Graduate labour market update: geography and generations

Charlie Ball summarises the latest labour market data and looks at reports on how different generations are faring in the economy, and the geography of work

In August to October 2023, the estimated number of vacancies in the UK fell by 58,000 on the quarter to 957,000 according to the Office for National Statistics (ONS).

UK payrolled employee growth for September 2023 compared with August 2023 has been revised from a decrease of 11,000 reported in the last bulletin to an increase of 32,000. The estimate of payrolled employees in the UK for October 2023 increased by 33,000 on the revised September 2023 figure, to 30.2 million.

• The UK employment rate decreased by 0.1 percentage points on the quarter to 75.7%.
• The UK unemployment rate was largely unchanged on the quarter at 4.2%.
• The UK economic inactivity rate was largely unchanged on the quarter at 20.9%.

In August to October 2023, total estimated vacancies were down by 257,000 from the level of a year ago, although they remained 156,000 above their pre-coronavirus pandemic January to March 2020 levels.

The industry sector showing the largest annual decrease in the number of vacancies is professional, scientific and technical activities - an industry mainly employing graduates - which fell by 35,000 from the equivalent period last year.

The estimated total number of vacancies fell by 5.7% from the previous quarter, with real estate activities and arts, entertainment and recreation contracting the most, falling by 35.0% and 19.6%, respectively.

The total estimated number of vacancies remains 156,000 above January to March 2020 pre-pandemic levels, with human health and social work activities showing the largest increase, at 43,000.

Three industry sectors fell below pre-pandemic levels for the first time since April to June 2021. Real estate activities fell the most, by 5,000 vacancies, with other falls in information and communication, and arts, entertainment and recreation. IT may be below pre-pandemic levels, though not because of a lack of demand but because a lack of available labour has led many employers to withdraw from the recruitment market.

Employee jobs increased by 68,000 on the quarter to June 2023, but self-employment jobs fell by 197,000. Employee jobs are at a record high of 32.4 million and are 1.6 million above their December 2019 pre-pandemic levels. Meanwhile, self-employment jobs have not recovered and remain 651,000 below those of a pre-pandemic December 2019.

Across industries, the recovery has varied, with eight of the 20 the sectors still below their pre-pandemic levels in June 2023. The sectors showing the largest increases in job number were human health and social work, which was up 333,000 and professional, scientific, and technical activities, which was up 211,000. Both these sectors are predominantly staffed by graduates.

Skills Development Scotland have an overview of Scottish data for November. Job postings remain relatively high at 52,600. However, trends suggest demand is cooling.

October 2023 saw the number of job postings decrease by 4% (-2,100) compared with September 2023, and by 6% (-3,400) compared to the previous year. There has been an increase in the job posting three-month rolling average (+1.5% for August to October compared with July to September), largely due to a smaller number of job postings in July compared to August-October.

The highest demand in October was for occupations such as:

• Sales Related Occupations
• Care Workers & Home Carers
• Cleaners & Domestics
• Programmers & Software Development Professionals
• Sales and Retail Assistants.

Occupations in highest demand have changed since the last month, particularly due to an increase in Programmers & Software Development Professionals.

Welsh labour market data is available:

• Early estimates for October 2023 indicate that the number of paid employees in Wales has increased by 600 (0.0% to one decimal place) over the month to 1.31 million.
• At a UK level, early estimates for October 2023 showed a monthly increase of 32,600 (0.1%).

Northern Irish data is here:

• The number of employees receiving pay through HMRC PAYE in NI in October 2023 was 797,400, an increase of 0.3% over the month and an increase of 2.0% over the year.
• NISRA, acting on behalf of the Department for the Economy, received confirmation that 450 redundancies occurred in October 2023, taking the annual total to 2,200. There were 4,000 redundancies proposed in the twelve months to October 2023.

And new data from the regions is also available:

• Between March and June 2023, workforce jobs decreased in nine out of 12 regions of the UK, with London seeing the largest decrease of 72,000, while the South East increased by 71,000, Scotland by 35,000 and the North East by 12,000.
• London had the highest proportion of service-based jobs (92.8%), while the East Midlands had the highest proportion of production sector jobs (12.5%).
• Comparing August 2023 with the same period last year, changes in payrolled employees ranged from a 1.7% increase in London to a 1.1% increase in Yorkshire and The Humber.

However, all this must be examined in the light of some concerns about the reliability of the ONS' Labour Force Survey, which is suffering from falling response rates. The ONS is introducing new methods and the House of Commons Library has a typically readable breakdown of the issues.

The Central Statistics Office has also released Q3 figures for Ireland. There were 2,784,400 persons in the labour force in Q3 2023. This represented an increase of 111,000 or 4.2% over the year. 1,053,400 of the employed have degree or equivalent, up 19,300 on last quarter. Using UK definitions through SOC 2010, the CSO data estimates that 1,183,200 workers in Ireland are in professional level employment, up 9,400 on last quarter.

