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Graduate labour market update: 24 January

January 2023

Charlie Ball's first graduate labour market report of 2023 takes a look at fresh reports on attitudes to flexible working, jobs in small businesses, and intermediate level skills shortages

Welcome to the first update of 2023 on developments in the UK and Irish graduate labour market from Jisc. The UK employment rate was estimated at 75.6% in September to November 2022, largely unchanged compared with the previous three-month period and 1.0 percentage points lower than before the pandemic:

  • The most timely estimate of payrolled employees for December 2022 shows another monthly increase, up 28,000 on the revised November 2022 figures, to 29.9 million.
  • The total number of jobs includes both employee jobs and self-employment jobs, with a rise in employee jobs being slightly offset by a fall in self-employed jobs in the quarter to September 2022. Employee jobs in September 2022 have continued to grow and are now at a record high of nearly 31.9 million, 1.1 million above their December 2019 pre-coronavirus level. However, this rate of growth has not been seen in the self-employment jobs, which remain 588,000 below December 2019 levels.
  • The unemployment rate for September to November 2022 increased by 0.2 percentage points on the quarter to 3.7%. In the latest three-month period, the number of people unemployed for up to six months increased, driven by those aged 16 to 24 years. Those unemployed for over six and up to 12 months increased, while those unemployed for over 12 months decreased in the recent period.
  • The economic inactivity rate decreased by 0.1 percentage points on the quarter to 21.5% in September to November 2022. The decrease in economic inactivity during the latest three-month period was driven by those aged 16 to 24 years and those aged 50 to 64 years. Looking at economic inactivity by reason, the quarterly decrease was driven by those inactive because they are students, long-term sick, or retired.
  • The redundancy rate has increased to 3.4 per thousand employees in September to November 2022 but remains low.
  • The number of vacancies in October to December 2022 was 1,161,000, which is a decrease of 75,000 from July to September 2022. Quarterly growth fell for the sixth consecutive period to negative 6.1% in October to December 2022, with vacancies falling in 14 out of 18 industry sectors. Total vacancies were down by 85,000 from the level of a year ago, but remained 365,000 above their pre-coronavirus January to March 2020 levels.
  • In September to November 2022, the number of unemployed people per vacancy was at 1.0, and went up slightly from the previous quarter. We may be moving back out of a period where there were more vacancies than unemployed people, but bear in mind that many unemployed people do not have the skills or qualifications to successfully apply for many of the vacancies that exist.

In early January 2023, 28% of businesses with ten or more employees reported they were experiencing a shortage of workers.

Scottish data is here:

  • The estimated unemployment rate (16+) in Scotland was 3.3%, down 0.5 percentage points since pre-pandemic, but stayed the same over the quarter. Scotland's unemployment rate was below the UK rate of 3.7%.
  • The estimated employment rate in Scotland was 76.1%, up 0.7 percentage points since pre-pandemic and up 0.3 percentage points over the quarter. Scotland's employment rate was above the UK rate of 75.6%.

Data for Wales is available too:

  • The Labour Force Survey shows that recent unemployment levels in Wales are close to pre-pandemic levels at 3.4%. This is similar to the trend at a UK level. Comparing across UK nations, the unemployment rate in Wales is below England and above Northern Ireland and Scotland.

And here is the report for Northern Ireland:

  • The number of employees receiving pay through HMRC PAYE in NI in December 2022 was 783,800, an increase of 0.2% over the month and an increase of 2.0% over the year.
  • Earnings from the HMRC PAYE indicated that NI employees had a median monthly pay of £2,021 in December 2022, an increase of £7 (0.3%) over the month and an increase of £119 (6.3%) over the year.
  • In December 2022, the seasonally adjusted number of people on the claimant count was 36,900 (3.9% of the workforce), which was an increase of 2.1% from the previous month's revised figure. The December 2022 claimant count remains higher than the pre-pandemic count in March 2020
  • NISRA, acting on behalf of the Department for the Economy, received confirmation that 80 redundancies occurred in December 2022. Over the year January 2022 to December 2022, 730 redundancies were confirmed, 74.4% less than in the previous 12 months. There were 80 proposed redundancies in December 2022, taking the annual total to 1,570 (19.3% less than in the previous 12 months).

