UK graduate labour market update: 8 September

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:

• Not surprisingly, we're officially in a recession.
• The graduate labour market has suffered significant damage, particularly in the arts - which may be the worst-affected sector in the UK. But things are far worse for non-graduates. 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.
• The level of vacancies is running at about 50-60% of normal rates.
• 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.
• Domestic student numbers seem to have held up strongly as young people opt for more education rather than taking their chances in an exceptionally difficult jobs market - but applications are not the same thing as actual enrolments.
• Postgraduate interest is strongly up and the coming term could see a great many enrolments. Teaching, for example, is up significantly.
• The situation for international student recruitment is tricky and we won't really know what the true impact is on universities until registration and we find out if they do or don't turn up.
• 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.

People Management continue their liveblog on employer actions in the pandemic. 

The ONS have reporting on the social and economic impacts of COVID-19 to 3 September.

• 54% of trading businesses said they were owed outstanding invoice payments.
• 20% of working adults are exclusively working from home.
• Between 21 and 28 August, total online job adverts remained around 55% of their 2019 average.
• 42% of businesses have less than six months cash reserves.
• 48% of businesses stated that turnover between the 10 and 23 August was at or above the levels expected in a normal year.
• 57% of adults travelled to work in the last week.

Not entirely COVID-related but still significant - British Chambers of Commerce have published the progress report for their Workplace Training and Development Commission, looking at the barriers and opportunities for business investment in workplace training and development, for adults over the age of 25, and at all skill levels. The commission have reached their halfway point and have released their report, which reflects both on their findings and the way the pandemic has shaped thinking. Key points include:

• In the years leading up around three in four businesses were struggling to fill job vacancies. 
• Low levels of productivity, increased automation and an ageing workforce will continue to present significant challenges for businesses.
• The introduction of a new points-based immigration system from January 2021 will increase recruitment and employment costs for firms unable to fill job vacancies from the local labour market.
• Firms were investing less in training and development in 2019 than they were in 2014.
• Apprenticeships are highly valued by many employers, and can help to resolve skills shortages, but they are not the solution to all workplace training and development needs.
• A more flexible and modular approach to learning would allow people whose role spans several functions (such as in SMEs) to gain access to chunks of accredited learning
• Many SMEs lack the HR skills and business transformation resources to properly identify, articulate and plan for existing and future workforce development needs. All SMEs should have access to impartial advice and support to adopt new innovative processes, conduct a workplace training needs analysis and identify relevant, high quality provision.

REC and EMSI have updated their Jobs Recovery Tracker to the end of August:

• Total number of active job postings rose to 1.12 million in the final week of the month.
• 107,000 new job adverts posted in the week beginning 24 August.
• Graduate positions on the increase include legal associate professionals, market researchers, dental nurses and podiatrists.

BDO's monthly Rethinking the Economy survey of 500 medium-sized businesses found that 60% of respondents are planning redundancies as a result of the government's Coronavirus Job Retention Scheme coming to an end in October.

• 89% of those surveyed have already made up to a fifth of staff redundant.
• Less than 10% have no plans for any job cuts at all.
• 41% recorded the same or an increase in revenues compared to the same time 12 months ago.
• 57% have either partially or fully reopened their offices or place of work.
• 29% have launched new products or services as a result of the pandemic.

Community Leisure UK have issued a report about the impact of pandemic on their sector.

Community Leisure UK is a members' association representing registered organisations delivering public leisure, sport and/or culture services for communities across the UK, and represents one the sectors most severely affected by COVID-19. It's also an important employer of graduates in fitness and heritage.

Current reserves, compared with pre-COVID levels, have dropped to 64%. Only 10% of reserves are expected to remain by the end of the current financial year. If there is a second lockdown, trusts will have no reserves to rely on and it is unlikely they would be able to remain solvent. In addition, as the anticipated recovery period for members is 12 to 18 months after reopening - and longer for those with cultural facilities - there will be no reserves available to support trusts as they seek to regrow and rebuild.

Currently 26% of the contracted workforce (6,975 jobs), and 50% of the casual workforce (9,218 jobs) is at risk. This is in addition to over 6,000 contracted and casual staff already confirmed for redundancy. This disproportionately affects the workforce in the 18 to 34 age bracket. There are currently 342 facilities at risk of permanent closure, including 35 libraries, 85 leisure centres and 24 swimming pools.

And again, not 100% related to COVID, but of great interest nonetheless: Alan Manning and Graham Mazeine of the LSE have written this paper on precarious work in the UK, US and Germany. The authors examined data over 40 years (using British Household Panel Survey data in the UK) and make interesting findings. 

Firstly that there is little evidence of increased job insecurity over the time period, examining measures such as labour turnover rates and job tenure distributions.

The second is that while insecurity is very cyclical (e.g. rising in the last recession and almost certainly rising in the COVID-19 pandemic), the authors found little long-run trend, it simply tends to rise with unemployment rates. Adjusting for changes in demographic and other socioeconomic characteristics in the workforce makes little difference to the overall raw trend, and the authors found that the proportion of workers that feels insecure at any given point in time has not seen any demographically-adjusted rise over the last 40 years.

However, the authors also counsel that there is little data over this time period on perceived job quality, and that there is not information to assess if workers today have a different preference for atypical arrangements than they did 25 or 30 years ago. If they do, then ways in which workers  assess their own job security and job satisfaction may have shifted, making analysis of long-run trends in self-perceived job security difficult.

They further suggest that for many workers, there is evidence that 'flexible' arrangements are not favoured by employees when the terms are loaded in the employers favour and that workers may simply be more accepting - or resigned - than they were in the past. This is an interesting and nuanced topic and the paper well worth reading.

Written by

Charlie Ball

Head of higher education intelligence

Prospects