UK graduate labour market update: 18 August

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

The Office for National Statistics (ONS) have released the monthly labour market statistics from the Labour Force Survey (LFS), this time covering July.

The data is broadly encouraging, with strong vacancy numbers but it's clear that the jobs market has not recovered from the pandemic even as occupational shortages start to bite:

• The number of payroll employees showed another monthly increase, up 182,000 to 28.9 million in July 2021. However, it remains 201,000 below pre- pandemic levels.
• In the latest period (April to June 2021), there was a quarterly increase in the employment rate of 0.3 percentage points, to 75.1%, and a decrease in the unemployment rate of 0.2 percentage points, to 4.7%
• There were an estimated 953,000 job vacancies in May to July 2021, having grown by 290,000 compared with the previous quarter and 168,000 more than its pre-pandemic level (January to March 2020).
• Only one industry - wholesale and retail trade and repair of motor vehicles - remains below its pre-pandemic level. The 4.1% fall for this industry over the period as a whole is driven primarily by the retail subsector, which remains 10,000 vacancies below its pre-pandemic level of 85,000.
• All business size bands showed higher vacancy numbers on the quarter, and all size bands have now surpassed their pre-pandemic level.

Scottish data can be found here:

• The latest LFS estimates for April to June 2021 are little changed over the quarter. The unemployment rate decreased slightly as did the employment rate and economic inactivity rate increased.
• The estimated unemployment rate (16+) in Scotland was 4.3%, up 0.6 percentage points since December 2019 to February 2020 (pre-pandemic) but down 0.1 percentage points over the quarter. Scotland's unemployment rate was below the UK rate of 4.7%.
• The estimated employment rate in Scotland was 74.2%, down 1.2 percentage points since December 2019-February 2020 and down 0.1 percentage points over the quarter.
• Scotland's employment rate was below the UK rate of 75.1%.
• Early estimates for July 2021 from HMRC Pay As You Earn Real Time Information indicate that there were 2.4 million payrolled employees in Scotland, a decrease of 28,000 compared with February 2020.
• Median monthly pay fell sharply at the start of the pandemic but has been recovering since June 2020. Compared with the same period the year before, median monthly pay for employees in Scotland increased by 8.3%, slightly above the UK increase of 8.2% and above the pre-COVID peak annual growth of 5.5% in March 2019.

Meanwhile, data for Wales is also available:

• The employment rate in Wales was 74.2%. This is 0.3 percentage points up on the quarter and 0.2 percentage points down on the year.
• The unemployment rate in Wales was 4.1%. This is down by 0.4 percentage points over the quarter and up by 1.3 percentage points on the year.
• Early estimates for July 2021 indicate that the number of paid employees in Wales has increased by 9,800 (0.8%) over the month to 1.26 million. This is similar to pre-pandemic estimates from February 2020, and an increase of 38,100 since the lowest point during the pandemic in November 2020.

Northern Irish data is here too:

• The latest NI seasonally adjusted unemployment rate for the period April to June 2021 was estimated from the Labour Force Survey at 3.8%. The unemployment rate increased by 0.4 percentage points over the quarter and increased by 1.2 points over the year.
• The proportion of people aged 16 to 64 in work (the employment rate) increased over the quarter by 0.9 percentage points and remained unchanged over the year at 71.1%.
• Put into the context of the UK, NI had the second-lowest unemployment rate, the lowest employment rate and the highest economic inactivity rate of all the UK regions.
• During July 2021, 850 redundancies were proposed. Over the year from 1 August 2020 to 31 July 2021, 6,090 redundancies were proposed, a third less than in the previous 12 months (8,790). DELNI was notified of 250 confirmed redundancies in July, taking the annual total to 5,750. This total was 81% higher than last year.
• The number of employees receiving pay through HMRC PAYE in NI in July 2021 was 762,600, an increase of 1.1% over the month and 3.1% over the year. This is 1.3% above the pre-COVID total recorded in March 2020.

