UK graduate labour market update: 6 May

In this latest labour market update, Charlie Ball covers the impact of the pandemic on earnings, the value of quantitative skills for social science graduates, and insights into attitudes towards disability at work

The Office for National Statistcics (ONS) has delivered its weekly update on the economic and social change in the UK:

• Total online job advert volumes increased by 2% in the latest week to 131% of the February 2020 level. The only categories below pre-pandemic levels are law (93%) and energy, oil and gas (86%)
• The volume of online job adverts increased in 11 of 12 English regions and UK countries on 29 April 2022 when compared with the previous week. The only decrease in the volume of online job adverts was in Scotland, which decreased by 1% compared with the previous week and was at 142% of its February 2020 pre-coronavirus pandemic average level.
• Small business sales continued to rise in March 2022, up five percentage points compared with February 2022.
• Sales increased or remained stable in all industries except 'Accommodation and food services', which fell by 11 percentage points to 109% of the equivalent month of 2019. Small business jobs, meanwhile, fell three percentage points.
• Potential redundancies and the number of employers proposing redundancies fell by three and two percentage points, respectively, in the week to 17 April 2022.

The ONS has also examined the effects of COVID on earnings. Rapid changes in the types of employees in work led to changes in employee average earnings and earnings growth. A decrease in the proportion of employees in jobs that have lower pay can increase average pay, even if no one's individual earnings have increased. This is called the 'compositional effect' of earnings growth.

• The effect of employee workforce composition on earnings growth increased very rapidly at the start of the coronavirus pandemic. Estimates using Labour Force Survey (LFS) data suggest that changes in the composition of the workforce contributed 0.5 percentage points of earnings growth in Quarter 1 (Jan to Mar) 2020, increasing to 3.4 percentage points of earnings growth in Quarter 2 (Apr to June) 2020.
• The effect of furlough on earnings growth was greatest in Quarter 2 2020, where it contributed negative 3.2 percentage points to earnings growth (4.3%).
• The effect of employee workforce composition on earnings growth was at its highest in Quarter 1 2021, where it contributed 5.6 percentage points to earnings growth (7.8%).
• Decreases in the proportion of part-time employees and increases in the overall level of qualifications held by employees were the largest contributors to this effect, and most of the compositional effects for individual characteristics during the coronavirus pandemic were positive.
• The proportion of employees with a degree, who have a higher pay on average, increased from 37.5% to 41.1% between Quarter 1 2020 and Quarter 1 2021.
• In Quarter 2 (Apr to June) 2020, the compositional effect rose to 3.4 percentage points, from 0.5 percentage points in the previous quarter. The three largest drivers of this increase were: firstly, changes in the contribution to earnings growth of the percentage of part-time workers (a contribution of 0.9 percentage points in Quarter 2 2020, compared with 0.0 in Quarter 1 2020) as the proportion of part-time workers fell; secondly, changes in the contribution of the overall level of qualifications in the workforce (1.0 percentage points, up from 0.3) as the proportion of graduates increased; and thirdly changes in the contribution of the distribution of the workforce across occupation (0.8 percentage points, up from 0.5) as lower paid occupations were more likely to lose hours and be furloughed.
• Changes in qualifications and occupation alone explain more than half of the increase in the compositional effect in Quarter 2 2020. As COVID-19 restrictions began to be imposed, some firms placed workers on furlough while others quickly adapted to homeworking arrangements. ONS analysis of Labour Market Survey data in July 2020 found that occupations requiring higher qualifications and more experience were more likely to implement homeworking arrangements than elementary and manual occupations, while analysis of Labour Force Survey (LFS) and Opinions and Lifestyle Survey (OPN) data in October 2021 found that employees with GCSEs as their highest qualification were more likely to have been furloughed at some point than those with degrees or equivalent qualifications
• The global financial crisis was different to the coronavirus pandemic. During the financial crisis, the individual contributions of the different characteristics in the employee workforce to the compositional effect were smaller than during the coronavirus pandemic, and they also contributed to it in different directions. Changes in the proportion of part-time workers were the largest negative contributors to the compositional effect (contributing -0.8 percentage points to earnings growth in Quarter 3 (July to Sept) 2009), suggesting that an increase in part-time workers contributed to a fall in average earnings. However, this was balanced by other factors such as qualifications (contributing 0.9 percentage points to earnings growth in Quarter 4 (Oct to Dec) 2009).

Students who take quantitative skills modules during their social science degrees have better earning potential than students on similar courses, finds an evaluation of the Q-Step Programme by the Nuffield Foundation. 15 months after graduation:

• 46% of Q-Step trained graduates earn over £25,000 per year, compared to 30% of non-Q-Step graduates.
• 72% of Q-Step trained graduates are employed in highly skilled jobs, compared to 59% of non-Q-Step graduates.
• 89% of Q-Step students were satisfied or very satisfied that their course used real life examples and data.
• 80% of Q-Step students were satisfied or very satisfied with the support they received from teachers and their department.
• 57% of Q-Step students were satisfied or very satisfied with the quality of their work placement.

