Enough back-patting, let’s look at the 2015 graduate jobs market. This is a lot trickier than 2014, to be honest – in fact, it’s probably the hardest to predict since the recession because of – well, you can take the second reason to work out why.
As this is my blog, I’m permitting myself some opinion in italics.
So, let’s start with the first prediction:
Economic recovery – slow and patchy
This is a slow recovery and a lot of people are concerned about issues that could blow it off course. My feeling is that the economy is likely to continue a basic upward trend, but it may not be as strong and sustained as it was in the last 18 months. I’d expect the outcomes for graduates from 2014 to be slightly better than 2013, especially in building and architecture, engineering and financial services (and computing!). By the end of the year, we still won’t be back to where we were before the recession.
Added for High Peak Data – I have never been someone who thought that the recession was such an epochal event that the graduate jobs market would never recover. I expected the recession/recovery cycle to take about a decade, but I am starting to come to the view that we may need, at the very least, to see an end to public sector job losses, to get back to a pre-recession graduate labour market.
Uncertainty and the election
Uncertainty is back, and that breeds labour market caution. There are a lot of big things going on – we saw how much this can affect things in the second half of the year when the Scottish referendum brought an awful lot of uncertainty to graduate recruiters and the jobs market was disrupted. We have a General Election in May and that’s going to affect the graduate jobs market. This isn’t the blog for dissecting the right and wrongs of political policies, but some do have an effect on graduate recruitment.
Continuing public sector cuts will disproportionately affect the employment of graduates, particularly women and those outside the south east and if enacted that will probably mean more concentration of jobs in London and the overheated housing market there. Curbs on foreign students won’t have an effect on unemployed home graduates – they’ll just mean more hard-to-fill vacancies for recruiters and more skills shortages, with an effect on growth and on wages. And if business doesn’t think a new Government’s economic policy provides a stable platform for the national finances, they’ll be reluctant to invest – and that means fewer jobs.
But the most likely outcome of the election is a Government with a small majority and little room for manoeuvre, possibly a coalition of parties with often differing economic and social priorities, or even a minority Government. This doesn’t breed economic certainty and a lot of decisions are likely to be deferred until after May.
There is the argument that, economically, the two main parties are not that different (which, personally, I don’t buy), and that the paries , but we’re in the sphere of business confidence here and perception and belief are important. Once business has a chance to digest the election results and to work out medium-term effects, we’ll see more stability.
Very much a double-edged sword here. A lower oil price is good for the running costs of business and that might make them keener to recruit. Logistics, for example, is seeing skills shortages and may be a promising hunting ground for graduates looking for a less conventional challenge. But the big graduate success story of the last few years, Aberdeen, is already seeing belts being tightened and facilities being mothballed. A few more months of low oil prices is not going to be great for that part of the world and not for the jobs market for engineers and geologists, although both are in demand.
A lot of this will depend, of course, on how low the oil price gets and how long it stays there. A short period of low oil prices won’t have much of an effect, but a long period will.
The regions – again
I could pretty much cut out last year’s prediction and put it in here. London will continue to thrive and may continue to capture a larger share of the graduate jobs market. The REF 2014 results will not help, as they could drive a greater concentration of HE funding to the capital and south east. The larger cities – Birmingham, Manchester, Leeds, Edinburgh, Glasgow, Cardiff, Belfast – will continue to do well, with other cities with reasonable graduate jobs markets, including Bristol, Newcastle, Sheffield, Nottingham, Leicester, Liverpool, Oxford, Cambridge, Norwich (I’ve doubtless missed somewhere important), as well as the commuter towns and regions of the east and south east, will probably also see opportunities. But outside those areas graduates looking for work may not find a great deal, particularly if public sector employment continues to fall. Some towns or regions with a strong engineering sector, like Derby, Lancashire and Warwickshire may find that a demand for engineers boosts the local economy.
One of the hidden effects of the recession appears to have been to affect the proportion of graduates staying on in the city they studied. It seems to have fallen and this looks to me to be at least in part as a consequence of public sector cuts, especially in health and local Government. We also need to be mindful to monitor whether successful local cities may be drawing skilled roles away from other parts of the same region that need them – the graduate labour market in the north west, for example, may be getting more concentrated in Manchester.
Skills shortages and wages
There are clear signs of skills shortage in the graduate jobs market, in engineering and parts of financial services. Added to this, the ONS have noted that professional level roles are seeing wage rises above inflation. This suggests we might start to see increased starting salaries and pay rises for graduates – at least those in jobs that are in demand. I’m not so sure about engineers, though – a lot depends on how the oil and gas industry, which has been driving up wages, responds to low oil prices. Of course, higher salaries mean higher costs for business, so we will have to monitor business confidence.
How prepared is UK plc for recovery? Yes, increased business, but also increased skills shortage, employee turnover and wage pressure. Graduate retention is already a hot topic for recruiters, but it may become harder as employees become more confident and more inclined to look for moves.
We’re still in a shallow but sustained recovery, and so the likelihood is that we’ll see a modest improvement in the prospects for graduates in 2015, but probably not as much of an improvement as we saw in the last 18 months. There is a lot of uncertainty about, particularly with an election in 5 months, and with oil prices dipping. London is likely to continue to be strong, and there’ll be opportunities in the larger cities, but other areas may not fare as well. Skills shortages in some sectors, particularly in technical areas like engineering and computing, may start to bite and salaries might start to rise.
Am I right? I guess we’ll see in a year. Good luck to everyone in 2015.