UK graduate labour market update: 16 September

In our latest update, Charlie Ball summarises the key economic data and trends of relevance to the graduate labour market in the UK and Ireland

UK GDP is estimated to have grown by 0.2% in July 2022 following a fall of 0.6% in June 2022:

• Services grew by 0.4% in July 2022, after a fall of 0.5% in June 2022, and was the main driver to the rise in GDP. Information and communication grew by 1.5% and was the largest contributor to the services growth in July.
• Production fell by 0.3% after a fall of 0.9% in June 2022. This was mainly because of a fall of 3.4% in electricity, gas, steam, and air conditioning supply.
• Construction also fell in July 2022 by 0.8%, after a fall of 1.4% in June 2022. The decrease in monthly construction output in July 2022 came solely from repair and maintenance, which fell 2.6%.

The UK employment rate for May to July 2022 for people aged 16 to 64 years decreased by 0.2 percentage points on the quarter to 75.4% and is still below pre-coronavirus pandemic levels.

The overall picture is of a labour market with fewer vacancies and more unemployment than previously, but whose labour force is also falling at about the same rate as vacancies. This means that there are still more vacancies than unemployed people, and so long-standing recruitment difficulties do not look likely to be significantly eased at present.

Early estimates for August 2022 indicate that there were 29.7 million payrolled employees, a rise of 2.8% compared with the same period of the previous year. This means a rise of 803,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees increased by 0.2% in August 2022, which is equivalent to 71,000 people. The early estimate for August 2022 shows that the annual growth rate has fallen this month, but still shows relatively high growth.

Total hours worked decreased compared with the previous three-month period, and are still just below pre-pandemic levels. Compared with the previous three-month period, total actual weekly hours worked decreased by 3.5 million hours to 1.04 billion hours in May to July 2022. This is still 11.1 million hours below pre-pandemic levels (December 2019 to February 2020). However, total actual weekly hours worked by women exceed pre-pandemic levels. After falling sharply in the early stages of the coronavirus pandemic, the average actual weekly hours worked have now returned to levels similar to those seen before the coronavirus pandemic, with the average hours worked by part-time workers 0.1 hours above their pre-pandemic levels. Consequently, the shortfall in total hours compared with pre-coronavirus pandemic levels is linked to the reduced numbers in employment.

The number of full-time employees increased during the latest three-month period, and this increase was driven by men.

Part-time employees have generally been increasing since the beginning of 2021, showing recovery from the large falls in the early stages of the coronavirus pandemic. There was however a decrease in part-time employees during the latest three-month period.

The number of self-employed workers fell in the first year of the coronavirus pandemic and has remained low. However, the number has increased during the latest three-month period for both full-time and part-time self-employed. This increase was driven by women.

Economic inactivity increased, during the latest three-month period, driven by those inactive because they are students or long-term sick. The number of those economically inactive because they are students have been decreasing since mid-2021 but has increased in recent periods. The increase in economic inactivity compared with the previous three-month period was also driven by the long term sick, who increased to a record high.

In May to July 2022, reports of redundancies in the three months prior to interview increased by 0.3 per thousand employees, compared with the previous three-month period, to 2.3 per thousand employees. This is, historically, a very low figure.

The number of job vacancies in June to August 2022 was 1,266,000, a decrease of 34,000 from the previous quarter. There are still more vacancies in the UK than unemployed people.

In June to August 2022, vacancies were 470,000 (59.1%) above the January to March 2020 pre-coronavirus level, and 215,000 (20.4%) above the same time last year.

The effect of COVID-19 on job numbers has varied across the labour market, with ten of the 20 industry sectors still below pre-pandemic levels. The hardest hit sector, wholesale and retail trade; repair of motor vehicles and motorcycles, saw the largest fall in job numbers at 204,000. Most of the jobs in this sector are below graduate level. However, large increases in other industries: administration and support activities (up 181,000), human health and social work (up 180,000), and professional, scientific and technical activities (up 146,000), have helped to increase workforce jobs above pre-pandemic levels. Notably, these three industries, alongside education, and information and communication are at record levels. The majority of the jobs this covers are graduate level.

