UK graduate labour market update: 7 September

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

The latest round of the Office for National Statistics (ONS) fast response experimental statistics on the impact of COVID were released on the 2 September:

• On 27 August 2021, the total volume of online job adverts fell by 3% from the previous week to 125% of its February 2020 average level. This was driven by a week-on-week decline in job adverts in all UK countries and English regions. Oil and gas, accountancy, engineering, legal, management, education and healthcare are all below pre-pandemic levels although in most cases only marginally below and some employers may have temporarily withdrawn from recruitment due to lack of available candidates. All regions except London (at 97%) have more vacancies than pre-pandemic. All categories are significantly higher than this time last year, with a little over twice the number of available vacancies compared to September 2020.
• In late August 2021, a net 22% of businesses reported a decrease in turnover, compared with normal expectations for this time of year.
• In the week to 28 August 2021, overall retail footfall in the UK increased by 5%, and was at 84% of the level seen in the equivalent week of 2019.
• Transportation and storage remained the industry with the lowest percentage of businesses currently trading, at 82%, compared with 90% businesses in all industries.
• 6% of the workforce is currently furloughed.
• 70% is working at their normal place of work. Of businesses not permanently stopped trading, 18% intend to use increased homeworking as a permanent business model going forward, while 19% are not sure. This has remained broadly unchanged from late July 2021.
• The information and communication industry and the professional, scientific and technical activities industry had the highest percentages of businesses intending to use increased homeworking as a permanent business model going forwards, at 45% and 33% respectively in mid-August 2021.
• The main reasons businesses are keen to continue hybrid working are staff wellbeing (62%), increased productivity (53%) and reduced overheads (51%). However, for smaller businesses, the ability to recruit more widely is also important.

The Recruitment & Employment Confederation's (REC) newest JobsOutlook came out last week:

• In the three months to July, employers' confidence in their ability to hire new staff and make investment decisions remained high at net: +29.
• Employers' intentions to hire permanent staff in the medium term (the next 4 to 12 months) remained high at net: +26.
• Meanwhile, medium-term demand for temporary agency workers grew by four percentage points, to net: +20.

There was also a new Jobs Recovery Tracker:

• In the week of 23 to 29 August, there were 1.66 million active job adverts in the UK.
• There were around 193,000 new job adverts posted in the same week.
• New job postings numbers have remained high since early June, and labour shortages continue to be a concern for both government and businesses.
• There was a significant increase in adverts for dispensing opticians last week (+26.4%), as well as for vehicle-related occupations such as driving instructors (+12.9%), vehicle body builders and repairers (+12.9%), and vehicle valeters and cleaners (+9.2%).
• On the other hand, ambulance staff (excluding paramedics) (-10.1%), conference and exhibition managers and organisers (-9.7%), and standards and regulations inspectors (-7.9%) saw the biggest weekly declines in active job adverts.
• Six out of the UK's top ten hiring hotspots were in Scotland last week, as the country opened up further.
• Meanwhile, six of the bottom ten local areas for growth in job adverts were in Northern Ireland.

In a similar vein, the Lloyds Bank Business Monitor also shows robust business confidence:

• Business confidence increased by six points to 36% to reach its highest level since April 2017.
• Economic optimism rose by 6 points (38%), offsetting a slight July dip.
• Pay growth expectations reached a three-year high, with over a third (34%) of businesses predicting rises of at least 2%.
• Nine of the 12 UK regions and nations reported increases in confidence with the North West (64%) registering the highest level while Northern Ireland back in positive territory.
• Confidence in construction (40%), manufacturing (40%) and services (36%) reflected rises in trading prospects for the year ahead.
• 44% of companies, up five points from 39% in July are expecting to charge higher prices over the next year

BDO have released new figures on the retail industry:

• August marked six months of sustained retail recovery, boosted by online spending and buoyant consumer demand, new figures by accountancy and business advisory firm BDO LLP reveal.
• Total like-for-like sales, combined in-store and online, increased by +20.1% in August from a base of -3.3% for the equivalent month last year.
• Online spending continues to bolster sales in all sectors.
• The COVID-choked supply chain, however, could lead to disrupted months ahead.

The Resolution Foundation have issued their Q3 Labour Market Outlook:

• The outlook for the very short term appears positive: vacancies have recovered to or surpassed pre-crisis levels, even in those sectors hardest-hit by the pandemic.
• It's not clear how many of those furloughed will lose their jobs once the scheme unwinds, but only 39% of redundancies during the crisis led directly to unemployment.
• While under-25s have been the age group most likely to be on furlough for most of the crisis, over-65s have recently become the group with the highest furlough rates - and most likely to have been furloughed for long periods of time - putting them at higher risk of job losses when the scheme ends. Older workers also suffer more severe consequences from losing their jobs than other age groups: over-55s are less likely than younger workers to return to work within six months of becoming unemployed, and tend to take a substantial pay cut when they do return.
• In June, there were still more unemployed workers per vacancy overall than there were in 2019, but the picture varies substantially by sector: in hospitality a boom in vacancies had pushed the number of unemployed people for each vacancy almost back to pre-pandemic levels by Q2 2021, whereas in transport and storage, there were more than two unemployed for every vacancy.

