UK graduate labour market update: 11 January

Welcome to Charlie Ball's regular summary of data and reports from the graduate labour market, brought to you by Prospects Luminate and Jisc Data Analytics

First this week: 75.7% of employed 2019 first-degree graduates who had at least one graduate parent were in professional-level jobs after 15 months. Meanwhile 70.3% of employed 2019 graduates who had no graduate parents were in professional level jobs.

The top ten most common graduate level jobs for new graduates from 2019 are listed below along with the percentage of new entrants who had no graduate parents.

Medicine, IT and financial and business services are roles particularly less likely to be taken by students whose parents have not been to university.

The Office for National Statistics (ONS) have delivered their weekly update on the impact of the pandemic on business and the economy:

• In the week to 2 January 2022, overall retail footfall in the UK was 75% of the level seen in the equivalent week of 2019. This is lower than the previous week where overall retail footfall was at 86% of the equivalent week of 2019.
• The total volume of online job adverts on 31 December 2021 was at 121% of its February 2020 average level, a 4% decrease from the previous week. The highest level of job adverts relative to February 2020 continued to be in the 'transport, logistics and warehouse' category, at 260%.
• All major graduate recruitment categories remain significantly above their levels this time last year, but a number have dipped back below pre-pandemic levels, with law at the lowest, at 69% of pre-pandemic vacancies. London as a city is now back below pre-pandemic levels of vacancies as well, albeit only marginally. Some of this may be seasonal.
• In late December 2021, 15% of businesses reported a shortage of workers, which has remained broadly stable since late October 2021 (this rose to 35% for businesses with 10 or more employees). The percentage was highest in the accommodation and food service activities industry at 37%, and 65% of these businesses reported employees were working increased hours because of these worker shortages, compared with 38% and 55%, respectively, in late October 2021
• Worker shortages are most acute outside London, with the North East, South West and Midlands most likely to report shortages.
• 2.3% of businesses in the UK expect to make redundancies in the next 12 months.
• 42% of businesses say raw materials prices increased last month. Not great news for inflation.
• 31.4% of workers were working from home or in a hybrid mode in the two weeks to 12 December. This rises to 83.9% of IT workers. 1.3% of workers were absent due to COVID.

The Institute of Student Employers (ISE) have released findings from their 2022 Vacancy Survey:

• Graduate vacancies are set to increase by 20% compared to 2019 pre-pandemic levels and more than 22% from last year.
• The biggest increase in graduate vacancies in 2022 is set to be in the built environment sector (48% growth), the energy, engineering & industry (41% growth), and the health & pharmaceuticals sector (37% growth). The only industry to experience a reduction in graduate vacancies is the charity and public sector (11% dip). The only sector that is yet to reach pre-pandemic levels is the retail and FMCG sector currently 3% below graduate hires in 2019.
• 48% of graduate employers report that they are receiving fewer applicants for graduate vacancies than this time last year.
• 18% of employers indicated that the quality of their graduate applicants have dropped in 2022. 13% say it has increased.

The Resolution Foundation have kicked off 2022 with a big new report on change and mobility in the UK labour market:

