UK graduate labour market update: 30 November

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

According to Graduate Outcomes data, 21.7% of UK domiciled employed graduates from 2018/19 were known to be working for SMEs 15 months after graduation (during the pandemic last year). The difference when looking only at graduates in professional employment is minimal as 21.6% of graduates in professional employment were in SMEs.

Employer size,Percentage of graduates
1 to 9,4
10 to 49,6.2
50 to 99,6.4
100 to 249,5.1
250 to 499,5.7
500 to 999,5
Over 1000,67.6

The latest round of the Office for National Statistics (ONS) fast response experimental statistics on the impact of COVID were released on 25 November:

• 14 % of businesses currently trading reported a shortage of workers between 1 and 23 November. 38% of accommodation and food services businesses, 25% of organisations in health and social care and 22% of manufacturers reported worker shortages.
• The total volume of online job adverts on 19 November 2021 was unchanged from the previous week at 144% of its February 2020 average level. Law is the only sector still below February 2020 levels. In major graduate employers, HR and recruitment and manufacturing have more than double their pre-pandemic vacancies.

More from the regular ONS survey of student wellbeing. This covers the period from 5 to 15 November.

• Almost half (49%) of students reported taking a COVID-19 test in the last seven days.
• When asked if they think they have had COVID-19 at some point during the pandemic, 21% of students said yes and that this was confirmed with a positive test.
• The average life satisfaction score for students was 6.7, which was significantly lower than those aged 16 to 29 years (6.9) and the adult population in Great Britain (7.0).
• The proportion of students feeling lonely often or always was 17%, significantly higher than those aged 16 to 29 years (9%) and the adult population in Great Britain (7%).
• Three in ten (30%) students reported that their mental health and wellbeing had worsened since the start of the autumn 2021 term, similar to late October (32%).

The ONS has also been looking at the technical issues of working out which households are student households. This is not something where I can give some neat statistical summary but more a discussion of how to go about looking at this subject, which it turns out is a lot harder than most people realise.

The Minister of State for Higher and Further Education, Michelle Donelan, gave a significant speech to the Times Higher Education Conference last week. The speech covered a lot of ground, but from the labour market and employability point of view the following points stood out:

• From 2025, lifelong learning accounts will be brought in. New students will be able to sign up and log in online to find a learning loan entitlement worth the equivalent of four years of post-18 education to be used across higher and further education as they choose.
• The Office for Students (OfS) is to 'strongly encourage' providers to set themselves ambitious, measurable targets to significantly increase the proportion of students on higher and degree apprenticeships, Level 4 and 5 courses, including Higher Technical Qualifications, and utilising greater flexibility of access such as part time courses.
• Universities with 'poor' outcomes will have to set 'ambitious' targets for reducing drop-out rates and improving progression to graduate employment.

The average tuition fee loan to students in England in 2020/1 was £8,520, in Wales it was £8,180 and in Northern Ireland was £5,440.

The Recruitment & Employment Confederation's (REC) monthly Jobs Outlook came out last week:

• Business confidence in hiring fell by nine percentage points to net: +13 in August to October.
• Confidence in the wider UK economy also fell by 13 percentage points to net: +3. Overall this means a slightly higher proportion of firms said their prospects were still improving, rather than getting worse.
• Demand for permanent staff remained high at net: +22 in the short term and net: +23 in the medium term. Hiring intentions for temporary workers in the next three months remained stable at net: +8, and demand for the next 4-12 months rose by two points to net: +5.
• 31% of businesses wanted government to increase funding and provision for lower-level skills training, whilst 24% expressed a desire for reform to the apprenticeship levy scheme, to allow funds to be used more flexibly.

The Institute of Employment Studies have looked at young workers' view of good work, for the Health Foundation's 'Young People's Future Health Inquiry':

• Young people value work that is stimulating, looks after their wellbeing, and allows them to grow.
• For those who prioritise quality, there is a perception that they are in a privileged position to do this due to financial security, which enables them to be selective. Those who feel like they cannot prioritise quality often decide to take any job that provides an income.
• Young people do not believe the work available to them is of good quality. For those still in education, a common issue is the low quality of work experience, often not related to their interests or not teaching them new skills.
• The most important factors in accessing good quality work, according to young people, are previous work experience, networks and knowing the right people, having the right qualifications and skills, availability of jobs in their local area, and confidence.
• Mental health has an impact on ability to access good quality work for over one in five young people, and physical health for over one in three. Disabled young people, males and non-binary people, and those from white ethnic backgrounds, report the strongest impact compared to those in other groups.
• Young people say that apprenticeships and traineeships provide the most useful support to access good quality work. There is no strong majority of young people that find any of the support offered to them most useful.  However, a large minority think vocational routes such as apprenticeships and traineeships are very useful. There is little awareness of Kickstart and Youth Hubs among the general young people population.
• Young people feel let down by the quality of careers support they receive. Issues include careers advisers pushing students towards certain educational paths (particularly university), or industry sectors, and providing generic advice without sharing the full range of options or tailoring support to the interests students express.
• Just under two-thirds of young people feel the pandemic had a negative effect on their confidence to look for and secure good work, and just under half feel it negatively affected how they value the quality of work.
• The pandemic affected young people's learning and negatively affected their prospects and aspirations. This is tied to disruptions in learning, perceived increased competition for jobs, particularly in lower-skilled sectors which are seen to attract larger pools of candidates, and lack of access to work experience. Those in higher education are more likely to be interested in professional sectors and feel more positive.
• Despite the mixed impact of the pandemic on young people's outlooks, many report positive impacts on their priorities for work, including prioritising having good work-life balance and placing more value on being paid and treated fairly.
• During the pandemic the majority of young people either became unemployed, changed jobs, or saw their hours decrease or increase.
• There are many more young people reporting poor conditions after the pandemic compared to before the pandemic in respect of the work environment, job security, number of hours, impact on mental and physical health, and work-life balance. However, there is also a small increase in those reporting good conditions following the pandemic around feeling valued, making good use of skills, having opportunities to progress, and pay.