Risk managers Willis Towers Watson have surveyed senior managers and found that only three in ten expect workers to be fully back in the office within the next two years:

• 85% of businesses anticipate a return to the workplace for most employees who want to by the end of 2021.
• Employers think about a quarter of the workforce (23%) will work remotely on a full-time basis in two years' time, and 41% will embrace hybrid working.
• One in five employers have encouraged employees to get vaccinated through communications campaigns, with another 18% considering this approach. 12% are considering requiring employees to get vaccinated before they can return to the workplace.

However Ricoh Europe has found widespread mistrust of their employees amongst employers:

• 35% of employers trust their staff fully while working remotely, with 39% suggesting their people don't work as hard or effectively as in the office.
• But just 19% of employers say that their own business productivity decreased since they transitioned to remote working.
• 57% think investing in flexible working technology is essential to attracting and retaining talent.
• 42% of decision makers say their teams are worried about returning to the office when restrictions ease due to concerns about health and safety. A failure to acknowledge these concerns could not only impact morale but risk losing good people.

The CBI have found rapid private sector growth in the three months to August:

• Activity across the private sector grew at the fastest pace since May 2014 in the three months to August (+34% from 33% last month).
• Consumer services activity was a significant driver of growth (+30% from +3%). Distribution activity picked up further too (+53% from +48%), while business and professional services growth was broadly stable (+32% from +34%). Meanwhile, growth in activity within the manufacturing sector slowed (+22% from +37%).
• Private sector activity is expected to grow at a faster pace than the long-run average in the coming quarter. However, the pace of growth is expected to ease.
• Distribution firms in particular anticipate a slower rate of growth (+41%), the business & professional services sector expects a similar rate (+30%), and manufacturers predict a slight acceleration in the rate of growth (+26%).
• Within consumer services, however, a fall in volumes is predicted over the next three months, driven primarily by the hotels, restaurants and bars sub-sector.

Meanwhile, the CBI also warn about ongoing staff shortages:

• Labour and skills shortages are being felt right across the economy, in sectors ranging from construction and manufacturing through to retail and hospitality. And the shortages are at multiple skill levels, from entry-level front of house workers, through scaffolders and carpenters, through to skilled workers in butchery and electrical engineering. A shortage of drivers in the logistics sector is also disrupting supply chains across the economy in everything from food and health to utilities. At graduate level, the CBI reports particular shortages of mechanical and electrical engineers.
• A third of the companies that responded to the CBI's July manufacturing survey were concerned that skilled labour would limit output in the quarter ahead - the highest share since the mid-1970s.
• The shortage of HGV drivers is estimated to have grown from 60,000 to over 100,000. Digital skills were also already highly prized around the globe before the pandemic and it is not surprising that they're in-demand again now, particularly with so many businesses embracing new hybrid ways of working.
• The CBI estimated that it may take two years to resolve current shortages based on the time it takes to train new workers. Investing in more apprentices and improving diversity are essential actions CBI members in sectors from food manufacturing to energy are taking. But will take time to build a qualified and experienced workforce. In other cases, like training HGV drivers, the capacity to train is a limiting factor. The RHA estimates that it will take at least 18 months to train enough HGV drivers.

Indeed have released another analysis of their UK vacancy data:

• Job postings were 26.3% above the 1 February 2020, pre-pandemic baseline, seasonally adjusted, as of 27 August 2021.
• The biggest improvement in trend during the past fortnight was for chemical engineering (mainly driven by gas engineer jobs). This was followed by cleaning & sanitation, construction, installation & maintenance, loading & stocking and veterinary.
• All regions saw improvements in the latest fortnight. The North East remains the strongest performer, with jobs postings 57% above the pre-pandemic baseline. London continues to experience the weakest job posting recovery (9% above baseline).
• Aberdeen, Crawley and Aldershot are the only three cities and large towns Indeed track where job postings have not yet recovered to pre-pandemic levels.

Indeed surveyed 5,000 people in mid-July. The sample included individuals both in and out of the labour force, taking in employed workers, those on furlough and the jobless:

• Just 11% of workers currently on furlough or not working are urgently seeking a job.
• A further 23% of those on furlough and 16% of those not working were actively searching, but not urgently.
• Almost two-thirds of those on furlough aren't searching at all or are searching passively, reflecting that most survey respondents expect to return to their jobs when the programme finishes at the end of September - other data from employers suggest that they are probably right to expect to return to their jobs.
• The main reasons those who are unemployed but not urgently seeking work give for their stance are access to financial buffers, benefits or partner income, followed by COVID-19 concerns and caring responsibilities.
• One-third of all respondents want to wait until more jobs are available before starting a new position, while others want to take time off or wait for the new school year.
• Many jobseekers still perceive the labour market as difficult; this suggests that widely-publicised (and real) jobs shortages may not be in fields people want.

Written by

Charlie Ball

Head of higher education intelligence

Prospects