Finally, data for the regions is here:

  • For the three months ending November 2022, the highest employment rate estimate in the UK was in the South West (79.3%) and the lowest was in Northern Ireland (71.3%). Scotland (76.1%) saw a record high employment rate.
  • The largest increase in the employment rate compared with the same period last year was in Northern Ireland, up by 3.3 percentage points, with Wales seeing the largest decrease of 1.8 percentage points.
  • For the three months ending November 2022, the highest unemployment rate estimate in the UK was in the North East (4.7%) and the lowest was in the South West (2.1%).
  • The East of England had the largest increase in the unemployment rate compared with the same period last year, increasing by 0.5 percentage points, with both the North East and London seeing the largest decrease of 1.0 percentage points.
  • All regions saw increases in total weekly hours compared with the same period last year; London had the most hours worked, at 162 million hours per week, and also saw the largest increase in total hours worked compared with the same period last year, up 9.0 million hours.
  • The number of payrolled employees continued to rise in all regions; comparing December 2022 with the same period of the previous year, increases in payrolled employees ranged from 3.6 percentage points in London to 1.8 percentage points in the North West.

The Census has released data on education:

  • There were 11.5 million schoolchildren and full-time students (20.4%) in 2021 across England and Wales, out of a total 56.4 million usual residents aged five years and over.
  • More than 3 in 10 usual residents aged 16 years and over had Level 4 or above qualifications (for example, Higher National Certificate, Higher National Diploma, Bachelor's degree and post-graduate qualifications); this was 33.8%, or 16.4 million people. The large majority of people in the UK have not been to university.
  • In 2021, almost one in five (18.2%, 8.8 million) reported having no qualifications.
  • Across England and Wales, apprenticeships were the highest qualification for 5.3% of people (2.6 million).
  • The region with the highest percentage of the population with Level 4 or above qualifications was London with 46.7% (3.3 million).

There is some data on recruitment difficulty from the fortnightly Office for National Statistics (ONS) BICS survey. In early January 2023, 28% of businesses with ten or more employees reported they were experiencing a shortage of workers. Some 56% of those businesses reported employees were working increased hours as a result of these shortages and 40% reported they were unable to meet demands.

Jobs in small businesses decreased by 3% in November 2022 compared with October 2022, and were 5% lower than November 2021:

  • Jobs in SMEs were around 91% of their pre-pandemic levels.
  • However, SME employment in IT and professional service was 21% and 3% above pre-pandemic levels respectively, and neither have seen much change in employment in 2022.
  • These two sectors are largely graduate employers.
  • Note that at present SME sales are currently well above pre-pandemic levels in all the sectors the ONS covers - obviously so are costs, but nevertheless it doesn't look as if the recession has yet really started to hit SME employment in some of the most important sectors for graduate workers.

Uncertainty surrounding the outlook dampened candidate availability, as more people became cautious around seeking out new roles in the current climate.

Data from Adzuna via the Office of National Statistics finds that the total number of online job adverts rose by 7% in the week to the 19th January:

  • The total number of online job adverts was 14% lower than the level seen in the equivalent period of 2022. Of the 28 online job advert categories, ten were above the level seen in the equivalent period of 2022, while the remaining 18 were below this level.
  • The number of potential redundancies reported in the week to 8 January 2023 was 116% above the level in the equivalent week of 2022, while the number of employers proposing redundancies was 110% higher compared with the level in the equivalent week of 2022.

Manpower Group expect employers to keep hiring during Q1 despite economic uncertainty. The Net Employment Outlook, the balance between those expecting to hire and those expecting to downsize, is still at a healthy +19, with IT much the highest at +34. But net outlook is lower amongst micro-businesses with fewer than 10 employees, at +9. This is not surprising - they're the group most exposed to a downturn.

The British Chambers of Commerce have released their latest Quarterly Economy Survey, looking at Q4 2022:

  • The survey of over 5,600 firms - 92% of which are SMEs - reveals business confidence, conditions and sales have stabilised at low levels, while inflation remains the top external factor of concern, with 80% more concerned about it than they were three months ago.
  • 33% of firms experienced an increase in sales over the past three months, while 25% of firms reported a decrease in sales and 42% report no change. 34% of firms expect their profitability to increase in the next year, but 36% expect it to fall.
  • This adds up to a gloomy picture for SMEs, and it remains to be seen if the ongoing labour shortage that many are experiencing will continue to keep SME recruitment reasonably stable in the face of pressures on cost and profitability - this will be a key question in recruitment in 2023.

Indeed also report that the UK labour market appears resilient in the face of current challenges.

Indeed report the following five signs in the labour market that bear monitoring:

  • Job postings continue to show resilience and are not abating.
  • Signs of workers over 50 returning to the labour force - is this a continuing trend?
  • Pay pressures may have peaked - which may help keep a wage/price spiral at bay.
  • Redundancy notifications remain low for now, as employers hold on to workers.
  • Balance of power may not shift too far away from candidates even in a downturn, supporting retention of more flexible working models.

