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Effects of recession on the graduate labour market

February 2018

Navigating the job market is inevitably tricky during a recession, but evidence from the last decade reveals that the experience of graduates is very different to that of non-graduates

It was widely reported that the outlook for graduates during the 2008/09 recession was bleak. Many graduates were so disheartened by the state of the labour market and media commentary that they gave up hope of finding employment altogether and even stopped looking for jobs.1

Graduate recruitment campaigns shrank:

  • vacancies fell by 8.9% in 20092
  • two-thirds of employers implemented a recruitment freeze3.

Those graduates that were successful in gaining employment found that starting salaries remained static or even fell in 2009.4 This continued to be the case until 2011.5 This lack of growth in starting salaries was described as a 'new phenomenon' in the graduate labour market.6

How was graduate employment affected?

Graduating during a recession is not easy. Unsurprisingly, graduates leaving university during an economic boom fare better than those who graduate during a recession.

However, just because graduates struggle during a recession does not mean that non-graduates fare better.

For non-professionals, it's hard to say that the recession ever ended

When considering employment outcomes, we split professions into professional and non-professional level jobs, with professional-level jobs seen as the ones that graduates would, ideally, be entering into. The chart shows the change in the number of people entering into both job classifications since 2007.

Year,Professional job numbers,Non-professional job numbers
2007,0,0
2008,131000,22100
2009,147400,-420200
2010,313700,-550800
2011,486000,-571600
2012,781400,-629400
2013,1020300,-477500
2014,1341000,-170900
2015,1708000,184400
2016,2148800,74300

The recession lasted from the second quarter of 2008 to the third quarter of 2009 and the UK very nearly re-entered recession during late 2011 and early 2012. However, the data doesn't reflect this.

Considering professional-level jobs in isolation, we see that the recession represents a flat patch in what is otherwise rapid growth.

What happened to non-graduates?

The general labour market took seven years to recover to the point where there were more people in non-professional level jobs than in 2008, despite adding nearly two million people to the working population in this period.7

Worse still, the number of people in non-professional level roles fell once again in 2016. It is entirely possible that the peak of 2015 was just a brief respite but more data is needed to know for sure.

Dividing non-professional level jobs further, two of the highest-earning categories (administrative and secretarial occupations, and skilled trade occupations) were among the areas that saw the greatest decrease in employment numbers. Neither of these occupations has ever employed more people than they did in 2007.

Consider just professional-level jobs and it's not obvious that there was a recession at all. For non-professionals, it’s hard to say that the recession ever ended.

Is it still better to go to university?

By and large, outcomes for graduates remain brighter, even during recession, than for non-graduates.

Employers should be aware that if they keep their graduate recruitment schemes then they will be better equipped for economic recovery.

Graduates did suffer during the recession. They saw their salaries fall, found it more difficult to get into the workplace, and struggled with underemployment. Those who entered the public sector found it particularly tough, with severe funding cuts leading to pay freezes - many of which remain to this day.

However, for graduates and those in professional-level jobs, the recession was short and their long-term outcomes were positive. For non-graduates in non-professional roles, the picture was much bleaker. Not only did they lose their jobs, but worryingly, they never got them back.

Notes

1 A HECSU Survey: How are Higher Education Career Services Experiencing the Recession?, HECSU, 2009.
2 The AGR Graduate Recruitment Survey 2010 Winter Review, AGR, 2010.
3 Employment trends 2009, CBI, 2009.
4 AGR, 2010; The UK Graduate Careers Survey 2009, High Fliers, 2009.
5 Graduate recruitment: AGR 2011, Freshminds, 2011.
6 'Graduate recruitment 2011, Carl Gilleard: The revolutionary road', Graduate Market Trends, HECSU, spring 2011.
7 Annual Population Survey, ONS, 2008-2015.

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