Scottish labour market data is here:

• Early seasonally adjusted estimates for August 2022 indicate that there were 2.43 million payrolled employees in Scotland, an increase of 1.8% (44,000) compared with February 2020. This compares with the UK where the number of payrolled employees has increased by 2.5% over the same period.
• The estimated unemployment rate (16+) in Scotland was 3.1%, down 0.7 percentage points since December 2019 to February 2020 and down 0.2 percentage points over the quarter. Scotland's unemployment rate was below the UK rate of 3.6%.
• The estimated employment rate in Scotland was 75.2%, down 0.1 percentage points since December 2019 to February 2020 (pre-pandemic) and down 0.3 percentage points over the quarter. Scotland's employment rate was below the UK rate of 75.4%.

Welsh data is here:

• Early estimates for August 2022 indicate that the number of paid employees in Wales has increased by 1,400 (0.1%) over the month to 1.30 million. This is above the pre-pandemic estimates for February 2020, and an increase of 73,200 since the lowest point of the pandemic in November 2020.
• The employment rate in Wales was 72.0%. This is down 1.9 percentage points on the quarter and down 2.4 percentage points on the year.
• The unemployment rate in Wales was 3.2%. This is down 0.3 percentage points on the quarter and down 1.0 percentage points on the year.
• During the year to March 2022, the average number of hours worked in Wales was 31.5 hours per week, an increase of 3.4 hours from the previous year. Data for the year to March 2021 estimated the lowest number of hours worked since records began in 2004.
• Men in Wales worked an average of 35.4 hours per week and females worked an average of 27.2 hours per week

Northern Irish data is here:

• The number of employees receiving pay in NI in August was 779,600, an increase of 0.2% over the month and an increase of 2.7% over the year.
• In August 2022, the seasonally adjusted number of people on the claimant count was 35,600 (3.8% of the workforce), which was unchanged from the previous month's revised figure. The August claimant count remains higher than the pre-pandemic count in March 2020 (by 19.4%).
• The total number of weekly hours worked in NI was estimated at 27.4million, a decrease of 2.0% on the previous quarter and an increase of 4.2% on the equivalent period last year.

And data from the regions is here:

• For the three months ending July 2022, the highest employment rate estimate in the UK was in the East of England (78.6%) and the lowest was in Northern Ireland (69.6%).
• The largest increase in the employment rate compared with the same period last year was in Scotland and the West Midlands, both up by 1.1 percentage points, the largest decrease was in Wales down by 2.4 percentage points.
• For the three months ending July 2022, the highest unemployment rate estimate in the UK was in the North East (4.7%) and the lowest was in the South West (2.7%). Three regions had record lows, the North West (3.5%), London (4.2%) and Scotland (3.1%).
• All regions in the UK saw a decrease in the unemployment rate compared with the same period last year, with London having the largest decrease at 1.8 percentage points, and Yorkshire and The Humber the smallest at 0.2 percentage points.
• For the three months ending July 2022, the highest economic inactivity rate estimate in the UK was in Northern Ireland (28.2%) and the lowest was in the East of England (18.9%). Wales saw the largest increase in the inactivity rate compared with the same period last year by 3.5 percentage points, and both Yorkshire and The Humber and the West Midlands saw a fall of 0.6 percentage points.
• Between March and June 2022, workforce jobs increased in 10 out of 12 regions of the UK, London had the largest increase of 89,000, while Scotland and the East of England had falls of 13,000 and 9,000 respectively. London had the highest proportion of service-based jobs at 92.0%, while the East Midlands had the highest proportion of production sector jobs at 12.5%.

The latest rapid indicators of economic and social change are now available from the Office for National Statistics:

