Recent government policy has focused on helping low-skilled individuals obtain a Level 2 qualification. Previous work using the Labour Force Survey has however found that controlling for other qualifications achieved, individuals holding low-level National Vocational Qualifications (NVQs) have statistically significantly lower wage levels than otherwise similar individuals who lack NVQs, the estimates for NVQs at Level 1 and 2 falling between 5 and 20 percent lower wages.

This work offers an in-dept investigation of NVQs obtained at Level 2 (and to a lesser extent at Level 1), trying to shed some light as to why a seemingly beneficial certification of skill appears to hurt labour market prospects.

Based on our findings we conclude that in stark contrast to the large benefits uncovered from most other Level 2 vocational qualifications overall returns for NVQs at level 2 are extremely poor and remain negative for large segments of the working population. Substantial positive returns were however found for some sub-groups and sectors of the labour force. NVQ2s also appear to represent stepping-stones to higher levels of attainment, with individuals receiving NVQ2s being more likely than similar individuals without NVQ2s to obtain Level 3 qualifications.