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UK graduate labour market update: 24 June

June 2020

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:

  • As lockdown eases things seem to be improving in those sectors that are getting back to work.
  • But we are a very long way at present from the labour market we had in February.
  • The graduate labour market has suffered significant damage, particularly in the arts, but things are far worse for non-graduates. Many key graduate employment sectors - in health, social care, IT, business services - have been much less affected than many other areas of the economy.
  • Things are also looking difficult for the self-employed although that may be partly because a lot of them work in sectors, such as the arts, that have been badly affected.
  • Many SMEs are short of cash and have no prospect of recruitment right now.
  • But many businesses feel they can get back to operation quickly once restrictions are eased and are keen to do so.
  • It is now very clear that there is a significantly greater interest in postgraduate study than usual. It's not yet clear how enthusiastic prospective students might be about a blended learning experience though.
  • The outlook for international student recruitment is very tough but many of our key international competitors have their own issues.
  • Many employers are yet to make firm decisions about recruitment for the rest of 2020 and are continuing to defer decisions. Some businesses have quietly shelved recruitment plans, but others are making plans to recruit if the opportunity and business conditions allow. Don't assume that the graduate labour market will remain this subdued all year.
  • 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), and the ability of institutions (which are likely to have much less resources available) to cope with that.

Prospects traffic update web data gives a useful view of the online searches of students and graduates.

We've changed our reporting method slightly, mainly to allow for a greater understanding of the traffic patterns we're seeing. We're now reporting on a rolling 30-day basis, compared with the same dates last year. Also we're now reporting on pageviews of jobs and courses, instead of searches.

  • Users: 5.0% up.
  • Pageviews on jobs: 11.0% up.
  • Pageviews on courses: 41.7% up.

This new data shows that we're continuing to see good engagement on both employer and PG inventory, with views and clicks of both areas higher than this time last year.

The long-awaited data from the Graduate Outcomes survey of university leavers from 2017/18 was released last week. (Just to declare an interest, I sat on the Steering Group.) Overall 71.8% of UK domiciled first-degree graduates from the UK were working after 15 months. 8.3% were studying, and 9.5% were combining both work and study (mainly working full time). 5.1% were unemployed and 5.2% were engaged in other activity.

Here's a blog I wrote for Jisc on the data itself, and another I wrote for WonkHE on why it's still relevant in the COVID-19 era. There will be a great deal more on this data over the coming weeks and months as more is released and data users get their own datasets.

This week's updates from the ONS are here - reporting to 18 June. Nearly half of all working adults (49%) had worked from home between 11 and 14 June 2020, an increase from 41% the previous week. This was mainly driven by adults shifting from not actively working to working. 5% of the workforce had returned from furlough leave between 18 May and 14 June 2020.

A survey of 1,500 hiring managers found that more than half reported working remotely has gone better than expected.

The House of Commons Library have updated their briefing on the effects of pandemic on the economy, largely to take into account the ONS labour market update. Although much of the content is familiar to regular readers of these updates, it remains an excellent resource as an overview of the whole impact on the UK, and particularly important from a policy point of view as this is the core of Commons briefings on the topic.

The ESRC's Economics Observatory, has updated with a very insightful and thoroughly referenced analysis of the prevalence, effects and possible future of homeworking. Of particular interest is the latter section referencing work from the US. A survey of 1,500 hiring managers found that more than half reported working remotely has gone better than expected, while only one in ten said it has gone worse.

In a similar vein, McKinsey have produced this discussion paper on the future of work in Europe. It's a chunky 52-page number, that covers a lot of very interesting ground, but particularly eye-catching is Exhibit 13 (we don't do 'Figures' in this kind of analysis), which states that current trends towards a higher level of education in the European workforce are not going to abate with automation and post-pandemic. Almost all the areas of employment expected to see growth are those where tertiary education is the norm, while with very few exceptions those expected to shrink ask for lower levels of qualification. There seems very little evidence that graduates will be in less demand in the next few years. The whole paper is very highly recommended.

The data shows tentative signs of recovery in the labour market, particularly in areas such as legal, IT, sales, accounting/finance, and engineering.

