UK graduates will struggle to reap a return on their investment in higher education, in salaries and career prospects, research suggests.

University student numbers around the world have doubled, and multinational companies are increasingly ready to recruit employees from countries that can deliver high-skilled labour at low cost, the authors of the seven-country Economic and Social Research Council-funded study warn.

They say their report, Education, Globalisation and the Knowledge Economy, raises fundamental questions about the future role of higher education.

In his foreword to the report, Ian Diamond, chief executive of the ESRC, writes: "We may be entering an era in which many young people now investing in education across the developed world may struggle to attain the comfortable jobs and careers to which they aspire.

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"They risk being bypassed by decisions to send work ... to people in Asia and elsewhere, who bring the same skills to employers at much lower prices."

The report points out that university enrolments around the world reached close to 63 million by 2005 and that China now has more students in tertiary education than the US. It warns that: "While it is too early to reach firm conclusions, we must confront the prospect of a high-skilled, low-waged economy for the UK."

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The report's authors - including Phillip Brown, professor in the School of Social Sciences at Cardiff University, and Hugh Lauder, professor of education at the University of Bath - say a disjunction between education, jobs and financial rewards would have "profound implications" for our understanding of educational opportunity, justice and social mobility. "The role of higher education will be subject to intensive political and educational debate as the returns (of) knowledge decline for many, and when income inequalities are increasingly seen to be divorced from 'meritocratic' achievement," they suggest.

Meanwhile, a University of Oxford academic has suggested that some UK students with vocational qualifications might end up better off financially if they opted for apprenticeship not a degree.

At the Society for Research into Higher Education's annual conference next week, Geoff Hayward, associate director of the Centre on Skills, Knowledge and Organisational Performance, will argue that students progressing to higher education with vocational qualifications should be given better information on the likely graduate salary "premium" for specific courses.

While the Government claims that the wage premium for graduates is about ?100,000 before tax over a working lifetime, research suggests this varies by course and institution.

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Dr Hayward said: "Those with suitable levels of prior attainment to undertake apprenticeship at level 3, where there are known skills shortages, may be deterred from doing so by government rhetoric that promotes higher education even though the wage premium associated with undertaking an apprenticeship may be higher than the wage premium associated with holding a degree."

rebecca.attwood@tsleducation.com.