This article questions the concept of "education for employment", which constructs a discourse of individual and societal benefit in a knowledge-driven economy. Recent policy emphasis in the European Union promotes the expansion of higher education and short-cycle vocational awards such as the intermediate two-year Foundation Degree recently introduced into England and Wales. Studies of vocational education and training (VET) and the knowledge economy have focused largely on the governance of education and on the development and drift of policy. Many VET programmes have also been considered for their classed, raced and gendered take-up and subsequent effect on employment. This article builds on both fields of study to engage with the finer cross-analyses of gender, social class, poverty, race and citizenship. In its analysis of policy texts the article argues that in spite of a discourse of inclusivity, an expanded higher education system has generated new inequalities, deepening social stratification. Drawing on early analyses of national quantitative data sets, it identifies emerging gendered, classed and raced patterns and considers these in relation to occupationally and hierarchically stratified labour markets, both within and without the knowledge economy.