UK graduate labour market update: 9 June

Prospects' head of higher education intelligence, Charlie Ball, provides his weekly update on the impact of the COVID-19 lockdown on the graduate labour market 

• The signs are clear that the labour market bottomed out - for now - at the end of March, but the big test will come when the furlough scheme ends.
• The bulk of the damage to the jobs market is to non-graduates and the young.
• Many SMEs are running short of cash and have no prospect of recruitment right now.
• Finalists are increasingly looking at postgraduate options, but many say that they want that experience to be face to face and don't currently see a virtual experience as being so attractive.
• The outlook for international student recruitment is not favourable but some ideas are being discussed. Many of our key international competitors are not in the best situation either.
• There are increasing concerns about the early years sector whose entire financial model is under considerable strain, and this has implications both for new graduates from FE and HE and for parents returning to work.
• Many employers are yet to make firm decisions about recruitment for the rest of 2020. Some businesses have quietly shelved recruitment plans, but others are - equally quietly - making plans to recruit if the opportunity and business conditions allow.
• Decisions made about recruitment and business strength this year will also affect next year's recruitment round.
• There are increasing concerns about student deferral, not merely because of the reduced financing for 2020 that will follow, but also because of the likely much larger 2021 entry cohort (undergraduate and postgraduate, home and international) that would be a consequence of widespread deferral. Some institutions are concerned about their capacity to cope with that cohort.

The Office of National Statistics have updated their economic impact analysis from last week (as covered here), which includes findings from the most recent data from the Business Impact of COVID-19 Survey (BICS). The labour market outlook (derived from Adzuna) is much the same as last week's - the raw data is here - with advert activity now at around 45% of the levels of last year. This represents a very modest improvement but still a very difficult situation. Catering and hospitality, and wholesale and retail, both saw very large declines in job adverts across this period. In contrast, education saw a far smaller decline to around 80% of its 2019 average, and health and social care has seen little change between March and May.

The BICS data has some interesting nuggets: 31% of firms (60% in hospitality) have reduced staff working hours, and 36% (48% in construction) have laid off staff already. But 6% of firms - and 24% in health and social care - recruited in May. 42% of staff were working at home in May, but 47% in large businesses of over 250 employees and 84% in the IT industry.

Regional variation

 The Institute of Employment Studies IES) continue their own analysis of Adzuna data and have published analysis to 31 May - the ONS are about a week behind. Total vacancies reported were down again to 326,000. The IES report that at the start of lockdown, there were around two vacancies per 100 people of working age in most parts of England, and the ratio was slightly higher in London and the South East. The devolved nations and the North East of England had one vacancy or less per 100 people of working age.

At the end of May, there was just over one vacancy per 100 people of working age in London, around one vacancy per 100 in other parts of the South and East of England, and a ratio of between 0.6 and 0.7 in the Midlands, North West and in Yorkshire and Humberside.  In Scotland, Wales and Northern Ireland there are around 0.4 vacancies reported per 100 people of working age. On top of this there appears to be considerable variation within regions as well as between them.

Social work vacancies are the only category where job vacancies have continued to hold up at similar levels to before the crisis began. At the end of May there were about 32,000 social work vacancies - around 10% of all vacancies. Despite healthcare and nursing vacancies falling 15% since the beginning of the crisis, they continue to make up 1 in 5 available vacancies. 

There were signs last week of a pick up amongst some job types, with sales and customer service roles seeing modest increases. The IES also report that in areas that have been particularly badly affected, the proportion of available vacancies that are being advertised as part time has gone up substantially.

PWC have updated their weekly analysis of economic impacts of COVID-19. 38% of consumers surveyed by PwC indicate their financial position in the next 12 months will be worse than this year. Those on low incomes are hardest hit as a third of workers in the lowest decile of earners are employed in shutdown sectors, compared to 5% in the top decile. But 21% of consumers surveyed report an increase in their cash balances, and 36% of those intend to spend some or all of this extra cash, with home improvements and household furnishings top of the list of spending intentions, providing some light at the end of the tunnel for some retail sectors. 34% of consumers surveyed said they would buy from brands or stores that look after their staff after lockdown, and 31% indicated they would buy from brands or stores that support the NHS and vulnerable people.

Indeed have returned to the fray with another update of analysis from their own adverts. Indeed also have jobs ads significantly down - 61% down on this time last year (29 May) - and also note that the UK seems to be recovering more slowly than Australia and the United States. Indeed note that things seem to be slowing down a little in health and social care (except for nursing, which continues to see an increase in vacancies), but that sections of the economy where lockdown is starting to be eased - property and cleaning & sanitation and customer service -have seen very modest but welcome rises in vacancy numbers.

Written by

Charlie Ball

Head of higher education intelligence

Prospects