Graduate labour market update: 'cautious optimism'

Charlie Ball rounds up the latest data and reports on the labour market - including insights into employer efforts on social mobility, adult participation in learning, and much more

Jisc and AGCAS have released our annual review of Graduate Outcomes data, What do graduates do?, which is now available for free download here on Prospects Luminate.

This edition examines the outcomes of 206,795 UK-domiciled first-degree graduates from 2020/21 who responded to the survey. This cohort graduated during COVID restrictions, but were surveyed 15 months later after restrictions had been lifted and the outcomes demonstrate the resilience and employability of this cohort.

• The majority of graduates (59.6%) were in full-time work 15 months after graduating, while 10.4% were in part-time employment.
• Of those graduates in work, 76% were in professional-level employment - a higher proportion than among those who left university the year before.
• 8.4% of graduates in work were self-employed or actively working towards this goal.
• 7.8% of graduates were engaged in further study, while 10.5% were both working and studying.
• Despite the difficult environment into which they graduated, just 5.0% were unemployed, and this includes some who were due to start work.

Meanwhile the Institute of Student Employers ISE) annual survey has also launched, with a 'cautiously optimistic' outlook for the labour market for new graduates.

This year's survey ran during July and August 2023, receiving 169 responses from student employers in a range of sectors and organisation sizes. They hired 42,846 graduates and school leavers in the 2022/23 recruitment round.

• Graduate vacancies grew 6% in 2022/23, higher than predicted in last year's survey, which anticipated 2% growth.
• Jobs are forecast to grow by 5% in 2023/2024.
• Graduates who have IT, engineering or finance skills are particularly sought after with employers citing shortages in these areas - in line with other recruitment bodies and economic monitors.
• Despite the shift to remote working, the majority of graduates for these employers are hired to work in London and the South East (56%). Only 3% of graduates are fully remote.

Staying with the ISE survey, employers continue to be less reliant on grade as a means of assessing a graduate's suitability for a role:

• For the first time, less than 1 in 10 employers (9%) set minimum UCAS A-level grade requirements.
• Last year the ISE found that less than half of graduate employers stipulated a 2:1 degree for the first time. This year the trend continues with a new low of 44% of employers asking for a 2:1.
• A decade ago, the proportion was 40% and 76% for A-levels and 2:1s respectively.
• While vacancies remain up, employers spent £439 less on recruiting each graduate with an average cost of £4,319 per hire.

UK GDP grew by 0.2% in September and was flat in the third quarter of 2023, according to data from the Office for National Statistics (ONS).

Services output rose by 0.2% in September 2023, driven by growth in professional, scientific and technical activities, and human health and social work activities, and was the main contributor to the growth in GDP. This follows growth of 0.3% in services output in August 2023, revised down from growth of 0.4% in our previous publication. These sectors mainly employ graduates.

The total number of online job adverts decreased by 2% when compared with the previous week and were 7% below the level in the equivalent period of 2022.

• The total number of online job adverts decreased by 2% on 3 November 2023 when compared with the previous week. Of the 28 online job categories, 25 decreased, one category increased, and two remained unchanged, but these changes are not particularly large and effectively the jobs market has been quite stable since the end of the summer and is currently declining but at a very slow and gentle pace.
• The total number of online job adverts decreased by 7% compared with the equivalent period of 2022. Of the 28 online job categories, 22 were below their equivalent levels in the previous year. The largest decreases were in 'domestic help' and 'transport, logistics and warehouse' at 33%, closely followed by 'IT, computing and software' at 31%.
• All 12 of the UK countries and English regions decreased in the number of online job adverts on 3 November 2023 when compared with the previous week. The largest decreases were seen in London and Yorkshire and The Humber, both decreasing by 4%, quite small levels but in line with a slow decline of vacancies as a strong labour market becomes less strong.

