Graduate labour market update: cost of living and the state of UK business

Charlie Ball takes a look at fresh reports on student cost of living and wellbeing, digital skills, the state of UK business, and the London economy

The total number of online job adverts decreased by 2% compared with the previous week and was 23% lower than the equivalent period of 2022, according to the Office for National Statistics (ONS):

• The total number of online job adverts decreased by 2% on 24 February 2023 compared with the previous week, with growth in six of the 28 job categories, falls in 21 categories, and one remaining unchanged.
• The total number of online job adverts was also 23% lower than the level seen in the equivalent period of 2022.
• Online job adverts decreased in all 12 UK countries and English regions compared with the previous week for the first time this year.

Student cost of living crisis continues

The ONS have also released data on student cost of living and wellbeing. Note the ONS counsel that the sample size for this data is small so the findings are probably best considered to be illustrative rather than indicative - don't get too fixed on the specific figures but the overall shape of things is what is important here. This data was collected in the two weeks to the 13 February:

• 92% of higher education students reported that their cost of living has increased compared with last year, similar to students in early November 2022 (91%).
• 91% of students were either somewhat or very worried about the rising cost of living, the same as in early November 2022.
• 49% of students felt they had financial difficulties, with 33% saying these were minor and 16% saying they had major financial difficulties. This is similar to students in early November 2022.
• 68% of students were receiving a student loan. Of those, 58% said it did not cover their living costs, while 25% said that it covered their living costs but only just.
• In response to the rising cost of living, 30% of students had taken on new debt, a significant increase from early November 2022 (25%). Of those that did, 71% reported they did so because their student loan was not enough to support their living costs.
• 78% of students were concerned that the rising cost of living may affect how well they do in their studies. 35% of students reported they are now less likely to do further study after their course has completed.
• The average level of life satisfaction among higher education students (5.8) was significantly lower than the adult population in Great Britain (6.9).
• Around 46% of students reported their mental health and wellbeing had worsened since the start of the autumn term 2022. This is similar to students in early November 2022 (45%).

The Recruitment & Employment Confederation's (REC) most recent Labour Market Tracker was released at the end of February. Note that REC looks at employment agencies, whilst the ONS uses data from Job Centre Plus, so that's why we're starting to see differences between the figures.

• There were 256,855 new job postings in the week of 6 to 12 February 2023.
• It is 26.8% higher compared to the week before (30 Jan to 5 February 2023) and 22.4% higher compared to the same period in the previous year (7 to 13 February 2022).
• The number of active postings in the week of 6 to 12 February was 1,323,315 - a 6.6% increase compared to the previous week (30 January to 5 February), but an 8.5% decrease compared to the same period last year (7 to 13 February 2022).

Productivity growth in London slows

The Centre for Cities has published an eye-opening report on the London economy:

• London's average annual productivity growth was just 0.2% between 2007 and 2019 - a drop of 2.9 percentage points compared to the previous decade and well behind similar international cities.
• Rising office space costs appear to have been eating up business budgets and crowding out investment that would boost London's productivity.
• There has been underinvestment in areas such as software, databases, and research and development, which continue to be increasingly important for the growth of London's economy
• Increasing housing prices and changing migration policy have reduced London's ability to compete for global talent.
• The effective London wage premium has disappeared due to the cost of housing.

Survey highlights digital skills shortage

Gallup and Amazon Web Services have been looking at digital skills in the UK economy:

• 72% of businesses surveyed in the UK have a vacancy for workers with digital skills, but only 11% of UK workers possess advanced digital skills.
• 68% of businesses find it challenging to hire the digital workers they need, and 45% say this is due to a shortage of qualified applicants.
• UK workers with advanced digital skills (such as cloud architecture, software development and machine learning) earn 30% more than those with no digital skills. This translates into individual gains in the region of £11,568 annually.
• Meanwhile, job vacancies in the UK that require ten or more digital skills pay 48% higher salaries than those requiring no digital skills.
• 58% of workers with advanced digital skills expressed high job satisfaction, compared to 43% of workers with basic or intermediate digital skills. Among those with advanced skills, 44% say digital skills training has made them more efficient in their work, 50% believe it has improved their opportunities to be promoted, and 42% received an increase in salary.
• 67% of British digital workers are 'extremely interested' or 'very interested' in obtaining digital skills training.
• However, 93% of those who are very interested in additional training say they face at least one barrier to acquiring that training. 51% cite a lack of time as an impediment, followed by a lack of financial resources (34%), and knowledge of the skills needed to advance in their careers (32%).
• In the research, 56% of those who were very interested in additional training reported that their digital skills were self-taught.

Boston Consulting Group have produced a new report on the state of UK business in 2023:

• 75% of business leaders expect a recession in the UK this year.
• They are much more optimistic about the medium term. 61% expect economic growth to be somewhat or significantly better in 2025 and 63% think their own business revenue will grow over the next three years, while only 15% expect it to decline.
• 77% of senior leaders said they expected their headcount to either stay the same or grow over the next year, and 20% expect it to reduce.
• Only 8% of business leaders said the move to remote working has had an overall negative impact on staff performance. 29% of business leaders said they had hired purely remote workers in response to labour shortages.
• 8% of business leaders saying they think that AI will have a very or somewhat positive impact on their business in the next year, rising to 59% in the next five years and 64% over the next 20 years.
• 63% of leaders say that an economic downturn will either increase their company's prioritisation of environmental sustainability or have no impact. This compares to 21% who say it would decrease their prioritisation of sustainability. This is despite 60% of leaders acknowledging this will increase their costs over the next five years.

Written by

Charlie Ball

Head of labour market intelligence

Jisc