UK graduate labour market update: 19 December

Charlie Ball provides an overview of the latest labour market data as we move towards the end of 2022, including an ONS report on job quality

The UK employment rate for August to October 2022 increased by 0.2 percentage points on the quarter to 75.6% but is still below pre-coronavirus pandemic levels, the Office for National Statistics (ONS) reported:

• Over the latest three-month period, the number of employees increased, while self-employed workers decreased.
• The UK employment rate for August to October 2022 increased by 0.2 percentage points on the quarter to 75.6% but is still below pre-pandemic levels. Over the latest three-month period, the number of employees increased, while self-employed workers decreased and remain 588,000 below December 2019 levels.
• The most timely estimate of payrolled employees for November 2022 shows another monthly increase, up 107,000 on the revised October 2022 figures, to a record 29.9 million.
• Human health and social work (216,000), professional, scientific and technical activities (141,000), and information and communication (135,000) are the largest risers in employment. Note that these jobs are predominantly graduate. Indeed, the rise in the number of jobs in these three sectors alone over the last two years would comfortably accommodate the number of UK graduates in the last two years who have gone into work, and that is before we consider the number of graduates required annually to maintain staff numbers when older workers leave the market - which they have been doing in unprecedented numbers. With this in mind it is not surprising that there are substantial shortages across all of these sectors.
• The unemployment rate for August to October 2022 increased by 0.1 percentage points on the quarter to 3.7%. In the latest three-month period, the number of people unemployed for up to six months increased, and this increase was seen across all age groups.
• The economic inactivity rate decreased by 0.2 percentage points on the quarter to 21.5% in August to October 2022. The decrease in economic inactivity during the latest three-month period was driven by those aged 50 to 64 years. Looking at economic inactivity by reason, the quarterly decrease was driven by those inactive because they are retired.
• In September to November 2022, the estimated number of vacancies fell by 65,000 on the quarter to 1,187,000, but still remains very high in historic terms. The fall in the number of vacancies reflects uncertainty across industries, as respondents continue to cite economic pressures as a factor in holding back on recruitment.
• In September to November 2022, total vacancies fell by nearly 34,000 from the level of a year ago, which is the first annual fall since January to March 2021. Despite this, all industries remained above their pre-coronavirus January to March 2020 levels.
• In August to October 2022, the number of unemployed people per vacancy remained at 1.0, despite the number of vacancies falling and unemployment rising.
• Average regular pay growth for the private sector was 6.9% in August to October 2022, and 2.7% for the public sector; outside of the height of the pandemic period, this is the largest growth rate seen for the private sector and is among the largest differences between the private sector and public sector growth rates the ONS have ever recorded
• In real terms (adjusted for inflation) over the year, total and regular pay both fell by 2.7%.

Scottish data is here:

• The latest Labour Force Survey (LFS) estimates for August to October 2022 indicate that over the quarter the unemployment rate increased, while the employment rate increased and the inactivity rate decreased.
• The estimated unemployment rate (16+) in Scotland was 3.3 per cent, down 0.5 percentage points since pre-pandemic but up 0.2 percentage points over the quarter. Scotland's unemployment rate was below the UK rate of 3.7%.
• The estimated employment rate (the proportion of people aged 16-64 in work) in Scotland was 75.9%, up 0.6 percentage points since pre-pandemic and up 0.7 percentage points over the quarter. Scotland's employment rate was above the UK rate of 75.6%.

Welsh data has been summarised by the Senedd:

• Across the UK, Wales saw the largest increase in the inactivity rate compared to the same period last year (up 1.8 percentage points to 25.1%). Northern Ireland had the highest rate (26.7%) followed by the North East of England (25.2%) and then Wales (25.1%).
• Wales also saw the largest decrease in the employment rate compared to the same period last year (down 1.7 percentage points to 72.2%). The North East of England had the lowest employment rate (71.2%) followed by Northern Ireland (71.3%) and then Wales (72.2%).

Northern Irish data is here:

• The latest labour market release shows that payroll employee numbers and earnings have both increased over the year.  Measures of total employment, unemployment and economic inactivity continue to show improvement over the year but have not yet returned to their pre-pandemic position.
• The latest HMRC payroll data showed that payrolled employee numbers increased by 0.3% over the month and are 2.4% above the figure recorded in November 2021. Payrolled earnings also increased over the month, by 1.2% and are 7.5% above the figure recorded in November 2021.
• Employee jobs in NI increased over both the quarter and the year to 802,960 jobs in September 2022, to reach a new series high.  The quarterly and annual increases in employee jobs in September 2022 were largely driven by the services industry sector. The construction, manufacturing, and other industries sectors also reported an increase over the year.
• There were 50 redundancies confirmed to the Department in November 2022. Over the most recent 12-month period, 1,490 redundancies were proposed and 850 were confirmed.  The rolling 12-month total of confirmed redundancies is the lowest total in the time series and is the second consecutive total under 1,000.

