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UK graduate labour market update: 1 March

March 2021

This week's summary of data, research and reports on the labour market, by Charlie Ball, includes a look at higher technical education and the impact of COVID on the UK's cities

Economic overview and regional data

The Office for National Statistics (ONS) released their monthly labour market summary on 23 February:

  • In January 2021, 83,000 more people were in payrolled employment when compared with December 2020. This is the second consecutive monthly increase.
  • In January 2021, 726,000 fewer people were in payrolled employment when compared with February 2020.
  • The UK employment rate, in the three months to December 2020, was estimated at 75.0%, which is 1.5 percentage points lower than a year earlier and 0.3 percentage points lower than the previous quarter.
  • The UK unemployment rate, in the three months to December 2020, was estimated at 5.1%, that's 1.3 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter.
  • The redundancy rate, in the three months to December 2020, was estimated at 12.3 people per thousand employees.
  • The Claimant Count increased in January 2021, to 2.6 million. This includes both those working with low income or hours, and those who are not working.
  • There were an estimated 599,000 vacancies in the UK in November 2020 to January 2021. This is 211,000 fewer than a year ago and 64,000 more than the previous quarter.
  • The 18 to 24 age group has seen the greatest decrease in payrolled employees since February 2020.
  • Between July to September 2020 and October to December 2020, total actual weekly hours worked in the UK saw an increase of 53.7 million, or 5.8%, to 978.7 million hours
  • Average actual weekly hours worked saw an increase of 1.8 hours on the quarter to 30.2 hours.

There is also a regional analysis from the ONS:

  • Comparing January 2021 with January 2020, decreases in payrolled employees ranged from 0.8% in Northern Ireland to 5.2% in London.
  • For the three months ending December 2020, the highest employment rate estimate in the UK was in the South East (78.6%) and the lowest was in Northern Ireland (69.4%). Most regions saw a decrease in the employment rate compared with the same period last year, except for the North East, which was largely unchanged, and Yorkshire and The Humber, which saw a small increase of 1.1 percentage points.
  • For the three months ending December 2020, the highest unemployment rate estimate in the UK was in London (7.0%) and the lowest was in Northern Ireland (3.6%). All regions saw an increase in the unemployment rate compared with the same period last year, with London seeing the largest increase, at 2.7 percentage points.
  • Between June and September 2020, workforce jobs decreased in all regions of the UK, except for Wales, which increased by 11,000. The largest decrease was in London at 98,000.
  • Average weekly hours worked, for the 12 months ending September 2020, varied between London, with 30.9 million hours worked and the North East, with 27.9 million hours worked. All regions saw a decrease in the average weekly hours worked, compared with the same period last year, with the North West and Scotland both with the largest decreases of 3.2 hours per week. For total weekly hours worked, the South East saw the largest decrease compared with the same period last year, down 13.2 million hours per week.

In Ireland, employment in all professional-level SOC 2010 categories (effectively graduate level) increased between Q3 and Q4.

Meanwhile, here is the Scottish roundup:

  • Scotland's unemployment rate (16+) decreased slightly over the quarter (0.1 percentage points) and increased over the year (1.0 percentage points) to 4.5%. 
  • Scotland's unemployment rate was below the UK rate of 5.1%.
  • The proportion of people aged 16-64 in work (the employment rate) decreased over the quarter (0.3 percentage points) and decreased over the year (1.3 percentage points) to 73.7%. 
  • Scotland's employment rate was below the UK rate of 75.0%.
  • The economic inactivity rate (the proportion of people aged 16 to 64 years who were not working and not seeking or available to work) increased over the quarter (0.4 percentage points) and increased over the year (0.6 percentage points) to 22.8%. 
  • Scotland's inactivity rate is above the UK rate of 20.9%.
  • Early estimates for January 2021 from HMRC Pay As You Earn Real Time Information indicate that there were 2.3 million payrolled employees in Scotland, a decrease of 2.8% (68,000) compared to the same month the year before.
  • In January 2021, there were 208,800 JSA claimants in Scotland, a decrease of 800 (0.4%) over the month but an increase of 95,300 (83.9%) over the year.
  • The claimant count rate in January 2021 was 7.4%, compared with 7.2% for the UK.

The Senedd produced their monthly round up of Welsh data:

  • For October 2020 to December 2020 the unemployment rate for people aged 16+ in Wales was 4.4%, compared to 4.6% in the previous quarter (July 2020 to September 2020). This is a decrease of 2,000 people from the previous quarter to 68,000.
  • The unemployment rate in Wales (4.4%) is lower than England (5.3%) and Scotland (4.5%) but higher than Northern Ireland (3.6%).
  • The latest data for January 2021 show that the Wales claimant count went up from 58,576 in March 2020 to 110,025 in January 2021, a slight decrease from 111,359 in December 2020.

