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Economy / Jobs

Are investment banks really draining STEM graduates from other sectors?

One common answer to why Britain apparently lacks engineers is that graduates who study science, engineering or maths degrees are being lured away by the big bucks of the City. But as the data from our recent report The Great British Brain Drain shows, this is nowhere near as big a problem as some have suggested.

Looking at where STEM  (science, technology, engineering and maths) graduates were working six months later shows that some did go to finance and consulting in 2013-14 and 2014-15. But this figure was low – just 7 percent followed the money to higher paid jobs in these sectors.

They were also less likely than average to be working in London, where finance wages were the highest. Whereas 24 per cent of all graduates were working in the capital six months after graduation, 21 per cent of STEM graduates were doing the same.

So where do STEM graduates go? Manufacturing was the most popular (13 per cent found a job in this sector), while education was a close second (12 per cent). This was followed by computer programming, consultancy and related activities (8 per cent), health (7 per cent) and architectural and engineering activities (6 per cent).

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Of these top five industries, the publicly-funded sectors of health and education – which employ close to one-fifth of new STEM grads – stand out as not being directly relevant to STEM subjects. It is therefore these sectors which provide the biggest competition for STEM graduates, not finance or consultancy – with education recruiting double the number of STEM graduates that finance and consulting did.

Of course, we should not be discouraging STEM graduates to go into teaching – it makes sense to have maths and science graduates teaching these subjects. But in the same vein, having maths graduates applying their quantitative skills in finance also makes sense, given the skills that this sector requires and the role that it plays in the national economy.

As such, if the short supply of graduates with STEM degrees is a problem for employers, then it is likely to be down to the lack of graduates overall, rather than a result of competition from non-STEM sectors. And it is on this issue that policymakers should look to intervene.

You can see more of our analysis on the new graduate labour market in the Great British Brain Drain.


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