Back to the ONS, and the total number of online job adverts on 17 November 2023 decreased by 4% when compared with the previous week, and decreased by 17% when compared with the equivalent period in 2022

All UK regions and countries saw a decrease in online job adverts on 17 November 2023, when compared with the equivalent period in 2022. The largest year-on-year decreases were seen in Yorkshire and The Humber and London, both falling by 25% in the year.

Nearly half (48%) of businesses are not intending on implementing increased homeworking as a permanent business model going forward; in comparison, 18% of businesses are either using or intending to use increased homeworking, while 10% are unsure.

26% of the UK workforce is working hybrid, and there has been very little meaningful change since early summer.

The geography of work in the UK

The Institute of Fiscal Studies has issued a widely reported paper on the geography of work in the UK:

• Between 1993 and 2022, employment in traditionally middle-paying occupations fell by 12% nationally, while employment in low and high-paying occupations grew by 14% and 95%, respectively.
• The decline in manufacturing jobs that provided those without university degrees a route to well-paid work mainly affected the North and Midlands.
• Low-paid work is now often outsourced to specialised agencies. Cleaners, security guards and kitchen staff are increasingly subcontracted to firms specialising in these services rather than employed in-house.
• The IFS report that higher education participation has expanded evenly across the country, but graduate jobs have become more concentrated in London, and cite figures for the proportion of jobs requiring a degree. It must be noted here that the IFS use a definition for the jobs that require a degree that is more restrictive than the commonly used definitions and consequently come up with rather lower figures for the number and proportion of jobs requiring degree level employment. This particular section of the report is quite sensitive to definitions.

The Resolution Foundation have produced another of their periodic Intergenerational Audits, examining how different generations have fared in the economy:

• The decline in the availability of generous defined benefit (DB) pension schemes means that future cohorts will retire with less pension wealth than the generations that came before them. Millennials born in the early 1980s could reach age 60 with around £45,000 less pension wealth than the youngest baby boomers (born between 1961-65).
• Millennials have made progress on employment in the labour market, but pay progression remains close to zero. In fact, younger millennials, born in the late 1980s, earned on average 8% less at age 30 than members of Generation X, born 10 years prior, at the same age.
• Graduate pay, in particular, has underperformed since the financial crisis. The typical weekly pay of graduates aged 30 to 34 has fallen by 16% between 2007 and 2023, while the typical weekly of non-graduates is down by 6%. This is a particularly troubling finding, although the authors note that part of this is because of a welcome narrowing of pay distributions for young people at the bottom end of earnings thanks to the introduction of the National Minimum Wage.

The CIPD's Autumn Labour Market Outlook finds that 41% of employers surveyed have hard-to-fill vacancies:

• 51% of public sector and 38% of private sector employees report hard-to-fill vacancies, with education the worst-affected sector and business services towards the bottom with 36% of employers reporting difficulties.
• The level of employers who anticipate significant problems in filling vacancies next quarter has fallen from 27% last quarter to 23% this quarter. A further 35% still anticipate minor problems.
• As with previous quarters, a higher proportion of public sector employers (42%) anticipate significant problems in filling roles than private sector (19%) and voluntary sector (20%) employers, with health and education the most concerned. 24% of respondents said their organisations are introducing or increasing automation to address recruitment issues, almost twice (13%) the level in summer 2022.
• The net employment balance - which measures the difference between employers expecting to increase staff levels in the next three months and those expecting to decrease staff levels - remains positive at +26. The positive net employment balance is driven by employers looking to increase staff (35%), with very few looking to decrease total staff levels (9%). All industries have net positive hiring intentions despite the economic conditions as labour shortages persist.
• 69% of employers plan some form of recruitment in the next three months. Recruitment intentions remain highest in the public sector (85%), followed by the voluntary sector (75%). The level of firms in the private sector that plan to recruit in the next three months has fallen from 70% last quarter to 65% this quarter, although this is common in the latter part of the calendar year.
• 16% of organisations have a formal policy or guidance for employees on using generative AI at work. A further 20% currently have no policies or guidance in place but plan to introduce them. 52% do not have any policies or guidance or plan to introduce them.
• 8% of employers have currently banned its use, with a further 5% planning to do so in future. 18% of employers do not know at this stage whether or not they will ban the use of generative AI. Sixty-nine per cent of employers have not banned the use of generative AI and do not currently plan to do so.
• While employers in the private sector have banned or plan to ban the use of generative AI at a higher rate than the public sector (9% compared with 5%), a third (32%) of public sector employers do not know.
• Larger private sector employers are more likely to have banned the use of generative AI than SMEs (12% v 6%).
• Employers who have a formal policy or guidance are significantly more likely to have banned the use of generative AI (32% v 4%).
• Organisations see implementing the use of generative AI as more of an opportunity (41%) than a risk (23%).
• Organisations estimate the effect on employment due to the introduction of generative AI to be neutral. Most organisations (53%) implementing generative AI expect no change in the number of full-time staff employed by their organisation as a result. While a small number of organisations expect a fall in staff numbers over this horizon, this is offset by organisations that plan to increase staff due to their implementation of generative AI.

Written by

Charlie Ball

Head of labour market intelligence

Jisc