This is a bit late and since I’m not doing a proper one next week due to having some proper time off, I’ll do a bit of a mid-week update here, which includes bits of the Luminate piece earlier in the week and updates the rest to today.
Careers-related soundtrack is from OMD with Genetic Engineering. You want this one loud.
What we’re hearing:
- As lockdown eases things seem to be improving in those sectors that are getting back to work
- But we are a very long way at present from the labour market we had in February
- The graduate labour market has suffered significant damage, particularly in the arts – but things are far worse for non-graduates. Many key graduate employment sectors – in health, social care, IT, business services – have been much less affected than many other areas of the economy.
- Things are also looking difficult for the self-employed although that may be partly because a lot work in sectors, such as the arts, that have been badly affected
- Many SMEs are short of cash and have no prospect of recruitment right now.
- But many businesses feel they can get back to operation quickly once restrictions are eased and are keen to do so
- It is now very clear that there is a significantly greater interest in postgraduate study than usual. It’s not yet clear how enthusiastic prospective students might be about a blended learning experience though
- The outlook for international student recruitment is very tough but many of our key international competitors have their own issues
- Many employers are yet to make firm decisions about recruitment for the rest of 2020 and are continuing to defer decisions. Some businesses have quietly shelved recruitment plans, but others are making plans to recruit if the opportunity and business conditions allow. Don’t assume that the graduate labour market will remain this subdued all year.
- 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.
- We’re getting increasingly concerned about the way the collapse in employment in retail and services might affect term-time jobs for students in the future and thus the ability for students from less advantaged backgrounds to support themselves at university
- There are also worries 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) result, and the ability of institutions (who are likely to have much less resources available) to cope with that.
The Bank of England reported its quarterly Agent’s summary of business conditions on 18th June, this for Q2.
In business and finance, activity weakened further overall, but developments across sectors were mixed. Activity held up in corporate restructuring, audit, debt management, employment and probate law, IT and telecommunications. Insurance activity was also maintained and demand for banking and financial services remained strong as companies sought finance to bridge the lockdown. But discretionary spending cuts have led to weakening in marketing, advertising and recruitment services.
In the professional services sector, many employees have been able to work from home during lockdown and that has led to reduced disruption. A number of companies said they don’t expect to return even to limited onsite working until the autumn. Some have been able to improve productivity during lockdown, reducing their need for staff.
Manufacturers are resuming production, though many are operating well below full capacity due to social distancing measures , and a high proportion of workers remain on furlough or reduced hours.
Social distancing and weak demand are expected to constrain output for several months, with a consensus of production being down 20% by the end of the year. The aerospace, automotive, heavy engineering and oil and gas industries have been most severely affected, leading to redundancies with more expected as the furlough scheme unwinds.
Food producers have also been hit by loss of food service business and a drop in demand for pre-packaged food, which has been only partially offset by higher demand from supermarkets. The industry estimates it could take two to three years for food service demand to return to pre-pandemic levels. By contrast, producers of chemicals, technology and healthcare and personal protective equipment (PPE) have reported strong demand. Supply chains were generally stable, with only a few reports of shortages.
Construction activity resumed on a phased basis in May and June, though mainly on sites where building had already started or was close to completion. Activity was being constrained by social distancing measures and by shortages of materials. Enquiries and orders for commercial work over the next two years have ‘collapsed’ and the industry is concerned that changes to working habits as a result of the pandemic could affect office developments. Redundancy consultations are reported to be underway at some employers.
However, public sector projects were holding up, and housebuilding activity was resuming slowly, though house builders expected output to remain well below normal levels for some time.
In the retail sector, while the majority of workers remain on furlough for the time being, permanent store closures, and therefore job losses are expected. Some smaller retailers are reluctant to take staff off furlough until there is more clarity over how demand will evolve.