LinkedIn have released their Jobs on the Rise report, the 25 fastest-growing job titles over the past five years and their view on the trends defining the future world of work. The top five job titles are:

  • Customer success consultant
  • Sustainability manager
  • Product Operations manager
  • Sales development representative
  • Chief growth officer.

The BBC have some nice infographics attached to this piece if you want to explore who is currently out of the labour market in the UK.

The Recruitment & Employment Confederations' (REC) Report on Jobs finds that uncertainty is breeding caution for recruiters:

  • Permanent placements fell for the third month in a row, and at the quickest rate since the start of 2021, while billings for temp staff rose only modestly.
  • Growth of demand for workers also cooled, with overall vacancies rising at the slowest rate since February 2021. Starting salaries and temp wages both climbed higher in response to the greater cost of living and low candidate supply. However, rates of pay growth were the softest seen for 20 months.
  • Uncertainty surrounding the outlook also dampened candidate availability, as more people became cautious around seeking out new roles in the current climate. Combined with an already tight labour market, this drove further drops in the supply of both permanent and temporary labour. However, reports of redundancies in some areas meant that the overall rate of decline eased to the weakest in 21 months.

While their Labour Market Tracker suggests that despite other pressures, the labour market remains robust:

  • The number of active job postings were 1.53 million in the week of 2 to 8 January 2023, a 1.5% increase compared to the previous week.
  • There were 184,335 new job adverts in the first week of January, a 24.5% increase on the same period in January 2022 (148,032).
  • New job adverts in the first week of January 2023 were 134% higher than the week before but hiring always slows just before and over the Christmas period.
  • There is an increase in demand for police ffficers (sergeant and below), domestic workers and leisure industry personnel.

The UK's unmet need for green jobs is one of the highest in the developed world.

The University of Birmingham's Equal Parenting Project have been looking at managerial attitudes to flexible working. This report is full of interesting data, but here are some highlights:

  • Managers are currently more positive than they have been since the outset of COVID-19 about employees working from home, with: 51.8% agreeing that working from home improves employee concentration; 59.5% agreeing that it increases productivity; and 62.8% agreeing that it increases motivation. An even larger proportion of managers (76.5%) believe flexible working generally increases productivity.
  • In 2022 58.0% of managers said their organisations would be more supportive of flexible working requests in the future, down from 70% in 2020.
  • Managers find working from home the easiest flexible working policy to approve (43.9%) and job share the hardest (44.9%) to approve.
  • Requests for part-time working are less likely to be supported in future amongst those in the Professional, Scientific and Technical Activities industry compared to those in the Human Health and Social Work industries or Adult Education industry.
  • In 2022, 69.3% of managers reported that their organisation is not expecting employees to be back in the office more than 4 days a week. This is up from 59% in 2021.
  • 33.7% of managers reported their organisation had reduced or were planning to reduce, the amount of office space available.

The ReWAGE (Renewing Work Advisory Group of Experts) at the University of Warwick's Institute of Employment Research have released a new paper on intermediate level skills shortages. The ReWAGE definition of 'intermediate level' is relevant to both colleges and universities as many technical occupations are included.

The report concludes that 'demand for intermediate level skills is modest but skills shortages and gaps are evident. A supply side that increasingly pushes the costs of training on to employers and workers or trainees, in a labour market where policy makers have sought to increase labour market mobility is unlikely to do much to resolve skill mismatches.'

ReWAGE recommends:

  • Empower individual workers to undertake training to update and reskill as necessary. Initiatives such as Individual Learning Accounts provide a means of achieving this goal.
  • Empowering individuals to undertake training will need to be supported by adult careers guidance - available to people in work as well as those out of work.
  • Guidance also needs to be provided to employers about the skills their workforces need to acquire to meet future changes in the demand for skills.
  • Employers need to be encouraged to engage in training of a type which confers benefits on businesses and individual workers. Providing programmes which meet the needs of those employers, such as SMEs, which tend to face particularly formidable barriers to training, need to be developed. Tax credits may provide one means of achieving this aim.
  • Apprenticeships provide an important means of delivering intermediate level skills. The costs of training apprentices to completion of their training need to be set at a realistic level if apprentice volumes need to be increased. At the moment the net cost to the employer of training an apprentice may be too high for some businesses to take the risk of investing in apprenticeships

From Davos, the World Economic Forum have published this paper on the future of green jobs:

  • By 2030, the UK needs to fill an extra 1.5 million social jobs and an extra 59,000 green jobs
  • This includes an extra 602,000 care workers in the UK in the next 7 years - and 245,000 more primary school teachers.
  • The UK's unmet need for green jobs is one of the highest in the developed world. This includes 17,300 new environmental protection officials and 11,300 environmental, civil and chemical engineers. These will almost all be graduates.

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