Prospects' head of higher education intelligence, Charlie Ball, provides his regular update on the impact of the COVID-19 recession on the graduate labour market
What we're hearing:
- The economy improved significantly in July but we're nowhere near back to where we were pre-pandemic.
- The level of vacancies is running at about 50% of normal rates.
- The graduate labour market has suffered significant damage, particularly in the arts - which may be the worst-affected sector in the UK. But things are far worse for non-graduates. Many key graduate employment sectors - in health, social care, IT, finance - have been much less affected than many other areas of the economy. Retail, hospitality, travel and accommodation employers have all taken long term hits.
- It looks like there'll be a two-track recovery (US economists are calling it 'K-shaped'), with some sectors, particularly those where remote working is effective, recovering rapidly and others slowly. As most of the rapidly-recovering sectors are highly graduate this may exacerbate the already serious social and economic divides in the country.
- Things are also looking difficult for the self-employed, partly because a lot work in sectors, such as the arts, that have been badly affected and partly due to sheer lack of cash reserves, although the sector has been more resilient than originally feared.
- Domestic student numbers seem to have held up strongly as young people opt for more education rather than taking their chances in an exceptionally difficult jobs market - but applications are not the same thing as actual enrolments.
- Postgraduate interest is strongly up and the coming term could see a great many enrolments. Teaching, for example, is up significantly.
- The situation for international student recruitment is tricky, but it's starting to look as if many, if not most, are showing for the start of term.
- Salaries are likely to remain stagnant or even fall.
- Decisions made about recruitment and business strength this year will also affect next year's recruitment round (at least).
- The collapse in employment in retail and services is likely to affect term-time jobs for students in the future and thus the ability for students from less advantaged backgrounds to support themselves at university.
- The pandemic is going to profoundly change the nature of work for many employees and professional services and IT workers in particular have proved as productive at home as in the office, so a widespread move to homeworking is likely for many graduates. The large majority of workers in tech and professional services are currently working from home, and if this pattern persists it will significantly change many aspects of society, particularly in our cities.
UK GDP went up 6.6% in July.
- The economy has still only made up about half of its pandemic losses.
- Education and manufacturing (particularly distilling and car making) saw a strong increase.
- Production and construction still well below pre-pandemic levels.
People Management continue their liveblog on employer actions in the pandemic.
In common with other analysis, Indeed's data suggests that London is not faring as well as some other regions.
The ONS have reporting on the social impacts of COVID-19 to 10 September.
- Between 28 August and 4 September, total online job adverts decreased from 55% to 50% of their 2019 average, decreasing in every region and country of the UK.
- The fall was spread evenly amongst job categories.
- Healthcare and social care decreased by ten percentage points, bringing it to 84% of its 2019 average (still, it must be noted, far better than other sectors).
- Wholesale and retail decreased seven percentage points.
- Legal and customer service/support both increased one percentage point.
We also have ONS data on Wave 12 of the Business Impact of Coronavirus Survey (BICS) for the period 10 August to 23 August 2020
- 11% of the workforce were on partial or furlough leave.
- 36% of the workforce were working remotely instead of at their normal place of work.
- 49% of the workforce were working at their normal place of work.
- 6% of the workforce that were still on partial or furlough leave returned from leave in the last two weeks.
- The accommodation and food service activities industry reported the highest percentage of businesses reporting their risk of insolvency was severe to moderate, at 23%, compared with 11% across all industries.
- The arts, entertainment and recreation industry reported the largest percentage of businesses indicating that operating costs had exceeded turnover, at 40%.
- Also alarming: 29% of private or HE education organisations stated that operating costs exceed turnover.
- 35% of businesses had more than six months' cash reserves. 4% have none. The accommodation and food service activities industry, and the construction industry had the highest percentages of businesses indicating they had no cash reserves, at 8% and 6% respectively. 52% of businesses in education said they had more than six months cash reserves.
- Only one industry had less than 90% of their businesses reporting that they were currently trading. This was the arts, entertainment and recreation industry, at 79%.
Depressing but nevertheless useful reading - the Centre of Retail Research's constantly updated 'Who's gone bust' list.
The Recruitment and Employment Confederation (REC) and KPMG, with IHS Markit, have issued their September Jobs Outlook report as of 9 September. This is the result of a survey of recruitment consultancies and is a very useful barometer of hiring conditions.
- Recruitment activity picked up in August, but mainly in temporary roles. Demand for permanent positions continued to fall.
- But there has also been a very significant increase in the supply of candidates.
- Pay pressure is downwards.
- Regional data highlighted divergent trends, with permanent staff appointments rising in the South of England and the Midlands, but declining in the North of England and London.
Indeed's excellent work on the analysis of their own vacancies continues with the most recent data from their Hiring Lab, this time to 4 September.
Childcare, construction, medical and cleaning jobs were on the rise, the arts, social science and pharmacy fell.
In common with other analysis, Indeed's data suggests that London is not faring as well as some other regions. They say, 'At the regional level, London is now showing the biggest gap in job postings versus last year. The capital held up best in the early stages of the crisis, but with large numbers of office workers continuing to work remotely from the commuter belt, the lack of footfall appears to be having a substantial drag on sectors like hospitality, food service and retail', and go on to note that while hiring in other regions is on a gentle upward trajectory, London's is flat.
Manpower Group have published their Q4 Employment Outlook survey, which asks business how they see total employment changing.
- Outlook for Q4 2020 at -8%, up 4 points from last quarter's 28-year low, but still the second weakest since the recession of 1992 (which had a disproportionate impact on employment).
- Early signs of twin-track recovery as construction, finance and manufacturing all rise sharply while retail and hospitality are unmoved.
- Two-thirds of employers to overhaul workplace policies on remote working, flexi-time and new skills.
There's also a rather nice infographic here.
The Institute of Employment Studies released On Notice: Estimating the impact on redundancies of the Covid-19 crisis on 14 September. IES find that redundancy notices are running at more than twice the levels seen during the 2008/9 recession. Over 300,000 employees have been notified in HR1 forms as being at risk of redundancy - with 156,000 in June and 150,000 in July. The highest monthly figure reported in the last recession was 90,000 in March 2009.
The IES central estimate is for 650,000 redundancies in the second half of 2020: with 445,000 redundancies in the three months between July and September.
On a similar note, the Treasury Select Committee has produced their analysis of the challenges of economic recovery from coronavirus. There is a section devoted to the threat of long-term unemployment which includes observations about those most affected by furlough and job loss - the young, the less-qualified, groups already experiencing disadvantage - that are familiar to readers of this update, but the section is worth reading as this is an influential group whose findings may impact the next steps for government policy.
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