Graduate labour market update: 19 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:

• The fall in vacancies appears to have stabilised and although vacancies are a long way below where they usually are, they do not appear to be falling further.
• The relative impact on SMEs is far greater and we cannot expect much graduate recruitment from them at the moment.
• It looks as if there's likely to be a significant increase in home postgraduate applications.
• Some employers may be staggering their normal annual graduate intake and have plans to recruit when lockdown is eased. Others have decided to call a halt to recruitment this year. Only a minority are rescinding offers - but it is happening, and some employers are still considering whether or not to rescind.

The Office for National Statistics released their estimates for the number of jobs and vacancies in the UK in May. They estimate 637,000  vacancies in the UK in February to April 2020, down 170,000 on the previous quarter and down 210,000 on the same period last year. Accommodation and food service activities saw the greatest fall, healthcare the least.

The Institute of Student Employers (ISE) have released findings from a second survey of graduate recruiters. The full survey is only available to members, but this blog provides a useful summary. On average ISE firms are cutting entry level recruitment by around 23% - and graduate positions by 12% - mainly by ceasing ongoing activity. However, 14% have reneged on offers and another 14% are considering doing so later in the year. Graduates are not bearing the brunt of cuts. Employers anticipate reducing recruitment of apprentices and school leavers by 32% and interns and placement students by 40%. 

IFF Research has also been talking to employers, with interesting findings about the impact of pandemic on their businesses. Furloughing is most prevalent in the wholesale and retail (86% of businesses), accommodation and food (85%), manufacturing (82%), and construction (81%) sectors. Conversely, furloughing is less prevalent among information and communication businesses (62%), and the professional, scientific, and technical sector (51%).

In absolute terms, most businesses are furloughing small numbers of staff - under ten in most cases. Businesses only expected 52% of furloughed employees to return to work immediately had the scheme ended in June as originally anticipated, which does raise the prospect of significant job losses when funding is reduced. Half of businesses expect to trade at or above pre-lockdown capacity once lockdown is lifted. 

McKinsey have examined the possible impact of COVID-19 on the labour market. They estimate that a quarter of the workforce could have been laid off, furloughed, sick or isolated due to COVID-19 and that unemployment could rise to 9% as a result of the pandemic. But they outline reasons why the impact on employment will be very unevenly distributed. They conclude that non-graduates and the low-paid are in much greater danger of redundancy than graduates and that, with the exception of jobs in the arts, the workers in the sectors most at risk of job loss are largely non-graduate.

British Chambers of Commerce's COVID-19 impact tracker to 8 May has similar findings, with their survey of 601 businesses finding that 63% of firms agreed that they would be able to bring staff off furlough as restrictions are eased but 36% would not. 70% of surveyed businesses feel able to make provisions for remote working.

Indeed's weekly analysis of vacancy data for the UK to 15 May shows overall job postings down 57% on last year, little-changed from -56% the previous week and -54% a fortnight ago and suggesting a broad stabilisation of conditions. New job postings are down 71% year on year, a little down on last week but better than figures a month ago. Sector patterns remain stable, with food preparation and service, hospitality and tourism, and beauty and wellness roles seeing the largest drop and healthcare (especially nursing) by far the least.

The Institute of Employment Studies analysis of Adzuna vacancies to 10 May reported 329,000 vacancies, only down marginally on the previous week and again suggesting that the market has reached bottom. Last week there were 68,000 new vacancies notified. The fall in vacancies has been greatest for jobs paying between £15,000 and £24,999 a year, with these down 64%. This is, of course, a category that also covers much new entry to the graduate labour market.

In summary

• The graduate labour market is severely affected but some key graduate employing industries such as IT and business services have not experienced as much business impact and may be able to return to recruiting later in the year.
• Job creation activity is down on last year but may have stabilised.
• Evidence on geographic impact is mixed, with the sector mix of local labour markets likely to be important.
• There are particular concerns about the impact on apprenticeships and on internships and placements.
• Demand for postgraduate courses are expected to rise.
• Healthcare and social work recruitment continues and some analysis even has positions increasing. There is increasing recognition that allied health professionals have a crucial role to play in rehabilitation of those who have been ill and the UK is currently in shortage of these professions. There are also reports that police recruitment has held up well.
• Many businesses believe that once lockdown is lifted it will not take them long to resume operations.
• Business is relieved about the extension of the furlough arrangements, but many are concerned that once furlough is ended, workers currently furloughed may not be able to return to work.

Written by

Charlie Ball

Head of higher education intelligence

Prospects