Graduate labour market update: 11 May

Prospects' head of higher education intelligence, Charlie Ball, provides his weekly update on the impact of COVID-19 lockdown on the graduate labour market

What we're hearing:

• Vacancies are down but there is still hiring going on and jobs are still being created. Things might have bottomed out for now.
• Smaller businesses are in survival mode and recruitment is not a priority.
• Industries are experiencing the pandemic differently and a lot depends on how easy it is to work from home.
• University finalists continue to report vacancies and offers being withdrawn.
• Graduate roles are affected, but not as badly as placements, work experience and apprenticeships.
• There are signs of increased interest in postgraduate study - this is expected, but the size of the increase is yet to be revealed.

By May 3rd, 800,000 UK businesses had furloughed 6.3m employees, according to HMRC.

There is quite a bit to report from the Resolution Foundation this week. First, analysis of the effect of the pandemic on the UK economy suggests that a third of firms have cut working hours as a response to the crisis. Next,  analysis shows that workers in sectors experiencing shutdown are typically younger, lower paid and are significantly more likely to be renting privately than the workforce as a whole. Graduates are most likely to be able to work from home and least likely to be working in sectors experiencing shutdown. 

Finally, Kathleen Henehan at the Resolution Foundation has authored a report on the prospects for leavers from education. She analyses the data and concludes that the pandemic is likely to hit education leavers particularly badly, and that some graduates are expected to be compelled to 'trade down' to lower-skilled occupations (in which they are then more likely to get stuck due to depressed job mobility). However, it is worth stressing that effects on those with lower qualification levels are highly likely to be more serious still. The conclusion is that 'many young people would be better off getting some more training and education, rather than leaving education immediately'.

British Chambers of Commerce's COVID-19 impact tracker to 1 May shows that of 540 business surveyed (96% SMEs), 74% of firms had furloughed some or all of their staff, 54% had three months or less cash flow in reserve, but if lockdown were lifted 60% of firms would be ready to restart within a week.

The Office of National Statistics also produced analysis of Wave 3 of their Business Impact of Coronavirus (COVID-19) Survey (BICS), up to April 19th. The difference in impacts of the pandemic on different sectors is sharply displayed. 81% of accommodation and food service, and 80% of arts, entertainment and recreation businesses had temporarily paused or closed trading as opposed to 5% of IT businesses and 3% of professional or business service firms - both important graduate recruitment sectors.

Jonathan Boys, at the Federation for Industry Sector Skills and Standards, has produced an analysis of the skills challenges facing industry. The analysis examines the proportion of jobs at risk of automation, the proportion of staff over 50, the proportion of EU workers, staff turnover, pay growth, the proportion able to work from home and the female to male ratio of the workforce to produce a picture of some of the challenges industries face in the future and presents them very clearly.

Indeed's weekly analysis of vacancy data for the UK to 1 May suggests that the vacancies downturn may have bottomed out for now. Vacancies were down 54% from this time last year (they were down 53% last week), but new vacancies were up 46% from their mid-April low. Indeed reports that the key drivers of the upturn in vacancies have been community and social service, education and instruction, personal care and home health, and nursing.

The Institute of Employment Studies analysis of Adzuna vacancies to 3 May has a similar message, in that although vacancy numbers fell by 7% over last week and stood at 337,000, the number of new vacancies went up again and were the highest since late March. Sales, HR and recruitment, and hospitality and catering roles saw the largest falls since the start of lockdown, while domestic help and cleaning and healthcare and nursing have seen the smallest decreases and social work vacancies have increased.

In summary

• The graduate labour market has taken a severe hit but the main impact has been on non-graduate positions and some crucial graduate sectors have seen only small reductions in business activity.
• Job creation activity is down on last year but has not stopped and there are still positions available. It seems that job creation has started to rise again and we may have reached the bottom for now.
• Small and medium-sized businesses are experiencing a harder time of it in general than larger ones.
• There is going to be an unequal impact on the regions of the UK, but the evidence is mixed. IES and Indeed are giving slightly different reports on impacts.
• There are particular concerns about the impact on apprenticeships and on internships and placement.
• It looks increasingly likely that demand for postgraduate courses will rise.
• Healthcare and social work recruitment continues and some analysis even has positions increasing. There are also reports of good recruitment into the police. Recreation and travel, parts of retail, beauty and hospitality and call centre sales work are all seeing a serious downturn. The story is mixed on manufacturing, construction and business services, although the signs on construction are not currently encouraging.
• Many businesses may be quick to get restarted if lockdown is lifted.
• There's a long way to go yet.

Written by

Charlie Ball

Head of higher education intelligence

Prospects