UK graduate labour market update: 31 October

Charlie Ball's latest graduate labour market update leads with a major report in the skills demand in the UK through to 2035 - with data on apprenticeships and research into racism at work also covered

The headline news, and one of the most significant pieces of labour market research for some time, is the new Skills Imperative 2035 report from the Institute of Employment Research at Warwick, for the National Foundation for Educational Research.

This builds on the long-running Working Futures reports from the same Warwick team and examines skills demand in the UK to 2035:

• There will be 2.6 million new jobs by 2035, the majority of which will be taken by females.
• Employment in the health sector is expected to increase the fastest, with around 369,000 new jobs by 2035.
• Almost all of the new jobs created by 2035 will be in professional and associate professional occupations. These jobs overwhelmingly require higher education or equivalent qualifications. Drilling down into more detailed occupations, over 2020 to 2035, science, research, engineering and technology professionals will experience the largest net increase (+0.90 million job openings), followed by health and social care associate professionals (+0.60 million).
• The UK economy will see a substantial recovery in Gross Value Added (GVA) output by 2035, following the sharp decline in the pandemic. The construction (+2.4% per annum) and trade, accommodation and transport (+2.1% pa) sectors are expected to lead the way.
• The jobs most vulnerable to automation are currently mainly held by men.
• The sectors with the largest employment declines will be in manufacturing: metal products (-41,000) and other transport equipment (-22,000).
• Job losses will be concentrated among blue collar manual occupations, especially in areas where automation is possible, as well as among less skilled white-collar non manual occupations.
• Current trends that see young people acquiring more and higher level qualifications (replacing those generally less qualified people who are leaving the labour market), will continue.
• Replacement demands recognise the need to replace people who leave the workforce permanently or semi-permanently for various reasons. The projections show that replacement demand is much larger than net changes in occupations. The level of replacement demand, which is estimated to be 17.5 million jobs between 2020 and 2035, suggests that the future labour market will continue to be very dynamic, creating new employment opportunities even in declining sectors and occupations. To illustrate, administrative and secretarial occupations is projected to see a decline in total employment of 0.15million jobs between 2020 and 2035. But replacement demand will be nearly 1.9 million for these occupations over this period. This means that even though there is a decline in the total number jobs in these occupations, the fact that many people will be retiring from them or moving on for other reasons, means there will still be a healthy demand for workers with these skills.
• All of the top 20 role in terms of fastest growth of opportunity to 2035 are professional level jobs. All of the 20 roles expected to see the fastest rate of decline of employment to 2035 are below professional level.

The UK employment rate for June to August 2022 was 75.5%, 0.3 percentage points lower than the previous quarter, according to the Office for National Statistics (ONS):

• The most timely estimate of payrolled employees for September 2022 shows another monthly increase, up 69,000 on the revised August 2022 figures, to a record 29.7 million.
• The unemployment rate for June to August 2022 decreased by 0.3 percentage points on the quarter to 3.5%, the lowest rate since December to February 1974. The number of people unemployed for between six and 12 months increased on the quarter, while there were decreases for the short-term (up to six months) and long-term (over 12 months) unemployed.
• The economic inactivity rate increased by 0.6 percentage points to 21.7% in June to August 2022, compared with the previous quarter (March to May 2022), which had a notably lower economic inactivity rate than other periods. This increase in the latest quarter was largely driven by those aged 50 to 64 years and those aged 16 to 24 years. Looking at economic inactivity by reason, the quarterly increase was driven by people inactive because they are long-term sick or because they are students. Numbers of those economically inactive because they are long-term sick increased to a record high.
• Growth in average total pay (including bonuses) was 6.0% and growth in regular pay (excluding bonuses) was 5.4% among employees in June to August 2022. Average regular pay growth was 6.2% for the private sector and 2.2% for the public sector. Outside of the height of the pandemic period, this is the largest growth seen for the private sector and the largest difference between the private sector and public sector.
• In real terms (adjusted for inflation) over the year, total pay fell by 2.4% and regular pay fell by 2.9%. This is slightly smaller than the record fall in real regular pay we saw April to June 2022 (3.0%), but still remains among the largest falls in growth since comparable records began in 2001.
• The number of job vacancies in July to September 2022 was 1,246,000.
• There are still more vacancies in the UK than unemployed people - approximately 0.9 unemployed people per vacancy.
• In July to September 2022 vacancies were 450,000 (56.6%) above the January to March 2020 pre-coronavirus level, and nearly 117,000 (10.3%) above the level of a year ago.