In travel and tourism, major operators have already announced thousands of redundancies, and many smaller contacts in the sector also expect to cut jobs. Some leisure and fast food companies reported a small reduction in the use of furloughing as outlets begin to reopen.
The graph for employment intentions over the next six months is unequivocal – we expect to see significant redundancies.
Pay pressure has fallen sharply, as companies have deferred pay deals, cut pay or reduced working hours. There are also reports of sharp declines in bonus and commission payments.
The long-awaited data from the Graduate Outcomes survey of university leavers from 2017/18 was released last week. Just to declare an interest, I sat on the Steering Group.
Overall 71.8% of UK domiciled first degree graduates from the UK were working after 15 months. 83.% were studying, and 9.5% were combining both work and study (mainly working full time). 5.1% were unemployed and 5.2% were engaged in other activity.
Here’s a blog I wrote for Jisc on the data itself, and another I wrote for WonkHE on why it’s still relevant in the COVID-19 era. Tristram Hooley has his say here and WonkHE data guru David Kernohan is here.
There will be a great deal more on this data over the coming weeks and months as more is released and data users get their own datasets.
This week’s updates from the ONS are here – reporting to the 25th June.
Nearly half of all working adults (49%) had worked from home between 11 and 14 June 2020, an increase from 41% the previous week. This was mainly driven by adults shifting from not actively working to working. 5% of the workforce had returned from furlough leave between 18 May and 14 June 2020. Data from the (ONS’s) Opinions and Lifestyle Survey (OPN) to 21st June showed that 61% of working adults said the pandemic was having an impact on their work. The most common impacts reported were
- decrease in hours worked
- being furloughed
- finding working from home difficult
The proportion of working adults who reported they had travelled to work in the past seven days increased to 44% this week from 41% last week.
One-third of adults (33%) who had worked in the last seven days said they had done so exclusively at home – a decrease from 38% last week
The House of Commons Library have updated their briefing on the effects of pandemic on the economy, largely to take into account the ONS labour market update. Although much of the content is familiar to regular readers of these updates it remains an excellent resource as an overview of the whole impact on the UK, and particularly important from a policy point of view as this is the core of Commons briefings on the topic. Two important diagrams are this on the sectors affected by furlough
And this on the regional impact
The ESRC’s Economics Observatory, has updated with a very insightful and thoroughly referenced analysis of the prevalence, effects and possible future of homeworking.
Of particular interest is the latter section referencing work from the US. A survey of 1,500 hiring managers found that more than half reported working remotely has gone better than expected, while only one in ten said it has gone worse. US Jobs that are difficult to perform under social distancing policies are more often held by workers who are less likely to hold a college degree, to have a large amount of liquid wealth, to be white or to have been born in the United States.
They have also examined the effect of pandemic on the UK oil and gas industry, and report that Oil and Gas UK predict 25-30,000 job losses over the next year and a half unless there is direct Government policy action. The supply chains contractors, particularly those dealing with exploration, appraisal and new field developments, will particularly suffer.
In a similar vein, McKinsey have produced this discussion paper on the future of work in Europe. It’s a chunky 52 page number, that covers a lot of very interesting ground, but particularly eye-catching is Exhibit 13 (we don’t do ‘Figures’ in this kind of analysis) which states that current trends towards a higher level of education in the European workforce are not going to abate with automation and post-pandemic.
Almost the areas of employment expected to see growth are those where tertiary education is the norm, whilst with very few exceptions, those expected to shrink ask for lower levels of qualification. There seems very little evidence that graduates will be in less demand in the next few years. The whole paper is very highly recommended.
Time to revisit the IZA’s magnificent collection of global data to examine the effects of COVID-19. Data nerds everywhere can find things to bewitch and delight them within. I am delighted to report Prospects Luminate is amongst the global resources listed.
The IES have updated their ongoing analysis of Adzuna data on job vacancies from the Government’s ‘Find A Job’ site, to June 21st.
