university degree, going to university may develop the
knowledge requirements for professional employment, but may not improve
one’s employability in the ‘positional’ competition (Hirsch, 1977) for jobs. At best,
it enables the individual to stay in the race. It is for this reason that the ‘positional’
aspect of employability assumes major importance in understanding who will find
elite employment. As Fred Hirsch (1977) suggests, ‘If everyone stands on tiptoe,
no one sees better’ (p.5). But if one does not stand on tiptoe one has no chance
of seeing.

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