The latest rapid indicators of economic and social change are now available from the ONS:

• The total number of UK online job adverts fell by 2% in the week to 21 October 2022 and is now 10% lower than the equivalent week of 2021. Since mid-February 2022, advert numbers have followed a downward trend to early September but have shown relatively little change over recent weeks. The number of adverts also decreased from the previous week in ten of the 12 UK countries and English regions and 20 of the 28 advert categories. The largest decrease was a 10% fall in the transport, logistics and warehouse' category.
• The number of employers proposing redundancies in the week to 16 October 2022 was 163% of the level in the equivalent week of 2021, while the number of potential redundancies reported was 106% of last year's equivalent level. However proposed redundancies remain below historic trends.

Also from the ONS. data from the Annual Survey of Hours and Earnings, looking at pay:

• The proportion of low-paid employee jobs (based on hourly pay) fell to 10.5% in 2022 from 14.3% in 2021, the lowest since the series began in 1997, with the proportion of high-paid employee jobs falling 0.7 percentage points on-the-year to 23.7% in 2022.
• Average hourly pay in 2022 for full-time employees has increased for all percentiles year-on-year, but there is a larger increase in the lower deciles. Part-time jobs at the fifth percentile have seen the largest increase in hourly pay.
• The lowest-earning employees tend to be part time, younger (aged between 16 and 21 years) and in the elementary occupations or in the hospitality industry.
• The highest-earning employees are concentrated in the managerial and professional occupations, aged between 35 and 49 years, or work in the information and communication, and finance and insurance service industries. These workers are very likely to have higher education or equivalent qualifications.

New data on apprenticeships is available from Explore Education:

• Advanced apprenticeships accounted for nearly a half of starts (42.9% or 124,000 starts).
• Higher apprenticeships accounted for nearly a third of starts (30.6% or 88,200 starts).
• Under 19s accounted for 23.7% of starts (68,500).
• Starts supported by Apprenticeship Service Account (ASA) levy funds accounted for 62.5% (180,600)
• Apprenticeship standards made up 99.5% of starts (287,300). Note: there are still a small number of starts on frameworks. All remaining apprenticeship frameworks were withdrawn to new learners on 31 July 2020. Learners who started on frameworks are where it has been agreed a learner can return to a previous framework they have been on after an extensive break.
• 96,400 incentive claims so far for apprenticeships starting in the first three quarters. This compares to 77,500 for the same period in 2020/21.
• As of Q3 of the 2021/22 academic year, since May 2015 there have been 2,821,500 apprenticeship starts and since May 2010 this total stands at 5,199,000.

The Recruitment & Employment Confederation (REC) have released their Q3 Jobs Outlook:

• The immediate outlook for hiring remains positive - employers report that hiring intentions for permanent staff were +17 over the next three months and +18 over the next year, both down six points from last quarter. Intentions on temporary work were +6 and +4 over the same time periods.
• Employers' confidence in both the UK economic outlook and their own ability to invest in their business declined markedly. Both measures surpassed the lows of the pandemic (-67 on the economic outlook in July-Sept 2022 by comparison with -57 in 2020, and -27 on investment intentions for their own business by comparison with -13 in 2020).

The CIPD's new 2022 report on the HR profession in UK and Ireland, People Profession 2022, is out:

