While the recession has exacerbated the number of job losses among manual, administrative and unskilled workers, the country still required expertise in managerial, professional, associate professional and technical areas if it were to transform itself into a "knowledge economy".

As a result, Charles Levy, joint author of a report entitled 'Shaping up for innovation: Are we delivering the right skills for the 2020 knowledge economy?' said that, despite the dramatic expansion in the number of students graduating each year, the economy was not suffering from oversupply.

"High unemployment is affecting graduates in the short-term, but as the economy recovers long-term, demand will increase as the knowledge economy develops. Knowledge economy activities depend on the ability of workers to process, synthesise, interpret and communicate information – key graduate skills," he added.

The sustained strength of demand for such skills was indicated by the stability of graduate wage premiums, which the OECD estimated had slipped only slightly in the last ten years from 157% in 1998 to 154% in 2008.

Moreover, according to the Office of National Statistics' Labour Force Survey, employment in knowledge-associated occupations had increased by about 30,000 between the first quarters of 2008 and 2010, while employment in manual, admin and unskilled areas had dropped by 750,000 over the same period.

As a result, Ian Brinkley, associate director at the Work Foundation, said that progress towards creating a knowledge economy was "strengthening the long-term need for more graduates with the right skills".

Such demand had to be met through "both the sustained expansion of the higher education sector, and through less restrictive migration policies for high-level skills", although he acknowledged that "delivering more and better graduates will be costly".

This situation was particularly true if the focus was to remain on "high priority" Science, Technology, Engineering and Maths (STEM) subjects that were expensive to teach but necessary to meet "the needs of modern industry and the innovation system", Brinkley said.

"This will demand a more imaginative approach to how the government supports the high level skills for innovation. Simply following an efficiency agenda to save money will not enable the much-needed continued expansion of higher education and cuts in spending could impair the quality of teaching," he warned.

Because Brinkley did not believe ideas such as the graduate tax were "technically feasible" because of complicated financial structures and EU restrictions, the "only remaining viable option" was to increase fees. "The challenge will be for the government to implement this in a way which maximises access," he said.