Mobility and inequality

The Institute of Fiscal Studies have used LEO data to examine intergenerational mobility as a result of HE:

• While low-income students are as likely to attend the least selective institutions as their wealthier peers, they are far less likely to attend the top universities: in the mid 2000s, students who attended private secondary schools were around 100 times more likely to attend Oxford or Cambridge than  free school meal (FSM)-eligible students.
• Pharmacology and social care have only very small gaps in access by socioeconomic background, but there are large gaps in subjects such as medicine. In the mid 2000s, the privately educated were nearly 25 times more likely to study medicine than FSM-eligible students.
• The very best-performing institutions in terms of their labour market success admitted few FSM students. Similarly, the universities with the highest FSM access rates have below average success rates. However, across all universities, the correlation between access and success of -0.24 is relatively weak. Some universities do reasonably well on both metrics.
• The average mobility rate across all universities is 1.3%. This figure is well below our benchmark rate of 4.4%, the rate you would get if there were equal access to university for all income groups and undergraduates from all income backgrounds had the same chance of making it into the top 20%. This means that at age 30, only 1.3 in every 100 university graduates are in the top 20% of the earnings distribution and from a low-income background, compared with a benchmark of 4.4.
• The highest-mobility institutions are often less selective and based in big cities, with London institutions especially dominant. However, only seven institutions reach or improve upon our benchmark mobility rate of 4.4%.
• The high share of FSM pupils in London, many of whom perform well at school and are from ethnic minority backgrounds, is likely to explain at least part of the high access rates of London institutions.
• Many Russell Group universities have high success rates but admit very few FSM students, leading to below-average mobility rates. Queen Mary University of London (QMUL) is a remarkable exception, performing extremely well on both metrics and topping the overall mobility rankings with a mobility rate of 6.8%.
• Adjusting earnings for cost of living differences across the country improves the mobility rates of Northern universities, and lowers those in London and the South East. It does not change the overall ranking of universities very much, however. London universities still dominate the top of the mobility distribution, and the most selective universities still perform poorly.
• Adjusting for differences in attainment and other characteristics of FSM students across universities only reinforces the message that many low-return, low-selectivity degrees do very well in terms of mobility. The least selective institutions move up the mobility ranking, while the most selective ones move even further down. However, the overall changes from this adjustment are relatively minor.
• Law, computing and (especially) pharmacology are the best-performing subject areas, with mobility rates of 2.2%, 2.9% and 4.2%, respectively. Around 10% of their students were FSM eligible and many of them perform well in terms of labour market success.
• Based on these improved access rates, we predict an increase in average mobility rates from 1.3% for cohorts at university during the mid 2000s to around 1.6% for cohorts entering university in 2018 and 2019. Thus, the improvements in access still leave us well below our benchmark mobility rate of 4.4%. There is clearly much progress still to be made, especially by the most selective universities, where access rates remain extremely low.

Also, from the IFS, this fascinating report on the labour market and inequality, 1620 to 2020:

• Real wages grew on average from 1620 to 1770 and from 1840 to the 1970s. During the Industrial Revolution (1770 to 1840) and the post-1970 service revolution, however, the average real wage was flat and wage inequality increased. Output per worker grew in all of them.
• Rising real wages led to labour-saving technical change in Britain during the Industrial Revolution and to the invention of mass production in the USA in the 20th century.
• The last 50 years have seen large scale de-industrialisation across the UK. One million industrial jobs disappeared in London, and about five million elsewhere in the country. In both cases, the losses amounted to more than one-quarter of the jobs. Counterbalancing these declines was the growth in service employment. In London, this was driven by the vast expansion of the highly lucrative jobs in finance and business services. In the rest of the country, the new service jobs were less productive.
• For all but the mostly highly paid managerial and professional jobs, wages and salaries in London were not high enough to make the move to London worthwhile for people in the North. Consequently, there was no large-scale movement of workers from the North to London, not even amongst the university educated.
• The lost production jobs in manufacturing offered high pay. Many of the new jobs in services require advanced education and training and pay well; many others require little training and pay badly. The result has been a shift of income from labour to capital and an increase in inequality.
• Productivity and incomes in all UK regions were at the top of the West European league table until the 1970s when growth outside greater London stagnated. Now, most UK regions lie at the bottom of the West European table, along with the former East Germany.
• The UK's regional problem encompassing most of the country is really a national productivity failure.
• In 1960, UK wages were still above those of most of Europe. By 2011, the UK's standing had collapsed. In every job category, the UK was surpassed by every western and northern European country with the exception of Portugal. In four out of the six important job classes shown for men in International Labour Organisation data, the UK ranked 14th, just above Spain. Women did a bit worse. In half of the job categories, UK salaries ranked 18th, and the UK was below Spain. UK women managers, clerical workers, technicians (which includes nurses) and elementary workers were even being nosed out by their counterparts in the highest-paying countries of eastern Europe and earned very much below the western European countries to which the UK historically compared itself.

There's a lot in this one and it's very accessible and engagingly written, well worth reading in full.

Written by

Charlie Ball

Head of higher education intelligence

Prospects