UK graduate labour market update: 25 August

Prospects' head of higher education intelligence, Charlie Ball, provides his regular update on the impact of the COVID-19 recession on the graduate labour market 

What we're hearing:

• Not surprisingly, we're officially in a recession.
• The graduate labour market has suffered significant damage, particularly in the arts - which may be the worst-affected sector in the UK. But things are far worse for non-graduates. Many key graduate employment sectors - in health, social care, IT, finance - have been much less affected than many other areas of the economy. Retail, hospitality, travel and accommodation employers have all taken long term hits.
• The level of vacancies is running at about 50 to 60% of normal rates.
• Things are also looking difficult for the self-employed, partly because a lot work in sectors, such as the arts, that have been badly affected and partly due to sheer lack of cash reserves, although the sector has been more resilient than originally feared.
• Domestic student numbers seem to have held up strongly as young people opt for more education rather than taking their chances in an exceptionally difficult jobs market, but applications are not the same thing as actual enrolments.
• It is now very clear that there is a significantly greater interest in postgraduate study than usual and students may be willing to accept some virtual delivery if they're assured it is only temporary.
• The outlook for international student recruitment is very tough but many of our key international competitors have their own issues and many, possibly most, prospective international students still seem to be at least considering study.
• 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 (at least).
• The collapse in employment in retail and services is likely to affect term-time jobs for students in the future and thus the ability for students from less advantaged backgrounds to support themselves at university.
• The pandemic is going to profoundly change the nature of work for many employees and professional services and IT workers in particular have proved as productive at home as in the office, so a widespread move to homeworking is likely for many graduates.

People Management continue their liveblog on employer actions in the pandemic. 

This week's updates on the effects of pandemic on UK society and the economy from the ONS are here,  reporting to 20 August.

• 95% of UK adults wore a face covering when leaving the house in the last week.
• In the week starting Saturday 8 August, there were 3,002 new business incorporations per working day on average, a decrease from the previous week. There were 865 voluntary dissolution applications per working day on average.
• Between 7 and 14 August 2020, the total volume of online job adverts decreased from 62% to 58% of its 2019 average, partially offsetting the large increase of the previous week.
• Preliminary results from the 11th wave of the Business Impact of Coronavirus Survey (BICS, which left the field this weekend) suggest that 12% of the workforce remain on furlough leave, with 67% of furloughed employees receiving top ups to their pay.
• Of businesses paused or currently trading, 10% said that their risk of insolvency was 'moderate' (this is a lot of businesses) and 1% said it was 'severe'.

HMRC have issued figures on the effects of COVID-19 on business and the take up of Government interventions.  Over the course of the pandemic, 1.16m employers have furloughed a total of 9.6m employees - data here. Meanwhile, 2.6m people have applied for the Self-Employment Income Support Scheme by the end of July. That data is here.

There isn't much commentary here because the Resolution Foundation have produced some characteristically excellent and insightful analysis of this data.

British Chambers of Commerce have updated their Business Impact Tracker, to the 19 August . This survey covers 502 business, 97% of which were SMEs.

• 38% of firms reported improved revenue from UK customers.
• More than 1 in 3 of businesses say they have three months or less worth of cash in reserve.

The Recruitment and Employment Confederation (REC) released their Jobs Outlook report on 19 August. In May-July, employer intentions to hire agency workers in the short term (the next three months) reached net: +6, the highest level since October-December 2019. Employers' intentions to hire permanent staff also recovered to net: +5. Overall, firms are slightly more likely to look to bring on temporary workers than permanent members of staff in the next three months. This is the first time that has been the case since May-July 2018.

When asked why temporary agency workers are important for their organisation, more employers say that agency workers are important for short-term access to key skills. The proportion highlighting this factor rose from 53% in January-March, before lockdown measures were introduced, to 67% in May-July.

The Learning and Work Institute have been examining the future of the Minimum Wage.

• A majority of businesses don't believe an increase will have a negative impact on them or wider UK employment levels. In fact, employers believe an increase would boost the nation's productivity.
• A majority of businesses (54%) supported the UK government's policy of increasing the NLW to two-thirds of median income (projected to reach £10.50) by 2024.

Engineering UK have surveyed young people (aged 11 to 19) on their attitude to STEM.

• The pandemic is deepening gender differences in career aspirations in engineering or technology.
• The gender gap when it comes to choosing a career in engineering or technology is still very much prevalent.
• Young people are concerned going to university or becoming an apprentice will be more difficult in the future.
• Job security and job availability are important factors for young people when considering their future career choices.

The Institute of Employment Studies have resumed their vacancy analyses, this time on a monthly basis. This latest examines the month to 9 August.

• The overall level of vacancies at 9 August was 504,000.
• The overall level of vacancies has increased by almost 40% compared to last month, or by more than 140,000 vacancies.
• Vacancy levels remain lower by 316,000 posts compared to before the crisis began, and there are 393,000 fewer vacancies than at the same time last year.
• In the first week of July vacancy levels were 65% lower than for the equivalent week last year, whereas on the first week of August vacancy levels were 44% lower.
• Jobs in healthcare, social work and teaching have held up over the last four months.
• There were an estimate 6.8 claimant unemployed for every available vacancy, up from 1.5 before the crisis began, but down from 7.9 reported for May.

The Centre for Cities have updated their fascinating data on city centre footfall. As always this is essentially impossible to summarise but it has a lot of interactivity and it is remarkably easy to lose a lot of time examining it!

The LSE have looked at the lessons previous recessions can teach us about the COVID-19 downturn.

• The COVID-19  crisis  and  the  three  most recent  UK  recessions  share  the  common  feature  of  a  disproportionate  impact  on  the  most vulnerable (the poorest, the youngest, the least educated, and ethnic minorities).
• As  of  June  2020,  the  youngest  group  (18-24)  are  14.3  percentage  points  more  likely  than average to be furloughed or suffer a cut of at least 50% in hours worked (analogous  figures  for  those  with  only  GCSE  qualifications  and  for  black workers are 8.5 and 7.8 percentage points respectively).
• Previous   recessions   brought   significant   long-term   damage   (such   as   lower   future employment,  wage  penalties)  to  those  most  affected  and  those  just  entering  the  UK workforce.
• The LSE are concerned that the adverse effect on full-time education leavers might be exacerbated in this crisis, due to school and university closures.

The Institute of Public Policy Research (IPPR) have issued a report making recommendations on how the UK economy might recover from the pandemic.

• The IPPR estimate that one million furloughed jobs could be lost permanently, in the sectors most heavily affected by the crisis so far, such as hospitality, retail, entertainment, manufacturing, support services and construction.
• People with disabilities, carers, those in the shielded group and those with caring responsibilities are all significantly more likely to be in formal or informal stages of redundancy proceedings than the general population.
• Retail, hospitality, manufacturing and construction are among the industries with the largest number of employees on furlough and are those which could take the longest to recover.
• Most workers typically move within sectors rather than between them, so without support and training to switch jobs many risk long term unemployment. Those working in  the hardest hit sectors have a lower than average level of qualifications which reduces their potential options.

The Creative Industries Policy and Evidence Centre have released 'For Love Or Money', an examination of DLHE data for creative arts, dealing particularly with motivations and earnings data. It's not got a lot to do with COVID-19 (at this point, although the creative arts sector has been hit) but it's an interesting examination of some of the evidence that develops a useful counter-narrative to some of the jaundiced views of the value of these qualifications.

Written by

Charlie Ball

Head of higher education intelligence

Prospects