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How did those 2019 predictions work out?

Charlie Ball

December 2019

As 2019 draws to a close, Charlie Ball returns to the predictions he made for the graduate labour market back in January to assess what he got right - and where events didn't pan out as expected

In the spirit of transparency (and also because Gradconsult's Rebecca Fielding has gone through her predictions) let's take a look at what I had to say about 2019's graduate labour market, before I embark on the fool's errand of trying to predict 2020 next month. I'm taking the slightly unusual tack of annotating my own article - here's the original - so you can see the whole thing in the round.

It's never easy - or, often, wise - to make predictions about the labour market, and the ongoing, ever-more serious absence of clarity surrounding Brexit means 2019 is about the worst year to do it. The only certainty is uncertainty, at least until we know the terms (or lack of them) under which the UK is to leave the European Union (EU).

Well, I was pretty right about this. Apart from the bit about Brexit, which, of course, didn't actually happen. It will in 2020, though.

Occupational shortages could intensify

Prediction: The British Chambers of Commerce began the New Year with the release of findings from their Quarterly Economic Survey for Q4 2018. The message was consistent with previous findings and came through loud and clear - businesses are struggling to recruit key professionals.

As many as 81% of manufacturers reported recruitment difficulties, and just before Christmas the Bank of England reported that businesses were struggling to recruit in 'IT, professional services, construction, engineering, hospitality, health and social care and logistics', many of these being industries where particular occupations face a shortage of graduates.

These squeezes will only get more serious as the UK has to forge new relationships with the countries from which it draws a lot of the graduate professionals it needs to cover national shortages of highly skilled workers.

Verdict

Yes, occupational shortages have intensified, although a slackening labour market in the latter half of 2019 may have eased them slightly. On 19 December, the Bank of England's quarterly summary stated that 'Recruitment difficulties eased slightly, but remained elevated. Staff churn was lower due to uncertainty, and some contacts said that the prospect of a downturn had led some self-employed workers to seek permanent employment. Contacts continued to report skills shortages in manufacturing, professional services and IT.'

Many of these shortages are longstanding issues with graduate supply and there is nothing to suggest that they'll ease in the near future.

Graduate underemployment to persist

Prediction: A great deal of ink has been spilled on this subject, but little headway has been made in understanding it. How can we have, on the one hand, too few graduates entering many roles (including some that are theoretically open to any degree subject), but, on the other hand, have too many graduates in jobs that do not appear to require higher education qualifications at all?

There appears to be a complex mix of factors involved: graduates lacking skills, graduates not having the ability, capability or confidence to effectively articulate the skills they do have, and an increasing realisation that geographic factors may have rather more of an effect than has previously been understood.

But the trend will persist in 2019 and it will require a concerted effort by universities, employers, regional actors, and the organisations that support them all, to start to address this issue.

Verdict

At present we have no new destination data for graduates and so it's difficult to put figures on the issue directly. But mismatch between skills supply and demand in the UK is becoming an ever bigger issue. All of the issues raised in this comment still stand and will remain live.

Potential global slowdown concerns employers

Prediction: Taking a broader view, there are clear economic warning signs around the globe. It is now over a decade since the start of the last recession and there is a growing consensus that the next may be no more than a handful of years away.

Data from Europe and China suggest an economic slowdown may take place in 2019, and graduate employers with a global reach will be monitoring these indicators carefully.

Verdict

Well, the economy certainly slowed but a threatened recession did not materialise. Economic indicators are not very favourable in the UK right now though, so this issue is still very much on the table, particularly if post-Brexit negotiations with the EU do not go to the liking of business.

No-deal Brexit a threat to engineering

Predicted: If the UK exits the EU without a deal, disruption to just-in-time supply chains is very likely to have severe effects in many sectors. Manufacturing is expected to be particularly affected and in that event it is difficult to see how the strong employment performances of the last few years can be sustained.

This might have a particular bearing on the labour market for engineers - one of the strongest graduate labour markets at the moment, and one with a significant graduate shortage. Recent news of manufacturing job losses does give rise to concern in the field.

Verdict

Fortunately, while I was right that a no-deal Brexit would be a threat to engineering (among other sectors), it didn't happen in 2019. I'm very pleased to be very wrong about this one. However, the terms of any potential deal with the EU are still unclear and this will have a significant effect on skills supply and demand in many areas. It may be, though, that this reckoning has been delayed until the latter half of 2020 and could come to a head in 2021.

Overall, the prospects for 2019 are very uncertain but are likely to become clearer in the early part of the year as some resolution comes to the UK's relationship with the EU. At that point, it will be a little easier and more fruitful to predict where we might go from there.

I could have cut this paragraph out. The first eight words are fine, it's just that the rest of it turned out to be completely wrong. So, on balance, a mixed bag. Wrong on Brexit-related issues, right on much of the rest of it. On to 2020, and let's see what happens.

Also in this series

Notes

  1. Agents' summary of business conditions - 2019 Q4, Bank of England.

Written by

Photo: Charlie Ball
Charlie Ball
Head of higher education intelligence
Prospects

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