The ONS has also released data on salaries:

• Median weekly earnings for full-time employees was £682 in April 2023, which is a 6.2% increase over the £642 in April 2022.
• In April 2023, median weekly earnings for full-time employees fell by 1.5% on the year in real terms (adjusted for inflation using Consumer Prices Index including owner occupiers' housing costs (CPIH)).
• Median weekly earnings for full-time employees saw growth across all major occupational groups, particularly for lower-paying occupations (with caring, leisure and other service occupations up 9.4% and sales and customer service occupations up 9.2% compared with the previous year).
• In April 2023, median weekly earnings for full-time employees increased across all sector-level industries when compared with April 2022, with the highest growth seen in the wholesale and retail trade; repair of motor vehicles and motorcycles industry (8.6%).
• In April 2023, annual percentage growth in gross median weekly earnings for full-time employees was 7.7% in the private sector and 3.7% in the public sector.
• Median gross annual earnings for full-time employees was £34,963 in April 2023, which is a 5.8% increase over the £33,061 in April 2022.
• The gender pay gap has been declining slowly over time - over the last decade it has fallen by approximately a quarter among full-time employees, and in April 2023 it stands at 7.7%.
• For groups aged under 40 years, the gender pay gap for full-time employees (which is a more comparable basis than all employees for measuring differences in hourly pay) is low, at 4.7% or below. This has been the case since 2015.
• However, for the age group for those aged 40 to 49 years and older, the gender pay gap for full-time employees is much higher, at 10.3% or higher. The gender pay gap increased across all age groups between 2022 and 2023, except for those aged 18 to 21 years where it decreased from 1.1% to negative 0.2%. The largest increase was seen among employees aged 30 to 39 years, where the gender pay gap increased from 2.3% to 4.7%.
• Compared with lower-paid employees, the gender pay gap among higher earners is much larger, however this difference has decreased in recent years.
• The gender pay gap in skilled trades occupations remains the largest of the major occupational groups, however, it has also decreased by the largest amount over the past years.
• The gender pay gap varies substantially between regions. It is higher in every region of England than in Northern Ireland (negative 3.5%), Scotland (1.7%) and Wales (5.6%). In the case of Northern Ireland in particular, the gender pay gap is affected by a higher proportion of women working in the public sector, where pay rates for some jobs are higher than in the private sector.

The Recruitment & Employment Confederation's (REC) November Report on Jobs also reports a slowly weakening jobs market.

Following a slight reduction in September, overall demand for staff stabilised in October. Underlying data highlighted that permanent vacancies fell only fractionally, while the number of temp positions increased modestly.

The availability of candidates improved for the eighth straight month in October, and at a much sharper rate than in September. This was due to an accelerated upturn in permanent candidate numbers, as temp staff supply rose at a slightly softer (but still marked) pace. There were frequent reports that redundancies and subdued hiring activity had contributed to the latest increase in staff availability.

And Indeed's October update tells a similar tale:

• Overall postings have fallen 25% since the start of the year, though remain 10% above their 1 February 2020, pre-pandemic baseline, as of 20 October 2023.
• Postings had been plateauing over the summer but have started to fall again in recent weeks amid signs of a faltering economy, dropping 3% in the past month.
• Nearly all categories have seen falls, with the biggest decline seen in construction, hit by the impact of rising interest rates, with residential construction activity in particular having slowed sharply. This may surprise those of us who think that the UK does not exactly have an issue with too many new homes being built right now.

The Social Mobility Foundation have released their 2023 Employer Index looking at employer efforts towards social mobility.

• 143 organisations entered this year employing  1,082,348 people in the UK at the time of the survey.
• 85.3% of employers offered an apprenticeship scheme, 84.6% had a graduate recruitment programme and 26.6% recruited school leavers into their organisation.
• 23.3% of graduates, 37.5% of apprentices and 45.9% of school leavers were from a low socioeconomic background based on parental/guardian occupation data.
• 47% of employer participants in this research entrants that offer virtual work experience provide the equipment needed by young people participating in placements. 17% of young people rarely or never have access to broadband when they need it at home, 39% have regular access to reliable broadband and 51% say they have access to a laptop or computer to support study and work from home.
• 83.2% of entrants conduct an annual diversity survey, including questions on socioeconomic background. 77.3% collect three or more data points for current employees. For new hires, the figure is 71.2%.
• 64.1% of Index entrants have examined whether employees from culture is welcoming to them. 30.5% offer background-based diversity training.

The President of the Resolution Foundation and former HE Minister David Willetts has authored a new report for the Foundation's Economy 2030 Inquiry on the benefits of higher education for growth.

Willetts is characteristically thorough and offers a very robust defense of higher education and of the importance and interlinked nature of further education as well. From the labour market perspective, the report notes that:

• The employment rate among disabled people is 72% for those with a degree, compared with 45% for those whose highest qualification is at GCSE level.
• Prisoners who receive funding to undertake Open University courses have a reoffending rate four to eight percentage points lower than similar prisoners who do not.
• 38% of UK-domiciled students stay in the same local enterprise partnership (LEP) as where they studied
• 34% of students go to university in the LEP where they grew up.