And data for the English regions is here as well:

• In July 2021, the numbers of payrolled employees in the North East, North West, East Midlands and Northern Ireland continue to be above pre-coronavirus levels.
• For the three months ending June 2021, the highest employment rate estimate in the UK was in the East of England (78.1%) and the lowest was in Northern Ireland (71.1%).
• The North West saw the largest change in employment rate estimate compared with the previous year, with a decrease of 2.0 percentage points. The West Midlands saw a record increase of 1.6 percentage points compared with the previous quarter (January to March 2021).
• For the three months ending June 2021, the highest unemployment rate estimate in the UK was in London (6.4%) and the lowest was in the South West (3.6%). London saw the largest change compared with the same period last year, with an increase of 1.5 percentage points.

GDP data for June came out last week through the ONS:

• Gross domestic product is estimated to have grown for a fifth consecutive month in June 2021, by 1.0%, but remains 2.2% below its pre-pandemic level.
• Services continued to be the main contributor to GDP's recovery in June 2021, growing by 1.5% in June 2021 following a revised 0.7% growth in May 2021.
• Health activities contributed the most to services output as visits to GPs increased in June 2021, while hospitality benefitted from its first full month of indoor dining since coronavirus restrictions were eased on 17 May.
• Food and beverage services activities was again the main contributor to the growth in consumer-facing services, growing by 10.1% in June 2021.
• Production output fell by 0.7% in June 2021, as planned temporary closures for maintenance of oil field production sites once again hit output.
• Construction contracted for a third consecutive month, with output down by 1.3% in June 2021 and now 0.3% below its pre-pandemic level.

The latest round of the ONS fast response experimental statistics on the impact of COVID were released on the 12th August:

• On 30 July 2021, the volume of total online job adverts was at 129% of its February 2020 average level. In the latest week, volumes of online job adverts remained above their February 2020 average levels in all UK countries and English regions.
• In the week to 7 August 2021, overall retail footfall in the UK was at 80% of the level seen in the equivalent week of 2019.
• 4% of employees were on furlough.
• 27% of the workforce worked mainly from home and 65% were mainly working from the same place they worked pre-pandemic.
• 77% of IT workers and 62% of professional services workers worked mainly from home last week.

Jisc Student Services have produced a new analysis of graduate migration patterns based on 2017/18 Graduate Outcomes data. I was the author and analyst.

Graduates are split into four groups based on home domicile, location of university and location of study – the original paper from 2005 where I first introduced these groups has been reprinted here (it's not been available for a while).

• Loyals - over 40% of all first-degree graduates from university have not moved away from their home region for study or work 15 months after graduation. This is a long-standing and resilient pattern and ought to be viewed as the commonest and most typical behaviour for graduates. Loyals are more likely to be women, and are more likely to work in the public sector, although they are still very likely to be in graduate-level employment.
• Returners - who move away from home for university, and return home to work on graduation. They are much the most likely to struggle in the jobs market - many have returned home as they have not secured employment elsewhere. That said, a comfortable majority are in graduate level employment. They are actually quite likely to be from affluent backgrounds.
• Incomers - this group is slightly larger than after six months (when they typically made up around 20% of the cohort). These are the group who demonstrate what is often viewed as 'typical' graduate job seeking behaviour - they go away from home from university and then move again, usually to a large city, on graduation. Nearly half of Incomers work in London and they are much the largest group of graduates employed in London. They also tend to be from the most affluent backgrounds.
• Stayers - this is the smallest group and consists of graduates who left home to go to university and who stayed close to their institution to work. This group is the second most likely to be in professional level employment, and are quite likely to be from backgrounds of low HE participation.

The patterns in the paper are the first to be analysed after 15, rather than six months, and the main feature appears to be a slight move of graduates who went home after graduation and then moved away again for work - this is not a very large movement and does not fundamentally alter the basic patterns.

I also discuss possible changes post-pandemic and argue that as few workers will switch to being entirely remote workers and most will transition from 100% office-based to a more hybrid model, and hence will still need to regularly go to work, it may not disrupt migration patterns very substantially - although I expect some changes.

