Of course the number of grauduates is increasing and of course the quality is therefore declining.
Education may be about a love of learning for some, but for most people it is about furthering their prospects. So as each generation passes through, it becomes essential to have been in school until, say, O Levels. Then A Levels. Then a BA/BSc becomes the norm, then an MSc etc. It's something I have discussed a few times recently with different people. My husband has a PhD and my sister is working towards one atm. I'm working towards a professional qualification after a BSc and MSc. My dad (an educated, professional man himself) was saying how is in his day a PhD was so incredible, that it really was something. He can't understand how it isn't really to us, in our groups of friends we're all pretty normal. All of our friends have degrees, most have post grads and plenty have PhDs. It's just the requirement of our generation - just as all of his friends finished school and a good few went on to further study.
Most people try to make the most of the opportunities that come their way, so as the competition gets more intense, each generation creates new opportunities. As someone above said, the top 10% will always have the same kind of opportunities, as will the top 20%, 50% etc, the level of qualification required just increases. My theory is that PhDs will start to be graded and my (thus far fictional) children or grandchildren will be applying to jobs that say "2.1 PhD minimum".
SPAG are important, in my field you wouldn't (ok, shouldn't, it does happen) get hired if you can't write well, part of our job is to write reports and there's no one to come behind you to tidy them up.
But numeracy is also vitally important and hasn't been mentioned on this thread once, as far as I can see.
I'm Irish and in our system those wanting to go to university take at least six subjects to Leaving Cert (A Level equivalent) including English and Maths and generally including a modern language and a science subject. It gives a broader education and is a better system imo.