• Skills development remains a strong focus post-pandemic. There has been a sustained level of upskilling and reskilling in the last year, with a slight increase in Ireland. A third of upskilling has been in response to an immediate business need, demonstrating how people teams are adapting to deal with changing priorities. Skills priorities are supporting line managers, facilitating flexible working, and developing organisational development and change management capabilities.
• People professionals perceive their mental and physical health more negatively than the general workforce. in the UK, three in ten practitioners say that their mental and physical health is negatively impacted by work, especially for those who have a negative view of their career progression or who have less experience in their roles.
• People teams remain positive about their valued contribution to their organisations. Practitioners generally feel that they work collaboratively to meet business needs and that their practices are aligned to organisational outcomes. However, more work needs to be done to ensure that people professionals feel properly recognised for the work that they do.
• People teams operate in three main models. In the UK, people teams generally work in a business partnering model or as a single HR team. Teams in Ireland have a third model which outsources much of its people activity. While the UK teams operate fairly evenly across onsite, remote and hybrid models, Irish teams are more likely to work onsite.
• The use of people data and analytics has grown since pre-pandemic levels. While this increase suggests that more organisations recognise the importance and value of people data, teams need to improve capability and remove technological barriers to use this more effectively.
• The people profession is focusing on employee experience. Organisations are most commonly collecting information from leaving employees or focusing on company culture and values, but only a third do both. In this difficult labour market, data suggests that only two-fifths of organisations are prioritising employee experience within their core people strategy.

61% of Black employees experienced racism in 2021, Pearn Kandola's Racism at Work in the UK report has found:

• A similar proportion of Black and Asian respondents believe that racism exists in the workplace in 2021 as was in 2018, however there has been a 6.8% increase in the proportion of white respondents agreeing.
• Overall, 34% of respondents have experienced racism at work, with most of them being from Black (61.4%) and Asian (46%) backgrounds.
• Black people are 15.14x more likely to experience racism at work than white people and 1.87x more than Asian people. Asian people are 8.1x more likely to experience racism at work than white people.
• The majority of white people (88.8%) reported no experiences of specific racist scenarios described, compared to 34.8% of Asians and 15.7% of Black people.
• Black respondents are still most likely to have witnessed a racist incident at work (3.5x as likely as white and 1.6x as likely as Asian respondents), followed by Asian respondents (2.2x as likely as white respondents).
• The most commonly reported action was 'confronting the perpetrator' (15.6%), followed by 'reporting the incident to a manager or HR' (11.7%). 'Filing a complaint with an authority figure' was the action that had the highest 'resolved' rate (60.7%).
• White respondents were most likely to report taking some form of action (77%), followed by Black respondents (72%) and Asian respondents (67%). There has been a fall in the proportion of 'no action' responses for each group (since 2018, -5% for white; -3% for Asian, and -6% for Black respondents).
• White respondents in 2021 were more likely to give 'It wasn't my business' as a reason for not taking action (+ nearly 20% since 2018), and less likely to say 'I was unsure who to talk to' (-7.5% since 2018).

Westfield Health have examined how SMEs can attract and retain talent using wellbeing:

• 76% of SME workers are generally satisfied with their current position, 46% are either actively or considering looking for their next role.
• 53% of workers have no preference, but 34% of workers say they'd prefer to work for an SME with fewer than 250 employees.

Workers feel that small and medium-sized companies are more likely to offer:

• regular contact with senior leaders (60%)
• a positive workplace culture (48%)
• better work-life balance (35%)

In larger businesses, employees expect:

• Physical health support (51%)
• Progression opportunities (44%)
• Competitive salaries (40%)

67% of SMEs report that they have an allocated wellbeing budget. 85% of employees see a link between wellbeing and company culture and 86% saying they're more productive at work if there's a good culture.

Next, Indeed have an update on Irish job postings to mid-October:

• Irish job postings on Indeed remain elevated, and were 55% above the 1 February, 2020, pre-pandemic baseline, seasonally adjusted, as of 14 October, 2022.
• Pharmacy, therapy, cleaning & sanitation and personal care & home health job postings are furthest above pre-pandemic levels.
• There has been a notable slowdown in tech hiring in recent months (reflecting global trends in the sector). Having reached over 70% above the pre-pandemic baseline in June, software development has slowed to just 16% above the baseline. The IT operations & helpdesk and information design & documentation categories have similarly fallen - although both remain well above pre-pandemic baselines and all these roles are shortage areas so there remains little shortage of demand.
• Like many large urban areas, commuter footfall in Dublin remains down on pre-pandemic levels, weighing on local services that rely on their spending. The tech slowdown is also likely to have impacted more on the Dublin trend.

And finally, AGCAS and Prospects have published a new set of Job profiles and What can I do with my degree? titles for October 2022 - do have a look at them!

Written by

Charlie Ball

Senior consultant: labour market intelligence

Jisc