112,000 new vacancies were notified in the week to June 21st, up on the previous week and the third weekly rise in a row. There were 386,000 notified vacancies, again a healthy increase on the previous week and the best since the mid-April surge after Easter – but still running at about half the levels pre-pandemic. The IES remain cautious but suggest that the data shows tentative signs of recovery in the labour market, particularly in areas such as legal, IT, sales, accounting/finance, and engineering. Notably, these are all areas where the workforce are predominantly graduate.
However, the comparison of unemployment and vacancy data, which reflect the situation in mid-May before any increase in vacancies emerged, show that there were over eight unemployed claimants per vacancy, up from around four and a half in April.
This is the average across the country, and in some ex-industrial and urban areas outside of the south and east of England there may be as many as 50 claimants per vacancy.
This week the IES have again looked at SOC data for the period between the second week in March and the third week in June, and this is especially enlightening for examining the graduate labour market.
Everything down to Business and Public Service Associate Professionals are SOCs 1 to 3 – so professional level vacancies. Note that these are percentage falls and a fall, for example, of 66.7% in business and finance service professionals is extremely grave but this is a very large job area and so there will still be many unfilled vacancies.
There is also a very detailed 3 digit SOC analysis for the same period.
Finally, there is also an analysis of the data using Adzuna’s own categories. All jobs categories have seen increases in vacancies in June, with sales seeing the largest rise.
The Recruitment and Employment Confederation (REC) have surveyed employers along with ComRes for their JobsOutlook. Business confidence in the UK economy improved between May and June, although it remains strongly negative. Far more encouragingly, more employers are planning to expand their workforce than reduce it in the next three months. The net balance now sits at +6, an improvement of 11 percentage points from early May. Employers’ hiring intentions for the medium term (the next 4-12 months) also improved, rising from net: +6 in early May to net: +15 in June.
One particular area that has been affected by pandemic is work experience, and this has prompted a good deal of interesting discussion of how virtual work experience might be organised and managed. FE Week carries an interesting piece looking at this question.
Another area that has seen a substantial hit are the creative industries. The Creative Industries Federation commissioned Oxford Economics to examine the impact of pandemic on the sector. The report predicts a 119,000 drop in employment among employees and a further 287,000 job losses among self-employed workers, compared to 2019 levels. In total, 406,000 creative jobs – 1 in 5 of the entire industry workforce – are considered at risk. More than one in three self-employed respondents to the research reported having had all their freelance contracts terminated by Q1 2020. 46% had experienced half of their freelance contracts terminated. The report includes sub-sector breakdowns.
PWC are back with another examination of the economic effects of COVID-19, right up to June 24th. Much of it discusses the UK labour market figures from the ONS. PWC remark that 79% of businesses were trading at the end of May and another 9% were expecting to be trading by the middle of June. Businesses also seem to have stabilised their cash reserves, with around 43% of businesses having cash reserves of up to six months. The cash position for larger businesses tends to be better. The economic projections are useful but not joyful reading; the consensus forecast currently has UK GDP falling by 9.2% this year – needless to say that is new territory for the UK economy. There is also a very interesting section on trade which makes sobering reading and is likely to have a bearing on the UK labour market in time.
The Institute of Fiscal Studies have published their own analysis of the regional impacts of COVID-19 in England, focusing on three key areas of vulnerability. The whole report is interesting, but our attention is with the labour market impacts. The IFS find that more affluent local authorities might face a bigger labour market challenge than first anticipated because many workers are moving from one local authority to another to work. LAs that are not usually vulnerable to this kind of shock appear to be under threat, and if many workers in shut-down sectors live in a different local area from where they work, it is possible that the economic hit will be felt in a different place from the need for social support, which is a significant policy challenge.
In addition, the IFS note that one effect of this crisis may be to expose many workers to the means-tested benefits system for the first time. The way this affects their perception of the system and of unemployment in general may be a long-term effect of the pandemic on policy.