The start of the new year has seen the publication of the Institute of Student Employers' Pulse Survey and a subsequent panic in the media about the disappearance of opportunities for students. Tristram Hooley, chief research officer at the ISE, guides you through the hype…
ISE spends a lot of time surveying graduate employers to ask them about how things are going. Since 2016 the answer has generally been pretty positive and in September, based on the last season, employers were reporting that the graduate labour market was going from strength to strength with a 10% increase in the number of vacancies.1 However, just before Christmas we surveyed employers about this year and they were much more gloomy, predicting only 3% growth over the current year.2
When we have a story like this, we usually tell some of our friends in the media. This year the response has been overwhelming, with a huge number of print and online outlets running some kind of panic-based story about the collapse in the graduate labour market. The Times led with Graduates facing fight for jobs as recruitment cools, The Guardian reported that UK employers will offer fewer entry level jobs in 2020, FE News said that the market was stagnant, while Personnel Today went for the less sensational headline of Entry-level recruitment intentions slow down.
All of this sound and fury was prompted by our work, which at the end of the day predicted that there were going to be more graduate opportunities in the next year than there were last year, so what should you make of this? And should you and the students that you work with be worried?
While you probably shouldn't panic, there is good reason to be concerned and watch the labour market carefully
Growth, slowdown and risk
When we survey our members we are measuring a few different things. Firstly, we ask how many graduates employers recruited last year and how many they plan to recruit this year. From these figures we can predict the rate of growth in the graduate labour market (3% this year) and look at how this compares to historic growth (last year it grew by 10%). Based on this we can say that the labour market looks like it is growing (which is good), but that the rate of growth has slowed since last year (which is not so good).
We also ask whether employers managed to find all the graduates that they wanted last year. Employers reported that on average they had found almost all (97%) of the students that they wanted last year. This was better than in previous years, but still shows that the actual numbers are usually lower than targets. This introduces some risk into our prediction and opens the possibility that what currently looks like a small increase in the number of graduate opportunities might end up the same as last year or even as an overall shrinkage.
Based on our previous experience we can say that it is pretty rare for the number of students who end up being recruited to exceed targets. But it is quite common for employers to revise down their targets as the business situation changes and they start to fail to recruit the students anticipated. Given this, while our prediction is positive, we think that there is a good chance that things will change and that they will probably get worse.
We also look at what sectors are responsible for the increase. This year, the public sector is driving a lot of the increase, while the private sector is more likely to be stable/stagnant or in decline. This also isn't a particularly good sign, as it suggests that the overall economy is not as healthy as we might like and that public sector is doing a greater proportion of the heavy lifting in the graduate market than is ideal.
So, while you probably shouldn't panic, there is good reason to be concerned and watch the labour market carefully.
How reliable is this survey?
In general, you shouldn't put too much stock in any one economic indicator. The economy is made up of lots of different actors and factors and the only way to really figure it out is to keep an eye on multiple indicators. Furthermore, this is a niche survey working with a particular group of employers and may not be indicative of the wider economy.
The problem is that quite a lot of other economic indicators tell a similar story to ISE data. The Bank of England produced an economic summary in November that talked about how slowing global growth and uncertainties around Brexit are leading to 'subdued' growth in the UK.3 The Bank is optimistic that now Brexit is moving things will start to improve, but it is also flagging a lot of risk (which really means that nobody knows).
So what will happen?
I don't have a crystal ball, and macro-economics is outside of my area of expertise, but if I had to make a prediction it would be as follows.
Graduate employers will continue to be cautious throughout the rest of the recruitment season. By the end of the year they will have revised down their recruitment targets and recruited around the same number or slightly fewer graduates than last year. If the economy develops as predicted we will then see modest growth next year. But if Brexit goes badly or there is a global economic shock all bets are off.
But, let's be honest, far more qualified soothsayers than me have made massive prediction errors about the economy in recent years. All we can really say is that the future is uncertain and that graduates and careers professionals need to be good at reading the signals from the labour market.
The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of HECSU/Prospects
- Student recruitment goes from strength to strength, ISE, 2019.
- ISE Pulse Survey: Taking the temperature of the student labour market, ISE, 2020.
- The economic outlook, Bank of England, 2019.
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