The link between higher education and the labour market has been the focal point of higher education policy initiatives in many countries, especially since the advent of the financial crisis. In this context, greater attention has been paid to the role of higher education institutions in providing their graduates with employability skills. Universities are expected to strengthen the employability of their graduates by providing them with skills and expertise valued and rewarded by employers. In this context, higher education is viewed as an investment in human capital with expected returns both at the private and the social level (Becker, 1964; Mincer, 1962). However, relevant research points to graduate employability deficiencies and associated mismatches between graduates’ educational credentials and the requirements of jobs (Allen & Deweert, 2007). At the same time, a high incidence of graduate underemployment and unemployment is characteristic of many countries. This is especially the case in Southern European countries which have been hit hardest by the financial crisis.

The paper investigates the views of higher education graduates regarding the link between higher education and the labour market. Specifically, it examines the employment experience of graduates and their perceptions regarding the contribution of higher education to their employment and career prospects. Qualitative research was used to collect information from 58 university graduates in two Southern European countries, namely, Greece and Cyprus. Respondents provided information on the skills and competencies acquired through higher education and utilised in the world of work. They identified the problems they faced upon labour market entry and pointed to the need for changes in the higher education preparation of graduates. The findings show that even in recessionary economies and despite some degree of disillusionment, higher education graduates  (partly) consider higher education to be an investment in human capital and continue to acknowledge its importance for their employment and careers.

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