Chambers of Commerce have been interviewing firms about their plans for furloughed staff. The survey, carried out by BCC, asked over 250 businesses with employees still on furlough what their response might be to employers' contributions to the scheme rising to 20% from 1 August:

• 18% said they would make redundancies.
• 24% said they would reduce hours or make staff part time.
• 13% said they would cancel recruitment or other investment plans.

TotalJobs have released their Q2 Hiring Index. This is compiled from insights from over 1,000 HR decision makers across the UK:

• 74% of businesses recruited, compared to 63% in Q1.
• Of recruiting businesses, 41% increased their hiring. In particular, medical & health (50%), hospitality & leisure (48%), media, marketing, advertising/PR & sales (48%) and transport & distribution (45%) increased their hiring above the average seen across the wider market.
• 14% of businesses paused recruitment at some point in the last three months (April-June), down from 23% in Q1.
• In Q3, 29% of businesses expect to increase recruitment, while over a quarter (27%) expect to increase spend for specialist roles.
• The actions employers are looking to take in the second half of the tear include re-introducing in-person working practices (39%), implementing or reviewing flexible working policies (31%) and boosting employee engagement (26%).

The Recruitment & Employment Confederation's (REC) newest Report on Jobs has been released. Data was collected 12 to 26 July:

• Permanent staff appointments and temp billings continued to rise rapidly. Growth of demand for permanent staff hit a fresh series record, while the upturn in temporary vacancies was the steepest since November 1997.
• Ongoing uncertainty stemming from the pandemic and concerns over job security contributed to another severe drop in candidate availability in July. Brexit was also cited as a key factor reducing the supply of workers, particularly temporary staff. Overall, candidate numbers fell at the second-sharpest rate in the survey history, easing only slightly from June's record.
• Data broken down by region showed marked increases in permanent staff appointments across all monitored English regions. London saw by far the quickest expansion, which was the fastest on record.
• The faster increase at the national level was supported by stronger rises in temp billings in London and the Midlands. Growth meanwhile softened in the South and North of England, but remained robust overall.
• Stronger increases in vacancies across the private sector offset softer rises in the public sector during July. In the private sector, demand for permanent staff expanded at a slightly quicker pace than for temporary workers. In contrast, short-term vacancies rose more quickly than permanent roles in the public sector.
• Demand for permanent staff rose across all of the ten monitored job categories during July, led by IT & Computing. Nonetheless, vacancy growth remained marked elsewhere. The softest expansion in demand was signalled for Retail workers, in common with signals seen from other data sources.

There was also a new Jobs Recovery Tracker:

• In the first week of August, there were 1.65 million active job adverts in the UK.
• There were around 204,000 new job adverts posted in the same week, the fourth highest weekly figure since the start of the pandemic.
• The last three weeks have seen the highest numbers of new job postings since mid-May, but labour shortages continue to affect many sectors.
• There was a significant increase in adverts for photographers, audiovisual and broadcasting equipment operators last week (+19.3%), as well as for insurance underwriters (+15.5%). The number of adverts for farm workers rose notably (+9.2%) as the harvest season continues, and there was also increased demand for plasterers (+8.2%) and painters and decorators (+4.7%).
• On the other hand, playworkers (-20.6%) and other teaching and educational professionals (-14.7%) saw the biggest declines in active job adverts as summer holidays continue and the sector experiences a cooling off period.
• Four out of the UK's top ten hiring hotspots were in North West England in the first week of August, with the highest growth in Blackpool (+5.2%)

BDO have also published their Job Index:

• The relaxation of further lockdown in rules in July caused the UK's job market to surge -the BDO Employment Index jumped 1.57 points from 106.05 in June to 107.62 in July, the highest level seen so far this year. This has largely been driven by the hospitality industry, prompted by the widespread re-opening of pubs, bars and restaurants.
• Businesses continue to report labour shortages, in part caused by the pandemic and Brexit. Despite this surge, the outlook for overall employment levels remains uncertain due to the scheduled withdrawal of the furlough scheme.
• The BDO Inflation Index remained largely stagnant in July at 103.70, a slight fall of 0.13 points from last month. This still represents the second highest reading since June 2017. The record high levels of inflation are being driven by broader pressure on global supply chains as well as more specific problems importing goods and materials due to Brexit. Manufacturers have borne the brunt of this - 72% reported an increase in input costs in July. Another factor driving input inflation is rising wages, caused by the strong labour market, meaning employers are paying more to attract and retain talent.
• Despite the relaxation of lockdown in July, BDO's Optimism Index fell by 0.53 points from June to July, reaching 111.92 points. This is a high level but rising costs seem to be making some employers more cautious.