• The number of total online job advertisements has decreased in six of the last eight weeks, falling by 10% in the eight weeks from 15 July to 9 September 2022. It was broadly unchanged in the latest week, though, there were falls in 13 of the 28 categories, with the largest decrease in the 'legal' category, which fell by 8%. The largest week-on-week increase was in the 'scientific and QA' category, which rose by 11% when compared with the previous week.
• The largest week-on-week regional growth in online job adverts was in Northern Ireland, with an increase of 3%. Meanwhile, the largest weekly fall was in the North East, which fell by 4%. Three of the 13 UK countries and English regions saw increases in online job adverts compared with the same day last week.
• Voluntary dissolution applications increased by 9% from the previous week in the week to 9 September 2022, while company incorporations increased by 19% over the same period.
• Potential redundancies in the week to 4 September 2022 were 53% of their pre-coronavirus (COVID-19) level, while the number of employers proposing redundancies are now 69% of their pre-coronavirus levels. There is little sign of coming significant job loss despite many unfavourable economic indicators.
• However, a net 2% of firms reported increasing turnover in August 2022 when compared with the previous month.
• A net 42% of trading businesses reported an increase in the prices of goods or services bought in August 2022 compared with July 2022. In comparison, a net 18% of businesses reported an increase in the prices of goods or services sold over the same period.

The ONS have also released results from their fortnightly business survey:

• In late August 2022, 21% of businesses with ten or more employees reported they were on a variable rate for electricity, with 10% reporting that their fixed or hedged prices would expire by 31 December 2022; for gas these percentages were 16% and 6%, respectively.
• Input price inflation and energy prices remain the top two main concerns reported by businesses for October at 26% and 22%, respectively.
• In August 2022, 21% of businesses with ten or more employees, reported experiencing global supply chain disruption; this has remained broadly stable since March 2022.
• Nearly two-thirds (62%) of trading businesses reported that they were able to get the materials, goods or services they needed from within the UK in August 2022, however, this includes 14% of businesses that had to change suppliers or find alternative solutions to do so.
• The percentage of businesses with ten or more employees who were experiencing worker shortages in late August, has remained broadly stable since early April 2022, at 36%. 56% of health or social care employers report worker shortages.
• In August 2022, 51% of businesses with ten or more employees reported they were improving their management practices in some way, with 37% consulting employees about potential improvements and 30% receiving formal training either online (16%) or in person (14%). For all business sizes, the percentage of businesses that reported they were not improving management practices, was 36%. The education (private sector and higher education businesses only) industry reported the largest percentage, at 43%.

The Recruitment & Employment Confederation (REC) have released their latest Report on Jobs:

• Recruitment activity increased again in August, but the rate of increase has slowed.
• The recent slowdown in hiring reflected greater economic uncertainty, rising costs and candidate shortages, according to recruiters.
• Total candidate numbers fell, which combined with the increased cost of living led to further sharp increases in starting pay for both permanent and temporary staff. A generally tight labour market, fewer foreign workers and a reluctance to seek out new roles due to uncertainty weighed on staff supply.
• Stronger increases in permanent placements in London and the Midlands helped to offset a slowdown in the South of England and a renewed fall in the North of England.
• All four monitored English regions recorded marked increases in temp billings, with the quickest expansion seen in London.
• Latest data signalled a further slowdown in vacancy growth across the private and public sectors in August. The steepest increase in demand was seen for private sector staff - with permanent and temporary positions rising at identically sharp (albeit slower) rates.
• Nursing/Medical/Care topped the permanent staff demand league table in August, followed closely by Hotel & Catering - this is in line with other national data from other sources.

Reed's August Market Review is here:

• 237,157 adverts were posted on Reed.co.uk in August, up 9% from 217,707 in July.
• Applications were up in August by 2% month on month.
• The sectors with the most significant increase in jobs posted included Marketing & Media (30%), IT (26%), and Financial Services (25%).
• IT, Security and Safety, and Legal applications were all up by 6% compared to last month.
• Applications made in London were up by 6%
• Education jobs vacancies were down by -16% MoM compared to July

New data for the Irish HE sector in 2021/22 has been released by the HEA:

• In 2021/22, there were 246,299 students - up 0.3% on 2020/21 figures. Almost two-thirds were studying Honours Degrees (61.6%), and 11.3% were studying a taught Masters. In 2020/21, these were 60.8% and 10.8% respectively.
• Ordinary degrees are steadily declining in popularity (6.8% in 2021/22 and 7.3% in 2020/21, compared to 11.3% of 2015/16 students).
• Almost a quarter of students graduating from higher education earn a First Class Honours degree.

And the British Psychological Society published a piece discussing career aspirations amongst psychology graduates.

Written by

Charlie Ball

Senior consultant: labour market intelligence

Jisc