As the global pandemic threatens to shock the economy, Charlie Ball considers the impact this will have on the UK's graduate labour market
We are a short period into the greatest economic and social disruption most of us have ever experienced. We don't know how long this disruption will last, only that we are almost certainly in the early rather than the late stages.
As many organisations now have their business continuity plans in place and a new normal is emerging with home-based working, the business of talent acquisition and management for 2020 and beyond is high on the agenda for recruitment teams.
Everyone with an interest in business wants to know how this disruption is going to affect them and the economy in general and everyone is aware that there may never be a return to 'business as usual' as defined as the pre-2020 norms.
What is the post COVID-19 world going to look like? What will the labour market look like? These are already crucial questions for student and graduate job seekers, for business, for universities - simply put for absolutely everyone that we work with and work for.
Graduates are also adapting, rapidly. If the workplace changes they will not have old habits to cling to, the new normal will be their old normal.
Can we learn from previous recessions?
There are no easy answers right now – it's just too soon to be sure. Many commentators on the graduate labour market are currently drawing analogies with the recession of 2008. Many of these analogies are pretty shrewd, and many of them follow the same sort of logic:
- In 2008 economic commentators thought that the graduate labour market would suffer very badly and were proved wrong. It suffered, but to a much lesser extent than anticipated.
- Therefore this time the graduate labour market will suffer but probably not as badly as people think.
There is merit in this analysis. It all seems so long ago now, but back in 2007, it was clear that the UK was going into downturn long before the technical definition of 'recession' was fulfilled by two consecutive quarters of negative GDP growth. So those of us trying to work out the next steps looked back at the previous UK recession. The UK had last been in a full-blown recession in the early 90s and although the US and Eurozone had subsequently suffered a short and relatively shallow downturn in the early 2000s after the dot.com crash and the horrors of September 11th 2001, the UK had only experienced a relatively minor hiccup in the economy.
In the early 90s recession, graduate training schemes closed down and as a consequence the graduate labour market went into a steep downturn that took several years to resolve. Analysts like me noted that employers subsequently complained that when the recovery came around they didn't have enough new hires to effectively capitalise on more benign trading conditions, and assumed that the 2008 recession would adopt the same trajectory - an initial overreaction by employers followed by a response as the economy strengthened again.
In 2008 what actually happened was that employers had learned lessons from previous experiences. Very few employers closed their graduate schemes and as a consequence the graduate economy recovered reasonably strongly from the recession (albeit with occupational shortages still evident). At this early stage I think we have to be cautious about necessarily assuming that this is what is going to happen this time.
What do we know now?
The ISE have just done a quick piece of research canvassing employer views that showed that the large majority are, as yet, not looking to change recruitment this year. Almost half (42%) said that they will continue to hire graduates as planned and it was a similar trend for apprentice and school leaver hires (37% of firms) as well as interns and placement students (35% of firms).
One of the strongest patterns to emerge from the data is that employers are being careful not to change their plans significantly if they can help it. Over a quarter (28%) of employers said that they were not sure how they were going to adjust their graduate numbers, 38% were unsure about non-graduates and 31% were unsure about interns and placement students.
Overall, just 27% are looking to reduce graduate hires, 23% to reduce apprentice and school leaver recruitment and 31% are looking to reduce internships and placements.
Where firms have close relationships with universities and are delivering subject-based or employability learning they are making a stronger effort to continue these too, such as 27% are moving mock assessment centres online. Other education collaboration activities shifting online include business games and enterprise competitions (21% of firms), employer talks (47% of firms) and contributing to the curriculum (34% of firms).
What key insights can we take away from all of this?
- Employers still want graduate hires for the long term, not just the short term, and so it will take a lot to make them change those plans.
- As the ISE have seen, the majority of schemes are still going ahead at the moment.
- Employers have been agile in their response, shifting to digital recruitment and selection processes, from online assessment centres to virtual interviews. Those parts of that process that suit business when the virus has receded will be retained. Organisations that innovate in this space may find an advantage in future.
- Graduates are also adapting, rapidly. If the workplace changes they will not have old habits to cling to, the new normal will be their old normal.
- Adaptability will be hugely important. It seems obvious now, but it's worth restating.
- This will be a finite situation and whilst everyone is anticipating that it may last longer than expected, businesses are already planning for the time when it is over. Graduates feature hugely in those plans.
- In a new normal, information, advice and guidance will be needed more than ever. You can be sure that Prospects is right there with you as we all adapt to what awaits us in the months ahead.
- At the moment, some areas of demand are reasonably apparent. Health and social care professionals, IT and professionals in infrastructure and logistics are likely to be at a premium right now, along with workers in essential supply chains.
- As things currently stand it would be rational for graduates who are concerned about the 2020 graduate labour market to consider postgraduate courses - if they are confident that institutions can deliver them.
We are in uncharted territory right now and we only think we have any maps. Nobody really knows what is going to happen next, and this journey has a long way to go. We are going to gather information, amass evidence and keep talking, talking, talking to people and when we find out useful information that we think adds real value, we'll tell you.
We are here, we are listening and talking and we are absolutely committed to providing the best quality information and support to all of you that we work with, and we work for. The more we keep talking and listening, the faster we'll create new maps and help to understand the shape of the new world we're moving to.
The views expressed in this article are those of the author(s) and do not necessarily reflect the position of HECSU/Prospects
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