It’s the most wonderful time of the year – a time when I get to look at what I said 12 months ago and see whether it turned out to be right. Or, alternatively, the bit where I mark my own homework and declare myself a genius.
This time last year I made five predictions about the graduate labour market. Let’s go through them one by one.
Economic recovery – slow and patchy
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.
What actually happened is that recovery seems to have been at least as strong as it was in 2014. Outcomes for 2014 graduates were rather better than 2013, and in all subjects – although I picked the big winners reasonably well. We are nearly where we were before the recession began in 2007/8, and may well get there in 2016. Overall – not completely wrong, not entirely right
Uncertainty and the election
This was quite long and essentially I predicted two things – that there’d be uncertainty, and hence a tentative graduate labour market, before a close election result with more certainty, and hence a stronger market afterwards. I also predicted that we’d see curbs on foreign students and graduates which would go hand in hand with greater skills shortage.
I was right about the overseas nationals issues, but got the effects of the election wrong. In actual fact, the market was sufficiently strong that labour demand was maintained regardless of any uncertainty as skills shortages were beginning to bite. Not my best prediction.
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.
(Note to self – dig this prediction out every time I fancy straying outside my expertise.)
Overall – one bit right, one bit wrong.
Not hard to predict that this would hit the oil and gas industry, and it has been duly hit. The industry had been essentially buying up engineering talent and with mothballing and layoffs, some of those sought-after engineers are now being released into the jobs market, but not enough to compensate for demand.
Overall – pretty much correct
The regions – again
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.
There is not a lot to say here other than this is essentially what happened. I did think that Manchester might overtake Birmingham as the strongest graduate jobs market outside London, but Birmingham remained in pole position there but by and large I was correct here, even in the regional detail.
Overall – correct
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.
Correct except (possibly) for the sections about pay rises. Data for new graduates for 2015 is not yet available and those who have completed three year degrees are the first cohort to have paid the full £9,000 for their entire degree. Back in 2011, the AGR Survey reported that recruiters expected this group to have significantly higher wage expectations than their predecessors, and we will soon find out if that is the case. Skills shortages have become a serious issue in the graduate jobs market as predicted, and much of this section went as predicted. We are getting reports about some eye-watering salary increases for engineers from in-demand specialisms, such as certain rail engineers, so I was a little cautious there.
Overall – correct as far as we know, although I was probably a bit overcautious about engineers.
So, I got the issues of skills shortages, the regions and the oil industry reasonably correct, was a little too pessimistic about the way the market might improve, at least in the first half of 2015 (but got the detail right) and was largely wrong on the effect of the election. So, most things have proceeded as I have forseen.
Coming up next – what’s going to happen in 2016? Happy New Year, everyone!