And the Northern Irish data is here:

  • The latest NI seasonally adjusted unemployment rate) for the period October-December 2020 was estimated from the Labour Force Survey at 3.6%.
  • The unemployment rate was unchanged over the quarter and increased by 1.2 percentage points over the year. The annual change was statistically significant.
  • The proportion of people aged 16 to 64 in work (the employment rate) decreased over the quarter and the year by 1.1 percentage points and by 3.0 percentage points to 69.4% respectively. The annual change was statistically significant.
  • The economic inactivity rate (the proportion of people aged 16 to 64 who were not working and not seeking or available to work) increased over the quarter by 1.2 percentage points and over the year by 2.1 percentage points to 28.0%.
  • The economic inactivity rate was similar to rates over the last ten years but significantly below peak rates in 2009.
  • NI had the lowest unemployment rate, the lowest employment rate and the highest economic inactivity rate of all the UK regions.

The House of Commons Library have duly updated their analysis of the effects of COVID on the labour market - this remains the best resource (apart from reading these updates) to gain a basic picture of the current state of play.

Here's the latest economic data from Ireland - covering the period to the end of 2020.

  • The number of people aged 15 years and over in employment stood at 2,306,200 in Q4 2020 with an associated Employment Rate of 67.8% for those aged 15 to 64 years.
  • There was an annual decrease in employment of 55,000 (-2.3%) in the year to the fourth quarter of 2020, bringing total employment to 2,306,200. This compares with an annual decrease of 31,700 (-1.4%) in employment in the previous quarter and an increase of 3.5% or 79,900 in the year to Q4 2019.
  • There was an annual increase in unemployment of 28,300 (+25.6%) in the year to Q4 2020, bringing total unemployment to 138,900.
  • The unemployment rate for 15 to 24-year-olds (youth unemployment rate) increased from 9.6% to 13.8% over the year to Q4 2020.
  • Employment in all professional-level SOC 2010 categories (effectively graduate level) increased between Q3 and Q4, as did roles in administrative and secretarial occupations, and sales and customer service. Skilled trades, caring, leisure, process, plant and machine operatives and elementary occupations all saw falls in employee numbers over the quarter.
  • Most regions of Ireland saw modest rises in employment over the quarter. The exceptions were Southern, South East and South West.

Despite the pandemic, 38% of private sector hirers and 51% of public sector employers had increased staffing levels in the past 12 months.

The latest round of the ONS fast response experimental statistics on the impact of COVID were released on 25 February.

  • The proportion of UK workers who worked exclusively from home decreased slightly by two percentage points from the previous week to 35%.
  • The proportion of UK workers who travelled to work (either exclusively or in combination with working from home) increased slightly by two percentage points when compared with the previous week to 46%.
  • In the week to 20 February 2021, overall retail footfall in the UK was at 38% of its level in the equivalent week of 2020.
  • There was no vacancy data this week.

The ONS have also issued their regular update on the impact of the coronavirus pandemic and other events on UK businesses and the economy, based on responses from the voluntary fortnightly business survey.

  • The percentage of businesses currently trading has remained stable throughout January and February 2021, at 72%.
  • The percentage of currently trading businesses experiencing a decrease in turnover in the last two weeks, compared with normal expectations for this time of year, has remained stable in January and February 2021, at 46%.
  • The percentage of businesses with three months' cash reserves or less (including no cash reserves) has remained stable throughout January and February 2021, at 32%.
  • The proportion of businesses' workforce on furlough leave increased from 11% in early December 2020 to 20% in early February 2021. This equates to approximately 6.5 million people.
  • The arts, entertainment and recreation industry and the accommodation and food service activities industry both had more than half of their workforce on furlough leave, at 59% and 55% respectively.
  • The information and communication industry had the highest proportion of its workforce working remotely instead of at their normal place of work, at 80%. This was followed by the professional, scientific and technical activities industry, at 73% and the education industry (private sector and higher education businesses only), at 70%.
  • The 'other service' activities industry had the lowest percentage of businesses currently trading, at 19%. This was driven by businesses in hairdressing and other beauty treatments activities, where ONS estimates suggest that they were all temporary closed.
  • The accommodation and food service activities industry and the arts, entertainment and recreation industry were the other industries where 50% or less of businesses were currently trading, at 38% and 50% respectively.

HM Treasury have published their monthly overview of economic forecasts.

  • Predictions for 2021 GDP growth range from 0.5% to 6.1%, averaging at 4.3% (down on the January average of 4.4%)
  • Predictions for the unemployment rate at the end of 2021 range from 4.6% to 8%, averaging at 6.6% (no change on January).

