Postgraduate qualifications can help raise earnings significantly as em ployers seek to identify high-calibre recruits
Last year one in eight of all first degree graduates continued into further academic study or research. Almost as many entered postgraduate vocational courses in teaching, social work, ordination, medicine, the law and other professions.

The value of a vocational postgraduate vocational qualification is self-evident. Academic courses can also bring direct vocational advantages. If you hope to teach in higher education, or enter research and development, you will usually be expected to have a PhD. There are also many science and technology posts for which you need a master's degree. Already 31 per cent of biologists, 40 per cent of physicists and 41 per cent of chemists continue with further academic study.

Other graduates continue in higher education to follow a personal interest and in the hope that a higher degree will improve their job prospects. Is this a realistic hope? Is a higher degree more valuable than a first degree in the general graduate job market?

In 1993 a statement issued by the Association of Graduate Recruiters (AGR), the Association of Graduate Careers Advisory Services and the Higher Education Careers Services Unit argued that a higher degree was not always helpful. They warned: "The AGR survey confirmed that a post-graduate qualification is not always a benefit when seeking employment. Unless the qualification is relevant to the job, it is unlikely to give any advantage in terms of selection or salary."

A study of the postgraduate labour market, by the Institute of Employment Studies (IES) in the same year reached a similar conclusion: "There is little evidence of clear benefits of postgraduate study to individuals in terms of career progress or financial rewards."

The salaries paid to newly qualified graduates last year appear to give at least partial confirmation of this pessimistic view. According to the AGR survey of graduate salaries published early this month, a master's degree was worth very little extra on the median starting salary of £13,500 for a 21-year-old with a second class honours first degree. On the other hand, PhDs and DPhils were worth an extra £2,189.

However, if one looks at long-term employment prospects for postgraduates and at changes in the pattern of demand for graduates, the view is much more optimistic.

A study for the Department of Employment looked at the career experiences of 7,000 people who graduated in 1980. It found that after six years a master's degree had raised earnings significantly for both men and women. But it is changes in the overall market for graduates that appears most significant.

Thirty-five years ago the number of first-degree graduates was less than a quarter of the number graduating today. It was then reasonable for them to assume that a graduate came within the top 5 to 10 per cent of the population by intellectual achievement.

Now, with one in three school-leavers entering higher education, a degree has lost its exclusivity. Employers find it increasingly difficult to identify high-calibre recruits.

According to a survey of 68 large graduate employers conducted by the PA Consulting Group, 38 per cent were unable to fill all their graduate vacancies last year, despite receiving an average of 87 applications per post.

Most employers define quality in terms of a graduate having effective interpersonal skills, commercial awareness and some work experience in addition to a good degree.

It is the definition of a "good degree" that is at the heart of the matter. It used to be assumed that all degrees were marked to a common standard. Whether the fear is justified or not, there is a growing belief that standards vary and that some degreesare second rate. Some employers target those universities where standards are perceived to be highest. However, others are taking the simpler route of upgrading their requirement from a first degree to a higher.

The impact of the European Union on the graduate market has so far been small. However, in the longer term, we must expect more UK graduates to make their careers in mainland Europe. Those with first degrees from European universities tend to graduate several years later than their British counterparts. As a result, European employers mistakenly assume that British first degrees are inferior and so often look for master's degrees from British candidates.

The indications are that higher degrees are likely to be in increasing demand. This does not mean that they will be wanted because there is necessarily more postgraduate level work, but because employers have upgraded their entry level from first degree to higher degree graduates.

This is in line with the general inflation of selection criteria. The first degree graduate is roughly where A-level school leavers were 20 years ago. It may not be too long before the master's degree is the norm.

The graduate who stays on for a higher degree must accept that the benefit may not become immediately apparent. The short-term cost, unless you find a sponsoring employer or secure a grant, will be high and the rewards are likely to be long-term. If someone does undertake postgraduate studies, these should where possible be combined with relevant work experience and courses which aim to teach what are usually called personal transferable skills. These are now offered by an increasing proportion of unive rsities and should be considered an essential part of postgraduate (and graduate) study.