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UK graduate labour market update: 1 June

June 2020

Prospects' head of higher education intelligence, Charlie Ball, provides his weekly update on the impact of the COVID-19 lockdown on the graduate labour market 

What we're hearing that's not necessarily covered in the reports below:

  • The rate of decrease of open vacancies has slowed significantly, and there appear to be more new vacancies being notified. Things seemed to reach bottom at the end of March.
  • There is some evidence that this modest labour market recovery might be largely driven by healthcare roles - which most graduates can't do.
  • SMEs remain in survival mode. Many are in no position to recruit.
  • There is clear evidence of increased interest in postgraduate study amongst finalists, but at least some of that group are quite clear that, at least for now, they are not interested in a virtual postgraduate experience.
  • The outlook for international student recruitment is not favourable but some ideas are being discussed. Many of our key international competitors are not in the best situation either.
  • There is a great deal of divergence between the experiences of different sectors, and health and social care vacancies are still at reasonable levels. They're likely to be a key driver in the graduate labour market in the next few months
  • There are increasing quiet concerns about the supply of teachers especially as the new Year 7 cohort about to enter secondary school is large.
  • There are also increasing concerns about the early years sector whose entire financial model is under considerable strain.
  • Many employers are yet to make firm decisions about recruitment for the rest of 2020, and plans may change if business conditions change significantly. That could mean ceasing recruitment or layoffs. or it could mean further ad hoc recruitment later in the year.

Prospects traffic update

Levels of traffic on are a handy guide to the interest students have in jobs and courses.

  • Users: 11.3% up (compared to expected traffic levels).
  • Job searches: 3.0% up (actual YoY).
  • Course searches: 27.4% up (actual YoY).

Traffic is now stabilising at above expected levels. Course searches are still up when compared year-on-year and we're seeing good levels of engagement around all areas. Job searches last week were 3.0% up on the same period last year and clicks to apply were up 61.4%.

We haven't seen any significant difference to where our clicks are coming from, with the majority still coming from organic search.

The House of Commons Library have produced this briefing paper (up to the 29 May) outlining the effects of the pandemic on the UK labour market. The contents will be familiar to regular readers of this update but it provides a very handy and typically clear summary of many of the key issues and data sources and is highly recommended as a reference.

The Office of National Statistics has published a set of indicators relating to the pandemic. The interesting ones from a labour market perspective are the experimental ones on real-time vacancies that are derived from Adzuna data (more details here, including a useful list of pros and cons that are a must for anyone with a serious interest in using this data).  You can access raw data here.

Their findings are that 'the total number of online job adverts was relatively stable from the start of 2019 until the beginning of March 2020, after which it began to decline rapidly. This decline continued for two months, with total job adverts levelling off from the start of May to around 43% of its 2019 average. The categories of catering and hospitality, and wholesale and retail, both saw very large declines in job adverts across this period, stabilising in May between 20% and 25% of their 2019 averages. In contrast, education saw a far smaller decline to around 80% of its 2019 average. The volume of job adverts in health and social care saw little or no change from March to May.' 

As the ONS notes, the Institute of Employment Studies are also working with Adzuna data and their weekly update to the 24 May is here. There were 331,000 vacancies recorded, a slight increase of 5% on the previous week.  The number of new vacancies continued to increase for a fifth consecutive week, going from 67,000 the previous week to 74,000 last week. Social work vacancies are at a similar level to early March with a small 2% drop. Healthcare/nursing is down 11%. Hospitality/catering, administration, consultancy, and HR/recruitment are the occupational categories with the largest percentage falls.

The IES go on to note that districts with high ratios of claims for unemployment to vacancies (in other words, difficult labour markets) were among the highest claim-vacancy ratios districts in April, and that those areas where people were already struggling to find work were those that were more affected by the crisis. 

Two big names in the fields of (among other things) labour markets and social mobility, Lee Elliott Major and Stephen Machin, have produced this paper for the Centre for Economic Performance at the LSE on the effects of COVID-19 on social mobility. The authors note that one in four UK workers are currently furloughed, and many will lose their jobs once the scheme ends, and that the  worst  hit employees in  terms  of  job or earnings  losses are the young, the low-paid and the self-employed (Machin co-authored an excellent paper on the latter that we covered last week). The authors call for investment vocational education and in information on skills supply and demand at the local level.

Back to the ONS, who produced indicators on apprenticeship starts to March and other information to April. Apprenticeship starts are half their level last year, with all sectors affected (although the fall in higher apprenticeships is relatively small). Starts for younger apprentices are down the most. They also produced their monthly overview of economic forecasts for the UK. There is a little labour market data in there, but it is worth examining the views of forecasters on the direction of travel of the UK economy and how long a recovery might take.

PWC are also now producing regular updates on the economic impact of COVID-19. The document explores potential scenarios for the course of the pandemic and examines the impact on different sectors of the economy, concluding that finance and insurance, health and social care, IT and telecoms, utilities and public administration and defence are likely to see the smallest impacts. All five sectors are heavy graduate employers.

The Institute of Fiscal Studies has produced a report on the effects of lockdown on work for parents of children and how the overall experiences of mothers and fathers have differed. And there's also a podcast on the topic.

The IFS find that, on average, parents are doing childcare during nine hours of the day, housework during three and spend an average of three hours a day doing work - although that is partly driven by the large losses in employment. By contrast, comparable figures from 2014/15 suggest that, on a regular school day, parents did five-and-a-half hours of childcare and six-and-a-half hours of paid work. Furthermore, parents are now often doing at least two activities at the same time. Mothers are more likely to have quit or lost their job, or to have been furloughed. In 2014/15, mothers were in paid work at 80% of the rate of fathers - this now stands at 70% of the fathers' rate.

Also - and very significantly - the IFS find that three-quarters of university-educated parents who were working were working from home, but well under half of those with GCSE qualifications or below were working from home. 

The Recruitment & Employment Confederation (REC) Jobs Outlook for May was a little more positive than April's. Business confidence in hiring and investment decisions improved by 11 percentage points compared to early April, but remained negative overall at net -10. Short-term demand for permanent staff also saw a modest improvement.

609 businesses (98% SMEs) were surveyed for British Chambers of Commerce's COVID-19 impact tracker to 15 May . 70% of businesses have furloughed staff. 50% of firms say they have three months or less cash flow in reserve. 6% have run out of cash. 82% of firms say they are in a position to implement government guidelines and wholly or partially return to operation. 10% say they cannot restart.

In summary

  • The graduate labour market is severely affected but things are far worse for non-graduates.
  • However, new entrants to the labour market who are leaving education are being particularly badly hit.
  • Job creation activity is down on last year but may have stabilised.
  • The most heavily affected sectors are primarily employers of non-graduates, with one exception - the badly-hit arts industry. Other important graduate recruiting industries taking a hit include manufacturing and construction, although not all subsectors have been as badly affected.
  • Things are also looking difficult for the self-employed although that may be partly because a lot work in sectors such as the arts that have been heavily disrupted.
  • The sectors experiencing less disruption are heavy recruiters of graduates. Health and social care have only seen modest falls in activity and IT and professional services also seem to be faring better and these sectors are likely to lead a recovery.
  • Many businesses feel they can get back to operation quickly once restrictions are eased.

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