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 return to lockdown could be a blow to small businesses.
- The level of vacancies is running at about 50% of normal rates.
- 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 much less affected than many 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 - 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.
- Postgraduate interest is strongly up.
- The situation for international student recruitment is tricky, but it's starting to look as if many, if not most, are showing for the start of term.
- 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. 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 employers are at least discussing recruiting in Q3 and Q4 if conditions permit after missing the normal recruitment round earlier in the year. Others have decided to wait until 2021 though.
With the government reversing its push to get more people back into offices, London in particular looks likely to continue to suffer.
The government has announced its new Job Support Scheme, to replace the current furloughing arrangements. From 1 November to the end of January 2021:
- The government will contribute a proportion of the wages of staff who work a minimum of 33% of their hours. The scheme is available to all SMEs, and to large companies who can demonstrate that the coronavirus crisis caused turnover to fall by more than a third.
- VAT will remain at the lower rate of 5% for the hospitality and leisure sectors until 31 March 2021.
- All of the government's state-backed loan schemes will be extended until the end of 2020 and a new guarantee loan programme will come in in January.
- Businesses that took out Bounce Back Loans can extend their repayments over ten years instead of six. Businesses experiencing particular difficulties can pause repayments or move to interest-only payments without affecting their credit score.
- Banks who lent under the Coronavirus Business Interruption Loan Scheme will also have the option of extending the loan from six to ten years.
- Self-employed people can defer their income tax payment and those with tax debts over £30,000 can set up payments in installments.
- The Self-Employment Income Support Scheme will be extended, but will now pay a taxable grant up to 20% of average monthly profits rather than 80%.
People Management continue their liveblog on employer actions in the pandemic.
The Home Office's Migration Advisory Committee (MAC) have released an immense Review of the Shortage Occupation List, used in determining criteria for eligibility for immigration. Note that despite the title, this isn't actually a list of occupations in shortage in the UK, it's a list of those occupations where there is a shortage and overseas workers are considered an appropriate way of alleviating that shortage.
Despite COVID, the MAC have not recommended removing any graduate level role from the list, and have added health service and public health managers, senior care workers, pharmacists, physiotherapists and modern language teachers. The MAC also recommend having specific lists for the devolved nations and therefore recommend adding niche healthcare professionals, specifically audiologists, to the Welsh list, nuclear scientists, nuclear engineers, Gaelic teachers and housing officers to the Scottish list and housing officers to the Northern Irish list.
The MAC also expressed strong concerns about consequences of low wages in social care, with most frontline occupations in the sector ineligible for the skilled worker route, despite very serious shortages.
The ONS have issued another biweekly update on the impact of COVID on the economy, this one to the 24 September:
- 84% of businesses were currently trading, compared with 66% of businesses to 14 June.
- There were four industries where more than half of their businesses experienced a decrease in turnover compared with what is normally expected for this time of year. These were the arts, entertainment and recreation industry (68%), the education industry (private sector and higher education businesses only) (62%), the accommodation and food service activities industry (59%), and the administrative and support service activities industry (51%).
- 12% of the workforce were on partial or full furlough leave.
- 11% of businesses currently trading stated that they had a moderate or severe risk of insolvency, 78% they had a low or no risk.
- 4% had no cash reserves.
- 22% had less than three months' cash reserves.
The ONS also have reporting on the social impacts of COVID-19 to the 24 September.
- The proportion of adults travelling to work at some point during the week increased to 64%.
- The proportion exclusively working from home increased slightly to 21%.
- Between 11 and 18 September, total online job adverts increased slightly from 53% to 55% of their 2019 average.
- The East Midlands continued to see the strongest recovery in the volume of job adverts, whereas London saw the weakest recovery, with job adverts remaining below half of their 2019 average
UUK and the Industrial Strategy Council have released a report to better understand the contribution of further and higher education to the UK's Industrial Strategy.
The report considers knowledge exchange, research innovation and skills development, the latter section including data on graduate migration using HECSU's Loyals, Stayers, Returners and Incomers typology as developed by this author (and first published in the Summer 2005 edition of Graduate Market Trends, which is no longer available online).
- University-owned spin-outs (firms using university developed ideas) generated £1.4 billion across the UK in 2018/19.
- There were 20,039 newly-registered graduate start-ups in the last five years.
Employees earning below the real Living Wage were around twice as likely as higher-paid earners to have lost their job, been furloughed, or lost hours and pay.
REC and EMSI continue to publish their Jobs Recovery Tracker, this time to 20 September.
- There were 129,000 new job adverts posted in the UK in the week of 14-20 September, the highest since lockdown measures were introduced.
- Total number of job postings in the UK continued to rise to 1.21 million.
- Nurses, secondary school teachers, programmers, accountants and mechanical engineers all saw healthy rises.
The latest round of figures on hiring from Indeed are here, this time to the 18 September. The level of job postings continues to rise, albeit slowly. The strongest improvement in trend over the past month was seen for chemical engineering, mainly driven by gas engineers and water treatment specialists. Medical information (which includes registrars, healthcare advisors and clinic managers) also saw a healthy rise.
In common with other data sources, London remained the weakest performing region. All other regions of the UK improved over recent weeks, but the trend in the capital has been flat. Job postings in London were down -54.6% on last year as of 18 September, barely above their low point of -56.9% in early June. With the government reversing its push to get more people back into offices, London in particular looks likely to continue to suffer.
These figures are reinforced by the footfall data from the Centre for Cities that shows London firmly at the bottom of the table comparing current footfall with the average. Manchester is the only other city still showing less than half of normal footfall.
The Resolution Foundation has released its annual Low Pay Report. The graduate labour market doesn't feature strongly, but the findings are, nevertheless, important.
- Before the crisis, the rising National Living Wage was driving down low pay, 15.5% of employees were classified as being on low pay.
- The proportion of employees paid below the real Living Wage fell to 21% in 2019.
- In June, employees earning below the real Living Wage were around twice as likely as higher-paid earners to have lost their job, been furloughed, or lost hours and pay as a result of the crisis.
- Low-paid workers were less likely than higher-paid ones (44%, compared to 83%) to have been working from home at the peak of the lockdown in May.
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