• Structural change (the reallocation of labour across different sectors) has been slowing down in recent years, not speeding up. Alongside this, the rate at which workers move between jobs and sectors has also slowed down.
• In recent years, and in contrast to some other countries, occupational change has tended to involve 'upgrading' (the growth of higher paid occupations) more than it has 'polarisation' (the growth of high and low paid jobs), especially for women.
• The most significant shift in industries in the past 50 years has been the fall, in absolute terms and as a share of jobs, of manufacturing, and the rise of several service sectors, including business services.
• Alongside sectoral change there has also been occupational change, where the main trend has been one of occupational 'upgrading', meaning jobs growth has been highest in higher-paying occupations. In the 1980s and 1990s this was accompanied by growth in low-paid occupations, giving rise to a story of jobs 'polarisation'.
• Since the 2000s, jobs growth in the lowest-paying occupations has been negative, meaning 'upgrading' rather than 'polarisation' is a better description. The consistent trend, though, has been stronger jobs growth of higher-paying occupations. Occupational upgrading has occurred for both sexes but has been more pronounced for women than men. Total female employment grew by 4.3 million between 1992 and 2019, almost all of which (3.9 million) is accounted for by employment growth in professional level occupation groups (managers and directors, professional and associate professional occupations). These are also considered graduate occupations.
• (This is a theme we at HECSU/Prospects/Jisc have returned to many times over the last 20 years - contrary to many popular opinions, the graduate labour market has grown steadily and substantially over the last 50 years, and in the last 20 years it has continued to grow while the jobs market, and therefore opportunities, for non-graduates has steadily declined.)
• In 2021, the reallocation of labour across 21 industry sectors, compared to a decade ago, was equivalent to 7% of total employment. This is about one-third as high a rate of reallocation as the 1980s peak.
• If more workers enter employment (from non-employment) than leave employment (to non-employment) in a given sector, employment in that sector will grow even without any direct job moves between sectors. The figures show that the movement of workers between jobs in different sectors only accounts for around one-third of the fall in manufacturing employment from the 1980s to the 2000s, the rest coming from the net effect of workers joining and leaving the workforce. In the 1980s to 2000s, lifecycle entry/exit played a bigger role in the fall in manufacturing employment than within-career entry/exit - this goes against the idea some may have that such sectoral decline happens via mid-career workers being forced out of their jobs. In professional services, where employment has grown since the 1980s, the picture is more mixed. Employment growth has been driven by different factors (job moves, and lifecycle and within-career entry and exit) in different periods. Overall, job moves played a larger role in the growth of employment in a growing sector - professional services - than they did in the fall of employment in manufacturing.
• Compositional changes in the workforce - specifically the fact that it is becoming older - have had a small negative effect on the average mobility rate. This is because older workers have lower rates of job mobility than younger workers. In 2015 to 2019, 5.8% of 16 to 24-year-olds moved jobs per quarter, five times the rate of 55 to 64-year-olds (1.2%). There is an even bigger age skew when it comes to sectoral job mobility: 3.5% of 16 to 24-year-olds move job to a new sector each quarter, compared to 0.5% among 55 to 64-year-olds.
• Looking at all the job moves made over the past 20 years, a third (36%) were to a job in the same occupation. Younger workers are more mobile in terms of changing occupations than older workers, but when older workers do change occupations they are more likely to move to occupations with significantly different tasks. Young workers are much more likely to move occupations when they move jobs – from 2002 to 2020, 70% of 25-year-olds' job moves involved changing occupation, compared to 55% of 60-year-olds' moves. But when older workers do move occupations, the distance moved doesn't have the relationship with age we might expect. From 2002 to 2020, the average job distance of an occupation mover was highest for those age 25 to 35 but also for those age 55 and above (and low for those in their early 20s, as well as for those aged 40 to 50). The fact that some workers do manage to make significant occupational transitions later in their careers is encouraging.
• Workers who experience involuntary job loss will take longer to return to work than those leaving work voluntarily (half of those experiencing involuntary job loss have returned to employment after six months, compared to two-thirds of those leaving their previous job voluntarily). Moreover, when they do return to employment, it is on average to a job which pays less than the one they left. From 1995 to 2020, median real hourly pay growth was -1.1% among those who had experienced an involuntary period out of work within the past year, compared to 2.1% among all workers.
• 40% of workers in declining sectors who experience involuntary job loss either return to work in the same sector, or in another declining sector. We also find (using the same job distance analysis mentioned above), that those returning to work after involuntary job separations typically move 'away' from jobs placing emphasis on analytical and personal tasks, and 'towards' jobs involving manual work. This is against the grain of workers making voluntary job moves, where the direction is on average towards more analytical jobs.

Reed have surveyed 251 hiring managers and decision-makers to understand the sentiment of the market and what this means for hiring plans in 2022:

• 55% of respondents said there were current labour shortages in their sector. 82% of respondents said that they felt confident that the current labour shortages would improve in 2022, with 49% of people saying that they were very likely or likely to hire more people next year than in 2021.
• A higher percentage of people who were based in London were more likely to hire more staff (76%), compared to those from outside of London (36%).
• 67% of people said that their business revenue had recovered this year to be equivalent to or more than pre-pandemic levels. People in London were more likely to say that their revenue had exceeded pre-pandemic levels (36% compared to 16% who were based outside of London).
• 60% of employers said they found a degree valuable for recruitment, while 64% said that skills such as teamwork were important after the move to remote working, with larger companies (those with more than 1,000 employees) more likely to value soft skills. 35% said remote working made soft skills more important than ever.

Chambers of Commerce have released their influential Quarterly Economic Survey:

• Inflation is the top issue for firms, while a rise in the interest rate was also a cause for concern for many. 58% of firms expect their prices to increase in the next three months, the highest on record. 66% of businesses cited inflation as a concern, also a record high. 27% of firms were worried about rising interest rates, as concerns over rate hikes among manufacturers reach record high.
• 45% of respondents overall reported increased domestic sales in Q4, down from 47% in Q3. 16% reported a decrease, unchanged from Q3.
• These figures do point to a decline in business confidence, particularly amongst SMEs, in 2022, and this needs to be watched carefully as it could have effects on recruitment.

Written by

Charlie Ball

Senior consultant: labour market intelligence

Jisc