UK graduate labour market update: 27 October

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

• The economy is improving, but we're a long way from where we were at the start of the year and a prolonged return to lockdown will be a blow to small businesses and sectors like culture, retail and hospitality that have already had a hard time.
• The level of vacancies is running at somewhere around 55-60% of normal rates and seems to be climbing - slowly.
• Graduate training schemes are down but probably not as much as most of the rest of the market, and some recruiters are anticipating a potential rapid recruitment round if and when economic conditions allow.
• The graduate labour market has suffered significant damage, particularly in the arts - which may be the worst-affected sector in the UK. Many key graduate employment sectors - in health, social care, IT, finance - have been less affected than other areas of the economy. Retail, hospitality, travel and accommodation employers have all taken long term hits.
• It looks like there'll be a two-track recovery (US economists are calling it 'K-shaped'), with some sectors, particularly those where remote working is effective, recovering rapidly and others slowly. As most of the rapidly-recovering sectors are highly graduate this may exacerbate the already serious social and economic divides in the country.
• 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
• Undergraduate students have shown up for the start of term in large numbers but COVID outbreaks and lockdown restrictions are affecting morale, and mental health and dropout rates are concerns. But we must also be mindful that young people not in employment have very few alternative options at the moment.
• Formal and conventional internships as we knew them pre-pandemic are down but employers are trying to find alternatives and there is likely to be quite a diverse and innovative set of work experience offers.
• Apprenticeships have been hit hard in SMEs but seem to be recovering in larger businesses.
• A lot of employers are adopting virtual recruitment strategies which are likely to stick post-pandemic.
• 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. The large majority of workers in tech and professional services are currently working from home, and if this pattern persists it will significantly change many aspects of society, particularly in our cities.
• London seems to be taking a particular hit, with footfall and vacancies well below normal levels. It remains a very strong graduate economy though.
• Many of the big graduate training schemes are in the process of enacting plans for their 2021 recruitment round. At present we are hearing of some pauses, but they seem to be the minority at the moment. A reasonable view of the 2021 round right now is that it may be down on a normal year but better than the 2020 round.

This week's news and reports

The Government have issued a revised Job Support Scheme, designed to replace the previous furlough scheme from November

• Employers will have to pay for a minimum of 20% of usual hours worked, and 5% of hours not worked.
• The government will now fund 62% of the wages for hours not worked.
• Cash grants of up to £2,100 per month are available primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in Tiers 2 and 3. These grants will be available retrospectively for areas who have already been subject to restrictions.
• The government will provide two taxable grants to support those self-employed workers experiencing reduced demand due to COVID-19 but are continuing to trade, or temporarily cannot trade.

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

The ONS also have reporting on the social impacts of COVID-19 to the 22 October:

• The proportion of adults in Great Britain who travelled to work decreased by five percentage points, to 60% as stricter restrictions came into force in many important labour markets.
• Between 9 and 16 October 2020, total online job adverts increased to 66% of their 2019 average. Energy, oil and gas (although this is a volatile category), engineering and IT all saw significant rises, but retail and hospitality both fell marginally.

The World Economic Forum have produced the Future of Jobs 2020 report, looking at the effects of pandemic on global labour markets and the outlook to 2025

• Jobs held by lower wage workers, women and younger workers were more deeply impacted in the first phase of the economic contraction due to COVID-19.
• Employers expect that by 2025, increasingly redundant roles will decline from being 15.4% of the workforce to 9%, and that emerging professions will grow from 7.8% to 13.5% of the total employee base of company respondents.
• WEF estimate that by 2025, 85 million jobs may be displaced by a shift in the division of labour between humans and machines.
• The top skills and skill groups which employers see as rising in prominence in the lead up to 2025 include groups such as critical thinking and analysis as well as problem-solving, and skills in self-management such as active learning, resilience, stress tolerance and flexibility.
• 50% of all employees will need reskilling.
• 94% of business leaders report that they expect employees to pick up new skills on the job.
• 43% of businesses surveyed indicate that they are set to reduce their workforce due to technology integration, 41% plan to expand their use of contractors for task-specialized work, and 34% plan to expand their workforce due to technology integration.
• The top 20 emerging jobs expected to be of increasing demand in the next five years are all graduate level.
• Graduate jobs the WEF predict to see decreasing demand in the next five years include accountants and auditors, business service managers, financial analysts, HR and (rather oddly under the circumstances) trainers.
• This is a big, chunky report full of interesting insight and well worth a read if you have time.

The CBI and McKinsey have released Learning for Life, looking at skills gaps and training to 2030. The authors state that:

• Nine in ten workers will need some form of reskilling by 2030.
• 26m workers will require upskilling as their role evolves.
• Workers will need reskilling in six core areas by 2030:21 million will need basic digital skills, five million will need leadership and management; 14 million will need interpersonal and advanced communication, five million will need teaching and training, nine million will need STEM knowledge, and 16 million will need critical thinking and information processing.
• Five million workers will go through a more fundamental job change and require retraining.
• 33%  of adults say that they have participated in learning during the previous three years.
• On average, participation in training for those in lower-skilled jobs (and most at risk of automation) is 40% lower than that for high skilled workers across all OECD countries.
• Half of those in the lowest socioeconomic group in the UK have received no training since leaving school.

McKinsey have also released a report on the effect of the pandemic on SMEs across Europe (in France, Italy, Germany, Spain and the UK).

Spanish SME owners are the most pessimistic - with the UK next. German SMEs were the least pessimistic. But overall 70% said their revenues had declined as a result of the pandemic.

• If revenues were to remain steady, 55% of SMEs worry they may shut down by September 2021.
• If the situation were to worsen and revenues decreased by a further 10 to 30%, 77% of SMEs said they may be out of business by September 2021.
• If the situation were to improve and revenues increased by 10 to 305, 39% of SMEs said they may nevertheless be out of business by September 2021.

The Centre for Cities have been examining the potential effect of new lockdowns on cities, noting:

• No city has yet recovered to its pre-lockdown job postings trend.
• Employment opportunities in local services are down most in places where more people work from home and fewer people are returning to the high street, which means finding these kinds of jobs may be hard as restrictions are reintroduced. Bigger cities have more opportunities to work from home.
• Local service jobs that involve selling directly to consumers are among those struggling most. These include jobs in such sectors as food, retail, arts and leisure that are exposed to COVID-related restrictions.

Analysis of the live music industry suggest that 170,000 jobs could be lost by the end of 2020.

• In 2019, live music contributed £4.5billion to the UK economy.
• Revenue has been almost zero since March and 2020 revenue will fall by 81% compared to 2019.
• In 2019, live music supported 210,000 FTEs including 52,000 full time, salaried roles .
• 76% of live music employees were supported by the furlough scheme, as of 31 August 2020
• 0% of permanent roles will be lost by the end of the year.

Indeed's regular analysis of vacancies is out, looking at jobs to 16 October.

• Jobs recovery has paused, and the vacancy rate remains at 45% down on the 2019 average.
• Medical technician job postings are running 12.1% above last year's trend.
• Nursing, physicians and surgeons, and scientific research and development, are modestly down on the year but up over the month and are in a significantly better place than many other vacancies.
• HR and recruitment is down 63% on the year, but up on the month - this is very significant as jobs in recruitment tend to fall in poor labour markets and rise with improvement.
• London is the only part of the country running at below half of 2019 trend.

Written by

Charlie Ball

Head of higher education intelligence

Prospects