Time to revisit the IZA's magnificent collection of global data to examine the effects of COVID-19. Data nerds everywhere can find things to bewitch and delight them within. I am delighted to report Prospects Luminate is among the global resources listed.

The IES have updated their ongoing analysis of Adzuna data on job vacancies from the government's Find a Job site, to 14 June. 105,000 new vacancies were notified in the week to 14 June, well up on the previous week. There were 367,000 notified vacancies, again a healthy increase on the previous week and the best since the mid-April surge after Easter - but still running well below the levels of last year. The IES remain cautious but suggest that the data shows tentative signs of recovery in the labour market, particularly in areas such as legal, IT, sales, accounting/finance, and engineering. Notably, these are all areas where the workforce are predominantly graduate.

However, the comparison of unemployment and vacancy data, which reflect the situation in mid-May before any increase in vacancies emerged, shows that there were over eight unemployed claimants per vacancy, up from around four and a half in April. This is the average across the country, and in some ex-industrial and urban areas outside of the south and east of England there may be as many as 50 claimants per vacancy.

IES have also produced a commentary on last week's job figures from the ONS. It is characteristically shrewd and well worth reading. They contend that the data shows a fall in employment of around 600,000, a fall in self-employment of around 300,000 and that overall hours worked have also fallen dramatically. They conclude that May data will likely show claimant unemployment will rise above three million next month and may well be higher than the peak of 3.1 million reached in the 1980s recession and that unemployment may go significantly higher once the furlough scheme unwinds.

Encouragingly, more employers are planning to expand their workforce than reduce it in the next three months.

The Recruitment and Employment Confederation (REC) have surveyed employers along with ComRes for their JobsOutlook. Business confidence in the UK economy improved between May and June, although it remains strongly negative. Far more encouragingly, more employers are planning to expand their workforce than reduce it in the next three months. The net balance now sits at +6, an improvement of 11 percentage points from early May. Employers' hiring intentions for the medium term (the next 4 to 12 months) also improved, rising from net: +6 in early May to net: +15 in June.

One particular area that has been affected by pandemic is work experience, and this has prompted a good deal of interesting discussion of how virtual work experience might be organised and managed. FE Week carries an interesting piece looking at this question.

Another area that has seen a substantial hit are the creative industries. The Creative Industries Federation commissioned Oxford Economics to examine the impact of pandemic on the sector.  The report predicts a 119,000 drop in employment among employees and a further 287,000 job losses among self-employed workers, compared to 2019 levels. In total, 406,000 creative jobs - one in five of the entire industry workforce - are considered at risk. More than one in three self-employed respondents to the research reported having had all their freelance contracts terminated by Q1 2020. 46% had experienced half of their freelance contracts terminated. The report includes sub-sector breakdowns.

PWC are back with another examination of the economic effects of COVID-19, right up to 24 June. Much of it discusses the UK labour market figures from the ONS. PWC remark that 79% of businesses were trading at the end of May and another 9% were expecting to be trading by the middle of June. Businesses also seem to have stabilised their cash reserves, with around 43% of businesses having  cash reserves of up to six months. The cash position for larger businesses  tends to be better. The economic projections are useful but not joyful reading; the consensus forecast currently has UK GDP falling by 9.2% this year - needless to say that is new territory for the UK economy. There is also a very interesting section on trade which makes sobering reading and is likely to have a bearing on the UK labour market in time.

The Institute of Fiscal Studies have published their own analysis of the regional impacts of COVID-19 in England, focusing on three key areas of vulnerability. The whole report is interesting, but our attention is with the labour market impacts. The IFS find that more affluent local authorities might face a bigger labour market challenge than first anticipated because many workers are moving from one local authority to another to work. LAs that are not usually vulnerable to this kind of shock appear to be under threat, and if many workers in shut-down sectors live in a different local area from where they work, it is possible that the economic hit will be felt in a different place from the need for social support, which is a significant policy challenge.

In addition, the IFS note that one effect of this crisis may be to expose many workers to the means-tested benefits system for the first time. The way this affects their perception of the system and of unemployment in general may be a long-term effect of the pandemic on policy.

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