Data from the English regions can be found here:

• For the three months ending October 2022, the highest employment rate estimate in the UK was in the East of England and the South West (79.2%) and the lowest was in North East (71.2%). Scotland (75.9%) had a joint record high.
• The largest increase in the employment rate compared with the same period last year was in Northern Ireland, which was up by 2.9 percentage points, with Wales seeing the largest decrease of 1.7 percentage points.
• For the three months ending October 2022, the highest unemployment rate estimate in the UK was in the West Midlands (4.9%) and the lowest was in the South West (2.0%), which was a record low; the East of England (2.7%) had a joint record low. 
• Northern Ireland had the largest decrease in the unemployment rate compared with the same period last year, decreasing by 1.2 percentage points, with the West Midlands seeing the largest increase of 0.1 percentage points.
• Between June 2022 and September 2022, workforce jobs increased in eight out of 12 regions of the UK. The East of England had the largest increase of 50,000 while Scotland and the South West had falls of 28,000 and 24,000 respectively; London had the highest proportion of service-based jobs at 92.2%, while the East Midlands had the highest proportion of production sector jobs at 12.9%.

The number of potential redundancies reported in the week to 4 December 2022 was 71% above the level in the equivalent week of 2021, while the number of employers proposing redundancies increased by 112% compared with the level in the equivalent week of 2021.

Vacancies stood at 16% above the pre-pandemic average and at 85% of the same time period in 2021.

The ONS have also released a very interesting new paper on job quality, analysing a series of indicators using Annual Population Survey data.

• Across the UK, 82% of employees worked satisfactory hours (48 hours or less and do not consider themselves underemployed). Northern Ireland had the highest proportion of employees working satisfactory hours (88%), London the lowest (78%)
• Workers with a postgraduate qualification were the most likely to report not working satisfactory hours, and least likely to report paid overtime. A third reported working unpaid overtime, by some considerable distance the highest. In what this writer suspects is a wholly related stat, workers in education were most likely to report unpaid overtime, as were professional workers and management workers.
• Workers with higher education qualifications were comfortably the least likely to be in low paid work, and the most likely to report good career progression opportunities and good involvement in their company’s decision-making processes.
• This is a really interesting report with a lot of data involved that generally paints a very positive picture for UK graduates, but also raises some very significant questions. I recommend everyone reads it and looks at the data for themselves.

The Bank of England have released their influential quarterly Agents Summary of Business Conditions:

• Companies expect to keep headcount flat over the coming year, suggesting that the labour market has started to loosen.
• Economic uncertainty and concerns about weakening demand have led many firms to implement hiring freezes, leave vacancies unfilled or let temporary contracts expire. A small minority of companies reported making redundancies. Some contacts said that staff turnover had decreased.
• However, in sectors where revenues continue to grow, such as business services, a significant number of firms said they expected to increase headcount.
• Recruitment difficulties eased slightly - reflecting weaker demand for labour - but remained elevated, especially in professional services, IT, engineering, catering and care services. There were only a few reports of workers deciding to return from inactivity.
• Pay settlements ranged between 5% and 7%, and many contacts said they had made one-off payments to help offset rising living costs. Companies said the outlook for pay settlements in 2023 was uncertain.

Indeed have an update on the Irish labour market to 9 December:

• Irish job postings on Indeed remain elevated. Job postings were 67% above the 1 February, 2020, pre-pandemic baseline, seasonally adjusted, as of 9 December, 2022.
• That's down slightly from 70% at the end of November but still above the previous peak of 65% seen back in February.
• Job postings continue to show resilience to economic headwinds amid high inflation and cost of living pressures, with many employers still experiencing staffing gaps. 
• Dublin's job postings are 39% ahead of their pre-pandemic levels, but this is still the lowest figure for any region of Ireland. This, is, however, in line with the experience of the UK, where London is in the same position relative to the rest of the country.

And finally, this sobering report from Nature about the experiences of Black researchers in UK science, featuring Professor Robert Mokaya, the only Black chemistry professor in the UK.

Written by

Charlie Ball

Head of labour market intelligence

Jisc