UK graduate labour market update: 15 June

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:

• The labour market seems to have hit bottom in March, but although things are better now the market has remained stable rather than continuing to recover through May.
• The graduate labour market has suffered significant damage, particularly in the arts - but things are far worse for non-graduates.
• Many SMEs are running short of cash - Chambers of Commerce were reporting half would run out money before the end of summer - and have no prospect of recruitment right now.
• It is now very clear that there is a significantly greater interest in postgraduate study than usual, but many students are clear that they want a 'traditional' experience, not a virtual one.
• The outlook for international student recruitment is very tough but some ideas are being discussed. Many of our key international competitors have their own issues.
• There are increasing concerns about the early years sector whose entire financial model is under considerable strain. This is an issue for new graduates from FE and HE and for parents returning to work.
• Many employers are yet to make firm decisions about recruitment for the rest of 2020. Some businesses have quietly shelved recruitment plans, but others are - equally quietly - making plans to recruit if the opportunity and business conditions allow.
• 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.
• We're getting increasingly concerned about the way the collapse in employment in retail and services might affect term-time jobs for students in the future and thus the ability for students from less advantaged backgrounds to support themselves at university.
• There are also worries about student deferral, not merely because of the reduced financing for 2020 that will follow, but also because of the likely much larger 2021 entry cohort (undergraduate and postgraduate, home and international) result, and the ability of institutions (who are likely to have much less resources available) to cope with that.
• UK GDP fell 10.4% in the three months to April, with a 20.4% fall in April, according to the ONS. The ONS do urge caution as the figures have been unusually difficult to collect, but there is no doubt April saw the largest monthly GDP drop on record. Most of that is due to a sharp fall in the service sector, with the accommodation and food sector seeing a 40.9% drop over the three months, and the crucially important retail sector falling by 14.5%.

This week's updates from the ONS are here - reporting to 11 June. 30% of the workforce in businesses still trading had been furloughed by the end of May. Of all responding businesses:

• 78% had been trading for more than the last two weeks
• 5% had started trading again within the last two weeks after a pause in trading
• another 5% had paused trading but intend to restart trading in the next two weeks
• 12% had paused trading but do not intend to restart in the next two weeks.

It is interesting to note that the majority of businesses trading online state that online sales have at least held steady or increased. 32% have seen online sales increase. Another interesting thing to note is that the ONS are reporting a slight increase in the number of firms newly reporting VAT - in other words newly trading firms - in May. The number is well below the rolling five year average but is another piece of evidence suggesting that the worst for now has passed.

The ONS also report on Adzuna data but it's the same data as the IES are examining and it's running a few weeks behind so we'll cover that in the IES section later.

The ESRC are funding an initiative, the Economics Observatory, that aims to amalgamate information about the effects of COVID-19 on the UK economy. There is an interesting section on labour market effects that takes an academic perspective and looks at some of the evidence about the impact of the 2008 recession.

This week’s IES update of their analyses of Adzuna data (this time to 7 June) is here, and reports an upturn in vacancies of 6.5% on last week, to 364,000. This is now 64% down on the same period last year and reverses last week's small fall in new vacancies. Health, IT, education and social care jobs account for just over half of all vacancies - even though the number of jobs in IT has halved since March. Note that entry to all of these professionals is almost entirely graduate. Falls have been particularly steep in hospitality, sales and retail. There are some signs of a pick-up in vacancies on last month in a small number of job types - in particular in IT, accounting and finance, warehousing/ logistics, customer services and sales.

IES have also undertaken a coding exercise to examine some of the data at SOC level (only about half the vacancies could be matched). They find that associate professional, administrative and secretarial, and skilled trades roles have fallen by the largest percentages - the latter two are particularly concerning as they were badly hit by the last recession and had arguably not entirely recovered. The IES are still working on this data so we can expect more from it later.

Indeed have also been doing an excellent job analysing their own data and have published this analysis of job search terms on the site to the 6 June. The reopening of non-essential retailers has seen an increase in jobseeker interest, but the significant trend appears to be that searches for remote working are running at nearly four times their level this time last year.

The Recruitment and Employment Confederation (REC) have updated their Jobs Recovery Tracker, run in conjunction with EMSI, to June 7. This uses jobs data from a variety of online sources and so reports higher numbers than some others. But the findings are in line with other datasets, seeing a modest rise in the last week with 963,000 jobs reported and 112,000 new job postings in the last week. The largest increase in active job adverts was for customer service reps, rising by 18.6% in the first week in June, but active job postings for chefs (-4.5%), waiters and waitresses (-5.6%), catering assistants (-8.0%) and bar staff (-15.7%) all decreased significantly from the previous week. Primary school teacher ads fell by 6% in the week that the government announced that primary schools would not be fully reopening as they had intended.

The Resolution Foundation have spotlighted local and regional effects of COVID-19. The Foundation look at changes in unemployment claimant counts to map the effects of pandemic. Areas with a strong reliance on tourism and hospitality have been particularly affected and it has particularly affected parts of the country that already had high claimant counts - and often have older populations as well. There are some significant implications for inequality here.

LinkedIn report on global hiring trends and their chief economist, Karin Kimbrough, examined the situation on 11 June. China went back into positive year-on-year hiring growth by 5 June, and France and Singapore saw signs of a sustained sharp recovery. The US, Australia, UK and Italy are stable. LinkedIn data suggests hiring began to grow gradually starting four to six weeks after lockdown measures began to relax - where those measures were taken - but do urge caution due to differences in national government policies.

The Centre for Cities have two interesting pieces to report on this week. The first examines Job Retention Scheme data to look at the cities with the largest proportions of the workforce on furlough. 33.7% of the workforce in Crawley is currently furloughed, and 30% of the Burnley workforce, while at the bottom are Exeter, Cardiff, Oxford and Cambridge, all with less than 20% of the local workforce currently furloughed.

The second is a very interesting analysis of anonymised mobile phone data used to examine city centre footfall. The data are interesting but quite complex and not easily summarised, but seem to show that cities with a strong graduate employment market have significantly lower activity compared to their pre-lockdown levels than cities with a weaker graduate labour market. Presumably remote working plays an important role in this.

NACE, the National Association of Colleges and Employers in the US, have been polling employers, many of whom are big multinationals with UK graduate training schemes - so their findings are well worth considering.

• 7% of employers have revoked or will revoke full-time offers to graduates from the Class of 2020
• 31% of responding employers are delaying start dates for full-time hires
• among the employers delaying start dates, most (77%) report the length of the delay is one to three months
• 66% of employers plan to start full-time hires working remotely.

And finally, here’s the new Graduate Outcomes data for 2018 graduates!  The Irish Graduate Outcomes data, that is, produced by the Higher Education Authority with the Central Statistics Office. This survey examined Irish graduates from institutes of technology, colleges and universities nine months after graduation with an overall response rate of 51% (54% for university graduates).

Figures were quite similar to the UK's DLHE data, with 71% in full time work, 12% in further study and 4% unemployed. There's a wealth of interesting data in the report, and it is very well worth reading. For UK labour market specialists concerned about the dominance of London, it is worth noting that 46% of Irish first-degree graduates and 50% of taught postgraduates were working in or around Dublin nine months after graduation, while those concerned about under-employment will be interested to find that nearly half of the 4% of unemployed graduates had had a job at some point in the nine months prior to the survey. There are a lot of findings in here that will have relevance to the UK.

Written by

Charlie Ball

Head of higher education intelligence

Prospects