Predicting the labour market in 2024

Jisc's head of labour market intelligence, Charlie Ball, looks ahead to the next 12 months and sets out his expectations for the labour market - after reviewing the success of his predictions from a year ago

It's nice to start the year with a couple of venerable traditions. The second is making some labour market predictions - but the first is to remind everyone that I do not have magic powers and therefore everything I am about to say may be wrong. But I do know a thing or two about the labour market, so they're probably not going to be very wrong.

Reviewing last year's predictions

At the start of 2023 I predicted the following:

There's a recession on, and it's going to be on for a while

'This year is going to see falling real term wages, we're going to see hardship for many and in terms of propensity to hire, we'll see business confidence down (but medium term sentiment ok - I think most expect things to be getting better by this time next year), and so investment in things like training and hiring could fall.'

I didn't phrase that brilliantly. I did make the point quite a bit in the first part of the year that we weren't in a recession in the technical sense, but nevertheless people would feel as if we were. The detail was right - that pretty much summed up 2023 (although things are not necessarily feeling better), but headline was wrong. I'll give myself half a point.

We're not going to see the graduate labour market you normally get in a recession…

I went on to say that due to structural labour market shortages, we simply weren't going to see mass layoffs or a substantial reduction in graduate hiring. I was right here, it hasn't happened and (spoiler!) it won't happen in 2024 either.

…and graduate recruiters are going to carry on worrying about retention

Candidate shortage continued and retention, if anything, just got a bigger issue as the year went on.  We'll see more recruiters being pragmatic about entry requirements - we started 2023 with Santander loudly ditching the 2:1 as an entry requirement and I thought more employers would follow suit. It sort of happened but it wasn't as big a development as I expected, so a little less close to the mark.

But not everything will be different about this recession

I was worried about graduates with disabilities getting a particularly tough ride but because we weren't in a recession and the labour market for graduates was largely ok, this didn't really happen in the way I feared.

So, the track record isn't bad. I didn't really say much about AI for example (although I think that was more heat than light for UK graduate employment), but I was a bit vague. So I'll try to be a little more specific this time around. Here are my five predictions for 2024.

Looking ahead to 2024

1. There'll be a general election and it won't have much effect on the graduate labour market.

The prediction about there being an election is not hard, there'll be one - that's not my prediction. The graduate labour market will be a feature of the campaign though, probably in a way it hasn't been in the recent past. We've started 2024 with restrictions on dependents for international students, which has brought about debate about potential labour market effects. We don't know what they will be as we won't get any data on what happened to last year's students until 2025 and even then it will be at best incomplete, but that won't stop a lot of people having opinions.

I would also expect some focus on the value of degrees as well - this debate will follow the same pattern as it has since time immemorial, but it'll get more profile as I think it may form part of electoral debate. We might get a bit of culture war-influenced stuff about hybrid working as well, but business will not take much notice; it's other drivers that move the dial there.

But another aspect of the graduate labour market will also get significant coverage - longstanding serious shortages, particularly of public sector professionals. We're short of doctors, nurses, social workers. Personally, I am particularly troubled/alarmed by the state of the teaching labour market, and I think that is going to get worse and become higher profile in 2024. The government had an opportunity to pull levers in 2023 to fund recruitment that would have affected the jobs market this year, but now even if they did announce a big nursing/police/doctor/teacher/social care/prison offer/insert public sector professional recruit (all of which are needed) this year, the timings mean it won't affect the 2024 jobs market much if at all. That's a lot of words to say 'this thing you think will be important won't actually have the impact you might think'. But there you go.

2. The next round of Annual Population Survey data will show that the majority of the UK workforce has a degree or equivalent for the first time.

This is a pretty specific prediction, but I'm confident. APS data shows that at the end of 2022, 50.7% of the UK workforce were in professional-level employment. The last data we have on qualifications has just under 50% of the workforce with degree or equivalent. I think most jobs will be professional-level again (I think it will go up a bit), and we'll see most of the workforce has a degree or equivalent (note that 43.5% of the working age population has degree or equivalent, it's just you're rather more likely to be in the workforce if you have a degree than if you haven't).

3. There will be little evidence that AI has cost (or created) jobs, but it may start to change some

There was a lot of ink spilled about AI in 2023, but the evidence of its impact on the real jobs market for graduates has been very limited indeed. The main area where there has been some observable impact is on recruitment, which has been disrupted by widespread adoption of AI to write applications; this may have a modest effect on recruitment as I think it will increase cost per hire as employers drop tools that were cost-savers as they are too easily gamed, and so reduce some availability of places, but I don't see that as being a huge deal in bulk.

4. The labour market for graduates will continue to loosen - but only a little - and will look quite similar at the end of 2024 to the start

The Bank of England Agents Summary of Business Conditions for Q4, which came out on the 14 December 2023, notes we still have labour shortages, although they're easing a bit in construction, real estate, business services, three graduate areas where there have been longstanding issues.1 Shortages remain in health, education, social care and tech. They will still be there at the end of 2024, and will probably be worse and it will still be difficult to recruit experienced professionals in business services and finance as well.

5. There will be little change to hybrid working patterns, although it will remain an area of debate for cultural rather than business reasons

Hybrid working is largely done by graduates, and the proportions of workers working hybrid remained remarkably stable throughout 2023. There remains a tension in that in general, employees are keener on hybrid working than employers. We did see a (very) modest, but perceptible drop in hybrid work in tech in early summer after a round of high profile job losses convinced employers that there was a bit of slack in the labour market and they could get employees back into the office. However, it turns out that a few thousand people losing their jobs in a market that is short of several multiples of that amount doesn't actually mean it's easy to recruit any more, and the rest of the year saw a quiet return of tech workers to hybrid working (not least because it's cheaper, and business costs continue to increase).

Largely the patterns are set. About three quarters of IT/tech workers are working hybrid now, about two thirds of business service workers. That will continue because it works for everyone; there's little drop in productivity, it improves retention in a market where replacing experienced staff remains very difficult, and it has helped keep a lid on wage inflation as workers have accepted flexibility in lieu of wage increases even when labour has been in short supply. So I see no reason why this will change much.

Notes

1. Agents' summary of business conditions - 2023 Q4, Bank of England.

Written by

Charlie Ball

Head of labour market intelligence

Jisc