Recruitment plans and the state of cities

 The Recruitment & Employment Confederation (REC) and SavantaComRes have issued their monthly JobsOutlook looking at recruitment plans:

  • Employers' intentions to hire permanent staff in the short term rose in the three months to January 2021 to net: +25. This came despite some signs of the January lockdown slowing hiring, but suggests underlying demand that exists in the labour market and that businesses will be looking to hire in the coming months as restrictions ease.
  • The lockdown did translate into a further decrease in confidence in the wider economy, however, with confidence levels falling to net: -53 in the three months to January 2021.
  • Employers' hiring intentions for temporary agency workers were at net: +6 in the short term and net: +12 in the medium term - significantly higher than the net: -2 and net: -4, respectively, recorded a year earlier.
  • Despite the pandemic, 38% of private sector hirers and 51% of public sector employers had increased staffing levels in the past 12 months.
  • However, 40% of employers reported that they had reduced workers' hours over the year to November 2020-January 2021, up from 12% in the previous year.

The Centre for Cities have examined the effects of COVID on UK cities:

  • Cities entered the pandemic with above average claimant rates. All of them have seen claimant rates rise since then, and the Job Retention Scheme (JRS) - or 'furlough' - has prevented rates from rising even higher.
  • However, cities account for a smaller share of the rise in unemployment and the furloughed workforce than their pre-pandemic share of unemployment. This appears to be because although the Core Cities were home to a disproportionate number of people claiming unemployment benefits - many of whom are likely to be low skilled because of eligibility criteria - they are also more likely to be home to jobs that can be done at home, which are likely to be in higher-skilled occupations.
  • This suggests a two-tiered impact of the pandemic on the residents of the cities - those in lower skilled jobs have been exposed to the impact of the recession, reflected in the increase in claimant rates (albeit lower than elsewhere) and the use of the furlough scheme. But those in higher-skilled jobs have been able to continue to work despite the disruption.
  • The ability of places to bounce back depends on how affected their export base (e.g. automotive, finance, tech, etc.) has been rather than on local services such as retail or hospitality, as it is these exporting jobs that sell goods and services to markets in other cities and countries. They bring money into their local economy to be spent on local services.

The technical education system, including the capability of providers, is not well understood by employers.

The Learning and Work Institute have released a Gatsby Foundation-funded report on higher technical education.

  • The researchers worked with providers, employers and local stakeholders in two local areas to explore the barriers to boosting demand for and provision of higher technical education. This focused on the digital sector in the West Midlands Combined Authority area, and advanced manufacturing in the Heart of the South West Local Enterprise Partnership area.
  • Employers, particularly SMEs, are often not aware of the ways in which higher technical skills could contribute to business growth and increased productivity.
  • They lack time to find out about opportunities and are focused on business survival rather than growth.
  • The technical education system, including the capability of providers, is not well understood by employers.
  • The range of programmes and qualifications is confusing.
    Local economy limits demand for higher level skills. A dominance of low-skilled, low-wage jobs in parts of both regions impact on the demand for HTE. Firstly, with employers without an immediate need, or a reluctance to, upskill their workforce. And secondly, a lack of demand from potential learners due to lower aspirations.
  • Providers' engagement with employers tends to be 'product driven', promoting programmes that are currently prioritised through national policy and funding. Thus engaging employers on apprenticeships and T-level industry placements have attracted much attention, while HTE has been relatively overlooked.
  • The introduction of new higher technical qualifications (HTQs) from 2022 may help to raise the profile of HTE.
  • Providers and intermediary services have limited resources to engage with employers. This can lead to a focus on employers they have a long-standing relationship with and/or larger employers who can offer a sufficient pipeline of learners. It can also lead some providers to wait to be approached by employers rather than proactively engaging them.
  • Courses can quickly lose currency and relevance in the labour market. The need for ongoing training, which may include maintenance as well as updating skills, means that full qualifications may be perceived as costly and shorter courses may be more attractive.
  • Knowledge and industry experience of teaching staff can rapidly become out of date. This leads providers to make decisions on course content based on the skills of their existing staff rather than employer needs.
  • Providers lack the funding to upskill the workforce, either through CPD or by attracting new staff with relevant industry experience.

British Chambers of Commerce have been surveying exporters (in conjunction with moneycorp):

  • For UK exporters to the EU market, 44% said they plan to increase activity in the EU export market, 27% will consolidate rather than grow, 10% plan to have no activity in the EU, and 13% will decrease activity.
  • Overall, 60% of UK firms plan to increase activity in the domestic market. 28% said they will consolidate rather than grow, 2% said they have no plans to be active in the UK market, and 5% will decrease activity.

Finally, the Enterprise Research Centre have published a paper reviewing the evidence on diversity in R&D and innovation.

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