The Resolution Foundation's new report, Levelling up and down Britain, takes a look at how the regions labour markets have been faring.

• While all places experienced a labour market shock from the pandemic, some areas have been slower to recover than others.
• High-wage areas across the UK have seen some of the largest falls in employee jobs since February 2020. In June 2021, Westminster (the UK's highest-wage area) had seen jobs fall by 3.6%, while in Leicester (the UK's lowest-wage area) the number of employees had actually increased by 1.0%.
• This trend is also seen outside of London, with high-wage areas like Edinburgh and Aberdeen experiencing large job falls of 2.2% and 3.5% respectively.
• This geographic trend comes despite research showing that lower-wage workers have borne the brunt of the pandemic's labour market impact. It is likely therefore that it is low-paid workers in high-wage areas that have experienced the bulk of this job fall.
• Areas which are more reliant on either tourists or commuters were initially the hardest hit by the pandemic. In February 2021, the two highest furlough rates were in South Lakeland (26% of workers) and the London Borough of Newham (23%) - areas which predominantly cater to tourists and commuters respectively.
• However, these areas have seen very different paces of recovery. By June 2021, as many restrictions eased, furlough rates dropped to 7% in South Lakeland, but in Newham they still stood at 11%.
• London's labour market in particular has struggled to recover, with employee jobs still more than 3% below their pre-crisis level, while several areas including Cornwall and Isles of Scilly, Gwynedd, and the Causeway Coast and Glens are already at or above pre-pandemic levels.

The CIPD have issued a new Labour Market Outlook for Summer 2021:

• 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 - has risen for the fourth consecutive quarter. At +32, it has reached its highest level since tracking began. The net employment balance is +33 in the private sector, +30 in the voluntary sector and +27 in the public sector.
• The net employment balance remains positive for all industries but is particularly high in healthcare (+58), hospitality/arts/entertainment (+48) and IT (+41). The shortage of candidates in all three industries mean that recruitment difficulties are likely to persist and even worsen in the medium term.
• The proportion of employers planning to recruit in the three months to September 2021 rose to 69%. Hospitality/arts/entertainment has moved from 26% of employers looking to hire in summer 2020 to 72% looking to hire in 2021
• The percentage of employers looking to make redundancies has settled at around 13%. This suggests that the end of furlough may see job losses at the lower end of expectations.
• 51% of employers in the hospitality, arts and entertainment industries report hard-to-fill vacancies compared with 39% for all employers. Healthcare (49%) and manufacturing (47%) are the industries with the lowest proportion of HTF vacancies. The lowest figure for a sector with widespread graduate recruitment is business services, where 'only' 36% of vacancies are hard to fill.
• The main ways employers intend to alleviate their HTF vacancies are; upskilling existing staff (46%), taking on more apprentices (26%), raising wages (23%) and hiring more UK graduates (20%).
• 81% of employers are planning a pay review in the next 12 months (until June 2022). Among these employers, a third (33%) expect pay to increase, which is significantly lower than spring 2021 (40%). Twelve per cent expect a pay freeze and just 1% expect a decrease.

The CIPD have also surveyed 2,000 young people aged between 18 and 30 about their career prospects:

• 43% of them feel the pandemic has harmed their long-term career prospects. This may be because they've lost their job, the industry or organisation they want to work in now has fewer openings, or working from home has meant they've missed out on networking and development opportunities.
• 50% of young people who are currently not in work have been so for 12 months. 49% of those unemployed are not confident about finding any work in the next three months - and 72% aren't confident about finding a job that meets their career ambitions and salary expectations in the next three months.
• 14% of young people not in work have applied for more than 30 jobs in the last three months, and 51% of those not in work have not accessed any support services to help them look for work.
• 44% of those who are not currently in work, but looking for employment, attended university.