The Recruitment & Employment Confederation (REC) have issued their latest Labour Market Tracker:

• In the last week of April, there were 1.81 million job adverts in the UK, up by 7% from a week earlier and 15% from a month earlier.
• In the same week, there were 173,000 new job adverts posted in the UK.
• Almost all occupation areas recorded at least marginal increases in job adverts compared to the previous week.
• There were notable increases in adverts for jobs in the business and accounting sector such as accountants, collector salespersons, and financial managers and directors.

The data underpinning this comes from EMSI.

British Chambers of Commerce have released their Quarterly Recruitment Outlook:

• 78% of firms that attempted to recruit facing difficulties in finding staff.
• The hospitality sector was facing the most challenging recruitment issues, with 85% reporting difficulties, up from 83% in Q4 2021. This was closely followed by construction on 83%, logistics on 81% and manufacturers at 80%.
• Smaller firms reported that increasing wage pressures are making it harder to compete for staff.
• Attempted recruitment in Q1 was down slightly with 60% looking to recruit staff (64% in Q4 2021).

The Business Disability Forum have published the results of a consultation on whether employers with over 250 employees should be required to report the number of disabled employees they employ.

Disabled employees were actually not fond of a mandatory approach. They were generally concerned about the disability-related backdrop in which this mandatory reporting proposal is taking place - changes to benefit payments, Access to Work being decreased in some sectors, increased extra costs of being disabled, and the removal of COVID restrictions such as wearing face coverings in crowded places and removing shielding.

A mandatory approach would mean the Government deciding a definition of disability and the categorisations of types of disabilities and conditions. This caused anxiety to some disabled employees, particularly those who had been involved in forming the language and narrative of disability and being disabled at work co-productively with their employer and their disability related staff networks.

Others were worried about the 'must' and 'mandatory' approach for anything disability related. This is because they felt gives the impression that disability is 'hard work' and 'hassle' which then gets internalised in Government, work, and public life narratives as ‘disabled people are hard work and hassle'.

The IPPR thinktank is launching the Commission on Health and Prosperity:

• There are now more than a million workers missing from the workforce compared to the pre-pandemic trend and about 400,000 of these are no longer working because of health factors, such as long COVID, disruption to health care and declining mental health.
• People living in the most economically deprived parts of the country - including Blackpool, Knowsley and Barking & Dagenham - can on average also expect to fall into poor health in just their late 50s, five years earlier than the national average and 12 years sooner than people living in the healthiest area in the country, Wokingham. This is largely down to factors like low quality housing, bad jobs, low wages and chronic stress, the report argues.
• If rates of child poverty and unemployment in the unhealthiest local authorities (e.g. Blackpool, Kingston upon Hull, Stoke) met rates in the healthiest local authorities (e.g. Windsor & Maidenhead, Wokingham, Richmond upon Thames, we would see 430,000 less children in poverty and 420,000 more adults in work.

The Fawcett Society have been examining menopause and the workplace:

• One in ten women who worked during the menopause have left a job due to their symptoms.
• Eight out of ten women say their employer hasn't shared information, trained staff, or put in place a menopause absence policy.
• Almost half of women haven't approached their GPs and three in ten have seen delays in diagnosis.
• Only four in ten women were offered HRT in a timely fashion.

And another round of data from Indeed, covering the UK, Ireland and Europe to the 22nd April:

• UK job postings on Indeed were 46% above the 1 February 2020, pre-pandemic baseline, seasonally adjusted, as of 22 April 2022. Rising uncertainty over economic prospects and a severe squeeze on household incomes had led employers to cut back a little on recruitment. But many employers still have substantial staffing gaps to fill.
• Advertised wages in UK job postings picked up in March, with the rate of growth quickening from 3.3% year-over-year to 4.5%. Looking for higher pay was the top reason people were searching for a new job. But other aspects of jobs are also valued by jobseekers, with career development, benefits, flexibility and the ability to work remotely also highlighted.
• 7% of UK respondents were urgently searching for a new job in March, with a further 16% not urgently searching. That's the second-lowest total active job search share since the survey began in July 2021. Search urgency remains muted among both the employed and the jobless.
• It's a similar story in Ireland where job postings were 53% above the 1 February, 2020, pre-pandemic baseline, seasonally adjusted, as of 22 April, 2022.
• In Ireland, pharmacy and cleaning & sanitation categories have job postings over three times pre-pandemic levels, while they are more than double the baseline in personal care & home health and retail.
• Conversely, Irish job postings are below pre-pandemic levels in the chemical engineering, architecture, construction and civil engineering categories. Notably most of these jobs are considered in shortage in the UK.
• Across Europe, since late February, job postings in the 21 European countries with an Indeed job site have on average fallen eight percentage points relative to their pre-Ukraine war trend.
• Postings fell in countries with high imports from Russia and in energy-intensive sectors like manufacturing and transport, suggesting the war in Ukraine is starting to affect the labour market.
• Despite the slowdown, the labour market remains strong, with average postings in Europe still 45% higher than before the pandemic as of 22 April 2022.

Written by

Charlie Ball

Senior consultant: labour market intelligence

Jisc