UK graduate labour market update: 15 February

This week Charlie Ball explores the latest data on homeworking, an important labour market report from the CIPD, and graduate outcomes - in Switzerland

Data round-up

 UK GDP increased by 1% in the fourth quarter of 2021, despite a fall in GDP in December of 0.2%:

• In output terms, the largest contributors to this quarterly increase were from human health and social work activities driven by increased GP visits at the start of the quarter, and a large increase in coronavirus testing and tracing activities and the extension of the vaccination programme.
• Services output rose by 1.2% in the fourth quarter of 2021 and is now 0.5% above pre-coronavirus levels.
• There was a marked increase in output for human health and social work activities (4.5%) primarily driven by a large increase in the NHS Test and Trace and vaccination activities (particularly in December), as well as increased non-COVID health activity at the start of the quarter. Growth in administrative and support activities (5.9%) was driven by higher activity from employment agencies, travel agents and office administration. The quarterly increase in transport and storage (7.3%) was driven by Black Friday event sales and online festive shopping leading to higher deliveries of goods.
• Production output fell by 0.4% in Q4 2021 and is now 3.6% below its pre-coronavirus levels. The fall in production output was because of a 3.2% fall in the energy sector and a 4.5% fall in mining and quarrying.
• The fall in energy in the fourth quarter follows exceptionally high output levels in May 2021, mainly resulting from adverse weather conditions boosting demand for energy.
• The fall in mining and quarrying output was driven by a fall in extraction of crude petroleum and natural gas, following volatile growth across the year because of planned maintenance of oil fields.
• Manufacturing output was broadly flat in the fourth quarter. However, there were offsetting contributions within the industry. There was a large increase in the manufacturing of pharmaceutical products and pharmaceutical preparations, while manufacturing of machinery and equipment saw the largest fall. Anecdotal evidence in the October 2021 monthly GDP release found that businesses in some industries, including manufacturing of machinery and equipment, reported difficulties in sourcing supplies, which have led to them producing less output, despite seeing an increase in orders.
• Construction output increased by 1.0% in Q4 2021, following a fall of 1.4% in the previous quarter. Similar increases in both new work, and repair and maintenance (1.1% and 0.8% respectively) contributed to the growth. The sector is having particular issues with supplies of both raw materials and workers at the moment.

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

• The total volume of online job adverts on 28 January 2022 was at 145% of its February 2020 average level.
• Of the 28 categories, 23 saw an increase in the number of online job adverts, while three decreased and two remained unchanged when compared with the previous week. The largest weekly increases were in 'travel and tourism' and 'wholesale and retail', which rose by 10% and 9%, respectively. Meanwhile, the largest weekly decrease was in 'creative, design, arts and media', which fell by just 2%.
• The volume of online job adverts increased for all 12 English regions and UK countries on 4 February 2022 when compared with the previous week.
• 30.8% of the workforce worked in a hybrid way or entirely from home in the fortnight to 23 January. This increases to 82% of the IT workforce and 67% of the professional services workforce.

There is more detail from the ONS on homeworking and spending of workers.

• Between 19 and 30 January 2022, 36% of working adults reported having worked from home at least once in the last seven days because of the pandemic.
• Almost half (46%) of these homeworkers said they spent less as a result of homeworking because of the pandemic. A similar proportion of homeworkers reported spending less when interviewed in November (49%).
• The area where homeworkers most commonly saw spending increase was utility bills, where 86% reported their spending had risen.
• Half of homeworkers (50%) reported spending less on fuel and parking for commuting, and two fifths (40%) reported spending less on commuting using public transport.
• Very few people who worked from home reported that their spending on food stayed the same. A third (33%) said they spent more on food since working from home, and 34% said they had spent less.
• Around 9 in 10 homeworkers who live in rented housing (92%) reported increased spending on utilities, compared with 86% of those who are currently paying a mortgage and 77% of homeworkers who own their home outright.
• Homeworkers with dependent children are slightly more likely to report increased spending on food (39%), utilities (89%), and internet access (27%) than those without dependent children (29%, 85% and 23%) respectively.

January sees steep rise in recruitment activity

 The latest KPMG and Recruitment & Employment Confederation (REC) Report on Jobs is now out:

• The easing of pandemic restrictions, improved market confidence and strong demand for workers drove a further steep increase in recruitment activity across the UK during January.
• Robust demand for staff and candidate scarcity drove up rates of starting pay for both permanent and temporary staff at the start of the year.
• The rate of decline in overall candidate availability quickened for the first time in five months in January. Though not as steep as those seen during last summer, the rate of deterioration remained substantial overall. The downturn was driven by a quicker drop in permanent staff supply, as temp candidate numbers fell at a softer pace. Recruitment difficulties seem far from over.
• Demand for staff continued to rise sharply across both the private and public sector during January. The quickest increase in vacancies was signalled for permanent roles in the private sector, while the softest was seen for temporary workers in the public sector.
• Demand for permanent workers rose across all ten monitored job sectors at the start of 2022. The quickest increase in demand was seen for 'IT and computing', followed by 'nursing/medical/care'. The slowest upturn in vacancies was seen in the retail sector.
• The increase in demand for temporary staff was also broad-based across all ten monitored sectors in January. The quickest expansions were seen in the 'nursing/medical/care', 'blue collar' and 'hotel/catering' categories.

The CIPD have released their Winter Labour Market Outlook:

• The net employment balance - which measures the difference between employers expecting to increase staff levels in the next three months and those expecting to decrease staff levels - remained steady at +37 after reaching +38 last quarter. This is one of the highest figures on record and is being driven largely by the private sector.
• 70% of employers surveyed indicated that they plan to recruit in the next three months.
• Employment intentions remain positive across the board but are particularly high in information and communication (+59), healthcare (+55), business services (+53) and construction (+51). These are largely sectors with very graduate workforces (construction is the exception).
• Employers are increasingly focusing on retention to achieve the size of workforce needed to meet demand.
• Employers have responded to recruitment challenges by raising pay (48%), advertising more jobs as flexible (46%) and upskilling existing staff (44%). 29% aim to recruit more apprentices and 21% aim to recruit more graduates.
• Almost half of employers (46%) have hard-to-fill vacancies. These are most common in healthcare (64%), public administration and other public sector (52%), and construction (51%). These are all sectors employing large numbers of graduates.
• When looking only at employers with vacancies, this figure rises to three-quarters (75%). Hard-to-fill vacancies were reported by 53% of employers in the public sector, 45% in the private sector, and 41% in the voluntary sector.
• Looking forward, 64% of employers anticipate problems filling vacancies over the next six months and 33% expect these problems to be significant.
• 11% of employers are planning to make redundancies in the three months to March 2022. A similarly small proportion (12%) are unsure whether they would. Redundancy intentions remain below pre-pandemic levels.
• The median expected basic pay increase stands at 3% in total, and 3% for the private and voluntary sectors. Only in the public sector is relative pay restraint expected. All these awards are below inflation, which the Bank of England expects to peak at over 7%.
• This is a big, important survey and well worth your time.

Written by

Charlie Ball

Senior consultant: labour market intelligence

Jisc