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5 predictions about the 2020 graduate labour market

January 2020

As a new decade begins and the UK prepares to formally leave the European Union, Charlie Ball looks forward to see what issues will figure in the graduate labour market in 2020

I've just written a short appraisal of how my 2019 predictions went (spoiler - wrong about Brexit, right about other things), so let's see how the coming year will look. And we start with the obvious.

1. Brexit is going to happen - but little will really be resolved

Of course, most of us know this, but it's worth restating that Brexit and the aftermath of the UK's formal departure from the EU are going to profoundly shape the way the UK graduate labour market acts in the next few years. Most graduates work for large businesses and many of those businesses have international focuses for their client base, their recruitment needs, their supply chains or any combination of those factors. Brexit will disrupt them all.

It's important to remember that not all of these effects will necessarily be negative for UK graduates. Many businesses ease their graduate skills shortages using overseas recruitment and any barriers to that will place a premium on corresponding UK graduates. But with the future trading relationship with the EU looking very unclear, and businesses fearing a cliff edge to the UK's transition period at the end of 2020, Brexit uncertainty will not be over at the end of January. As 2019 has taught us though, a lot can happen in a year.

2. Skills supply and demand issues will become more urgent

We have both graduate underemployment and graduate shortage in the UK, sometimes even within similar disciplines (IT in particular). There are a lot of simplistic diagnoses around but the true picture is a complex matrix of factors around graduate mobility, the ability of graduates to adapt, the barriers that SMEs face to recruitment, how students and graduates become aware of their options and the choices business make in recruitment.

Nobody is to 'blame', but everyone can have a role in improving matters. As we transition to new trading arrangements with the world, the way people are educated and trained in the UK and the difficulties employers experience in finding the right people will become more important. Longstanding issues of shortages of graduates entering tech, engineering, nursing and teaching are likely to persist and become more urgent.

If business starts to become concerned at the way the UK's post-Brexit negotiations are going, it could be that we see a more sustained downturn in the jobs market

3. The economic indicators are not looking great

On 19 December, the quarterly Bank of England Agent's Summary of Business Conditions - this for the final three months of the year - reported that 'Contacts' employment intentions remained negative. A number of contacts said they were hoarding labour in the expectation of a recovery in demand in the near term. As a result, they expected their overall headcount to be unchanged.

'Some consumer services businesses reported cutting headcount to lower costs and improve productivity. There was an increase in the number of firms reporting recruitment freezes. And some contacts said they were using less temporary labour.'

Businesses are starting to look to reduce overall headcount for the first time since 2016, although the intention is modest. At the same time, the Bank does report that entry-level and apprenticeship recruitment seems stable and so there may not yet be too much to read into this for graduates. However, if business starts to become concerned at the way the UK's post-Brexit negotiations are going, it could be that we see a more sustained downturn in the jobs market. The latter half of 2020 is when this is likely to come to a head and we will know more.

4. The HE sector will soon have new data to work with

It's not been easy to get a really detailed view of the way the graduate labour market is operating as for the first time in over 50 years we've had no early graduate destination survey in the summer. The survey has had many incarnations over that time but the annual ritual of getting outcomes data of graduates six months post-graduation came to an end in 2019, leaving a large hole in the body of evidence we use to judge the graduate jobs market.

2020 should see the debut of the replacement survey, the Graduate Outcomes survey, which reports on graduates 15 months after graduation. It won't be the same data, but from a labour market point of view it will allow us a look at the jobs university leavers got and help to fill in that hole - and give us some better insight into the possible future direction of the labour market.

5. Diversity remains hugely important

Many businesses are making strenuous attempts to make their workforces more reflective of the UK itself. The Institute of Student Employers reports attempts to target underrepresented groups, changes to the institutions employers are visiting, better and more diverse campus representation, more outreach, more support for those attending selection events, name-blind recruitment and many other initiatives to try to make selection fairer and to ensure that organisations don’t become monocultures that spurn valuable talent.

These efforts are likely to persist in 2020 as business looks beyond its traditional recruitment areas to strengthen their workforces. Not everyone is making this a priority and the methods and aims differ between businesses but it's a move that could have significant benefits to groups of graduates who sometimes lose out in the jobs race.

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