City and Guilds have also surveyed young people - in this case, school leavers:

• 57% of UK 17 to 19-year -olds in their final two years of school say their decisions about post education work/training have been impacted.
• 20% say that because of the pandemic, they now want to stay in full time education for longer than they originally intended.
• 40% of 17 to 19-year-olds in their final two years of school report that they have planned or plan to go to university (note, this suggests the C&G sample underreports would-be graduates - this is not surprising given the aims of the organisation, but must be borne in mind when the report is read). This compares to 13% who say the same for apprenticeships, and 22% who plan to go straight into employment.
• 14% of those opting for university say that they're worried that it'll be difficult to get a job or apprenticeships, and 14% say it's the 'easiest thing to do'. 44% of school leavers who are choosing university consider this to be the best way to get a job, and 39% say they know they will get paid well if they have a degree.

So it's very timely that the extremely heavyweight consortium of Cedefop, the OECD, the European Commission, the European Training Foundation, the International Labor Organisation and UNESCO have released a new report on the importance of good career guidance:

• More than half of teenagers around the world plan on working in just ten occupations and that career aspirations are heavily shaped by socio-economic status, gender and migrant background.
• Teenage uncertainty about career ambitions - which is associated with poorer than expected adult job outcomes - increased by 81% in OECD countries between 2000 and 2018.
• European surveys show that careers linked to vocational education routes often suffer from negative stereotypes.
• Reviews of analyses of national longitudinal datasets show that better than expected adult employment outcomes are routinely associated with how school-age teenagers think about their future careers, whether they explore possible employment and the experiences that they have of potential future workplaces.
• Participation in career guidance activities has been linked with more positive attitudes towards school and better maths scores.
• Only four in ten adults access career guidance in a five-year period. These are mostly highly educated, young adults, in jobs that face no particular risk in the labour market.
• Many people are unaware of the availability of career guidance services aimed at adults. Vulnerable workers in low-skilled jobs (which are commonly at greatest risk of automation) tend to be least likely to access services.

YouGov have surveyed business leaders about remote working:

• 42% businesses will allow all (24%) or most (18%) employees to work from home with the last coronavirus restrictions lifting. This is a considerable increase compared with before the pandemic, when only one in four businesses (24%) had this policy, including 17% who allowed all staff to work remotely.
• 19% expect all their staff to work in the office full time - down from 30% pre-pandemic.
• Employers will ask their employees to come in one (7%), two (12%), three (11%) or four (6%) days.
• A fifth of businesses (19%) plan to let their staff choose whether to come in at all once all restrictions end - up from 11% before the coronavirus crisis.
• There does not appear to be any rise in businesses cutting costs and making all of their staff work remotely at 9% - similar to before the pandemic (8%).
• 36% of manufacturing and IT businesses and 41% of legal businesses have struggled to recruit in the last 3 months.

And Indeed have released another analysis of their UK vacancy data:

• Job postings were 19.6% above the 1 February 2020, pre-pandemic baseline, seasonally adjusted, as of 30 July 2021.
• Retail job postings saw the biggest improvement in trend during the past fortnight, followed by loading & stocking, cleaning & sanitation, customer service and therapy. Hospitality & tourism also saw a solid gain and has now surpassed the pre-pandemic baseline, having been among the slowest-recovering sectors until recently.
• By contrast, hiring slowed in the construction, nursing, media & communications, dental, mechanical engineering and logistic support categories.
• Posting recovery has been fastest in cities with higher shares of manufacturing, distribution, healthcare and education jobs, while areas reliant on hospitality, tourism and highly paid, white-collar, work-from-home jobs trail. Aberdeen (oil and gas) and Crawley (aviation) are highly exposed to specific sectors which have been hard-hit in the pandemic.

Written by

Charlie Ball

Head of higher education intelligence

Prospects