A UK perspective: I believe the quality of engineering graduates has declined steadily since the early 90s. It appears that higher education here is promoting knowledge without understanding, so you get guys that have passed exams but haven't a clue.
Obligatory anecdote: MSc (MSEE) qualified employee comes to me saying the main voltage rail is measuring too low on a board he is playing with. I think "it's drawing too much current, some chip is getting hot...." but when I question him about his theories, current does not get a mention. I become concerned, and - to cut a long story short - begin to wander if he understands electricity at all. So, I hold up a piece of wire and say "prove to me, without using a continuity checking meter, that this works". Employee goes off for 5 minutes, and returns with a request to use an oscilloscope. I inform him that Yes, he can, and he can use the refridgerator if he wants, but no meters are allowed. Another 40 minutes go by. He admits defeat. I ring my wife, who studied French and Italian, and who teaches younger kids, and ask the same question. She says some sensible stuff about batteries, light bulbs etc. Employee considers this and laughs - he hadn't thought of that.
This problem may be down to a reduction in the pursuit of electronics and programming as hobbies (when I got started, if you wanted to play a game on your computer you often had to write the game!). I really don't know. But it worries me. There is also much more of a tendancy now to treat work (in engineering) as a necessary evil rather than with enthusiasm. My younger engineers seem to be more pessimistic than I remember being, and most are doing nothing to plan for the future.