The Learning and Work Institute have issued their new Adult Participation In Learning survey for 2023:

• 49% of UK adults have taken part in learning in the last three years.
• The cost is increasingly borne by learners themselves - individuals in the UK invest £7.3billion a year and £55billion worth of time in learning - more than the government and employers invest in learning and skills.
• Meanwhile employer investment in training is down 26% per employee since 2005 and public spending on learning is down £1billion in England compared to 2010
• Adults in lower socio-economic groups (DE) remain twice as likely to not have participated in learning since leaving full-time education compared to those in higher socio-economic groups (AB). While this gap had narrowed slightly in recent years, it has increased again between 2022 and 2023.
• Meanwhile, of the four UK nations, only England has shown a substantial increase (+9 percentage points) in participation rates since 2022, leading to a gap in participation across the UK which was not evident in last year's survey. Among English regions, London continues to have the highest participation rate, in part because of its younger and more highly qualified population. The North East has the lowest participation in learning.

The Central Statistics Office in Ireland have released a review of economic and social change in Ireland over the last 50 years:

The composition of Ireland's labour market has undergone a significant transformation from 1973 to 2023. The industrial sector accounted for 31% of the labour force in 1973, however, this fell to 19% in 2022. Agriculture, having employed 24% of the workforce in 1973, has seen a dramatic decline and accounted for just 4% of the workforce in 2022.

In contrast, the services sector has risen from a 45% share of the workforce in 1973 to 77% in 2022, highlighting the role of technology, finance and other service-orientated industries in Ireland's modern labour market.

And Ireland's Skills and Labour Market Research Unit in SOLAS have released their 2023 National Skills Bulletin on behalf of the National Skills Council:

• The labour force stood at 2.67 million persons an annual increase of 119,800 persons (or 4.7%); the labour force was 9.3% (or 226,900 persons) above 2019 pre-pandemic levels.
• At 64.6%, the labour force participation rate (persons aged 15+ years) in quarter 4 2022, was slightly lower than the rate in quarter 4 2021, but two percentage points higher than the pre-pandemic rate in quarter 4 2019.
• 2.55 million persons were employed in 2022 (annual average), an increase of 158,100 persons (or 6.6%) since 2021 and 9.9% (or 228,500 persons) above 2019 levels.
• At 73.2%, the employment rate (persons aged 15 to 64) in quarter 4 2022 was the highest rate recorded, an increase of 3.1 percentage points compared to quarter 4 2019.
• 119,400 persons were unemployed in 2022 (annual average), a fall of 38,400 persons (or 24.3%) since 2021, and the lowest levels observed since before the 2008 financial crisis.
• At 4.2%, the unemployment rate (persons aged 15 to 74) in quarter 4 2022 was 0.7 percentage points below the rate in quarter 4 2021.
• There were 542,000 recent job hires in 2022, an increase of 9% on 2021 and 22% on 2019; of the recent job hires in 2022, 41% were aged 15 to 24 years, 46% held third level qualifications - degrees or equivalent.
• In 2022, on average, 96% of individuals who were in employment remained employed; 88% of those economically inactive continued to be outside the labour force and 41% of those unemployed remained unemployed.
• 4% of individuals transitioned out of employment - 3% to inactivity and 1% to unemployment.
• 59% of individuals transitioned out of unemployment, 34% to employment and 25% to inactivity.
• 12% of individuals transitioned out of inactivity, 8% to employment and 4% to unemployment.

Irish occupational shortages and hard-to-fill vacancies included:

• Analytical, process, and medical scientists
• Engineers (quality control/assurance, process, design, mechanical, electrical, automation)
• Maintenance/lab technicians
• IT project managers
• Software developers/engineers
• IT analysts/engineers
• Medical practitioners
• Nurses
• Healthcare assistants
• Care workers
• Civil engineers
• Construction project managers,
• Quantity surveyors,
• Plumbers,
• Carpenters
• Welders/fabricators
• CNC programmers
• Chefs
• HGV drivers, bus & coach drivers

This is very similar to the shortage list for the UK.

Written by

Charlie Ball

Head of labour market intelligence

Jisc