Student recruitment and development in 2023

Stephen Isherwood, chief executive of the Institute of Student Employers, expects financial considerations, opportunities for international students, and some push back towards face-to-face recruitment to be on the agenda in 2023

The UK is in a recession but vacancies are at record highs. With the UK economy expected to shrink by 1.3% in 2023, vacancy levels should fall, just as they did in the financial crash of 2008 and in the first year of the pandemic. Yet at the start of the 2023 recruitment season the ISE predicted 2% growth in student vacancies. Not as strong as the 17% increase in 2022, but still growth. Can we make any reliable predictions for graduate employment in 2023?

We can try. The ISE has over 20 years of market data and has surveyed employer hiring intentions for 2023. So, here are my key predictions for student recruitment and development in 2023.

Recruitment levels should remain stable

Vacancies are still growing because employers face a constrained labour market. Unemployment is low and demand from employers is high. Take a look at the Department for Education's data on skilled employment. The number of skilled managerial and professional jobs in the UK economy has grown consistently for over a decade regardless of economic performance. Employers have also learned from previous recessions: cut back on graduate recruitment this year, and you won't have enough managers, consultants, lawyers or accountants when the economy starts to grow again.

This doesn't mean that graduates can be complacent - the graduate labour market is always highly competitive whatever the economic outlook. Employers received over 60 applications per vacancy in 2022 and gloomy headlines may push this rate up in 2023.

Skills and apprenticeships to remain high on the government's agenda

The apprentice levy has made the student recruitment market more complex. Employer early talent strategies often incorporate apprentice programmes alongside their graduate programmes. Employers still have levy pots to spend. They are spending less than half the levy amount they pay (47%), which incentives them to increase apprentice numbers. ISE forecasts show that apprentice vacancies will grow at a faster rate (18% for 2023) than graduate vacancies.

Apprenticeships are not just for school and college leavers. Graduates should also be aware that some graduate schemes are in fact apprenticeships. For example, 40% of graduates hired by ISE finance sector employers joined an apprentice training programme.

The government wants employers to offer more apprenticeships. Robert Halfon, the minister for skills, apprenticeships & higher education, has spoken of his 'two favourite words in the English language: degree and apprenticeships'.  And if you follow his Twitter feed, you'll quickly notice that the majority of his comments are focused on skills development, ladders of opportunities, and college/schools issues. He says surprisingly little about higher education, and I don't see this changing in 2023.

Students will continue to feel the pressure

Students report poorer mental health levels than the rest of the adult population. Interrupted education and limited social experiences through the pandemic combined with the current cost of living crisis have negatively impacted students. In response, universities have significantly increased mental health support, students are more aware of their own mental health, and they are going to expect similar awareness levels from their employers.

The ISE found that that an average of 17% of all early-career hires sought mental health support at work, and 61% of employers saw an increased demand for mental health support from student hires. The most common mental health interventions from employers in 2022 were buddy/peer support schemes, counselling, mentoring schemes, and training for line-managers.

I expect more employers to discuss mental health issues as part of the recruitment process - some have even built mental health awareness training into their pre-joiner process. 

Employers will place greater focus on financial rewards

 Students' money struggles will not ease through the year. Rent and food inflation is running at far higher levels than the increase in maintenance support for 2022/23, which the Treasury based on an inflation forecast of 2.3%. Freezing the tuition fee cap at £9,250 is financially irrelevant for most students, at least in the short term (only those who pay back their fees in full will notice the difference in a few decades).

Salary growth for graduate hires can be lower than for existing employees. Retention of existing staff when pay budgets are tight can be a priority. Wage increases at entry level can also place structural pressure on rates throughout the pay scale: pay for last year's graduate intake needs to remain ahead of this year's intake, and so on up the hierarchy. Student attitude surveys that say training trumps pay may in the past have also impacted salary decisions.

Starting salaries are certainly on employers' action lists now. Offer renege rates have increased. More than in previous years, employers are asking the ISE for competitor pay data. On our forums, employers have asked how to get funds to students to help with relocation and other expenses as they start work. This isn't easily solvable when new hires aren't on the payroll, but I expect solutions to be found as we approach September start dates.

Careers teams will seek more career opportunities for international students

If the tuition fee cap had increased in line with inflation since 2012, universities would now receive £11,870 per student, not £9,250. International students, who pay on average £22,000 per year for an undergraduate course, are an increasingly important source of funding for universities.

I mention funding because international student growth is not driven by labour market demand. ISE employers do hire international students (around 10% of the annual intake on average), but the most commonly asked question on our higher education forums is how to get employers to hire more. Employers tell me they don't need any more applications from international students, they get plenty.

I'm not sure smaller employers would say the same. Recent research by HEPI with the Institute of Directors' members suggests that smaller organisations (those who may not have recruitment teams) are less aware of the graduate visa route and could hire international students to fill skills gaps. Were I responsible for international student employment outcomes, this is where I would place some of my efforts.

Virtual hiring will not end with the pandemic

Making predictions is risky. This time last year, I predicted that student demand and competitive pressures would propel the return of face-to-face selection. But like the fragmented return to the office, employers report mixed approaches to in-office recruitment activities. Lack of office space, travel hassles, hard to get hold of line managers, all make online recruitment logistically more appealing. While some employers have brought back the in-person assessment centre, many have not.

Some employers say candidates prefer online, some say they've improved intake diversity through online hiring, all say online is more efficient. I still think that candidates who experience the office are more likely to accept a job offer, and employer competition for the best candidates will push them to increase face-to-face engagement. Ask me at the start of 2024 if was right.

Written by

Stephen Isherwood

Joint CEO

Institute of Student Employers