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Graduate employers optimistic for 2019 recruitment

February 2019

Tristram Hooley, chief research officer of the Institute of Student Employers, takes the temperature of the graduate labour market - and despite all predictions to the contrary, employers say it's as fit as a fiddle

At the start of every calendar year the Institute of Student Employers (ISE) conducts a survey of its members. These are typically large employers who have a history of recruiting substantial numbers of new graduates and other entry level positions.

The survey takes the 'pulse' of the graduate labour market in the middle of the recruitment cycle. Is the patient healthy? Are employers feeling optimistic, recruiting lots of students and seeing them accept all of their offers? Or is a malaise setting in with employers either reducing their recruitment numbers or finding posts hard to fill?

So, how is the graduate labour market feeling at the start of 2019? When the survey was sent out, we were well aware that Brexit was only three months away and that there were voices of doom sounding on the economy. We also saw that higher education reform was not going well and that there were continuing concerns about the implementation of the apprenticeship levy. We were expecting employers to tell us that the patient was not feeling at all well and that the labour market was tightening.

But, we were wrong.

Public sector leads increase in demand for graduates

Almost 100 of the ISE's members responded to the pulse survey and in general they were feeling pretty optimistic. They were anticipating that demand for graduates would increase, estimating that they would recruit 18% more students than they did last year.

The increase in demand was bigger in some sectors than in others with the most substantial increases planned in the public sector (32%), finance (28%) and fast-moving consumer goods (26%).

This may seem surprising, in the face of the uncertainty caused by Brexit. But when we asked employers explicitly whether they thought that Brexit would change the demand for students, 70% of employers replied that they did not anticipate that it would affect it either positively or negatively. This positive picture is further emphasised by the fact that employers reported that 86% of graduates are accepting the jobs that they are offered, which is higher than in recent years.

Similarly, while most employers (55%) say that they have trouble filling all of their posts, on average this only leaves 12% of vacancies unfilled. So, there are still some good opportunities out there for students.

Post-Brexit skills shortage concerns half of employers

Before we give our patient a clean bill of health and discharge them, there are a couple of worrying niggles that are worth thinking about. Firstly, on Brexit, although there were minimal concerns about demand, there were some concerns about supply.

Almost half (49%) of employers were worrying about finding all the talent that they need after Brexit. In particular, they were worrying about finding more specialist skills both at the entry level and with more experienced hires. If they turn out to be right about this this could be a bad sign for the businesses of some of our members.

Apprenticeships are not displacing increases in graduate hires in general, but there are some signs this might be changing

A more long-term trend is the rise of apprenticeships. Recent figures from the government suggest that apprenticeship starts are on the rise again after the knock that they got from the introduction of the levy. Our data certainly supports that, with employers reporting a 47% increase in demand for apprenticeships this year.

At the moment increases in apprenticeships are not displacing increases in graduate hires in general. But, there are some signs this might be changing. Employers in the energy, engineering and industry sector reported a whopping 40% increase in the number of apprentices that they were recruiting and a slight decrease in their graduate recruitment (down 3%). If this pattern started to be repeated more widely it might start to spell a worrying trend for graduates.

Apprentices are paid a lot less and there is some evidence that they can be retained by employers for longer. They therefore offer employers a lot of benefits, if they can do some of the same things as graduates. We don't think that that moment has come yet, but we will be watching it closely.

So, all in all we can pronounce that the graduate labour market's pulse is strong and steady. But, as to its long term prospects, there are a few more question marks. At the Institute for Student Employers we will certainly be keeping it under close observation.

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of HECSU/Prospects

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