Category Archives: Graduate careers

The 2016 graduate labour market and Brexit.

A lot of people are writing about their personal journeys towards their referendum vote tomorrow, but I’m going to assume that anyone who pays attention to anything I say does so largely to hear what I have to say about the graduate labour market.

Over the long term neither vote is likely to change the economic or social makeup of the country very greatly – there are far greater forces in play than the EU. The UK is a relatively rich nation and is likely to remain so. As a consequence it is also likely to continue to require significant immigration to fill labour needs and thus for net migration to the UK to continue regardless of the result. It does seem likely that were we to leave the EU, the nation is more likely than not to end up less wealthy than it would were we to remain but we wouldn’t know either way and we’d still be an affluent Western nation and so that question is more theoretical than practical. There are lots of things we might do that could affect our long-term prosperity that we don’t put to a referendum.

It is not an easy matter to work out exactly what Brexit would entail for the labour market over the long term. I am not going to try. We would need detail about trade deals and future economics that simply does not exist.

The short term is a different matter. Almost all those with an informed view agree that the economy would experience a shock and most likely enter a recession if we vote to Leave. Much of this is due to uncertainty about future business conditions, that great foe of business planning.

Indeed, as anyone who is involved in the labour market will tell you, businesses seemed to become much less certain about the UK’s post-referendum future earlier this year (probably around February/March for most), and as a consequence recruitment, particularly into new positions, appears to have slowed down considerably since then. Again, it’s not clear exactly what will happen if we vote to Leave tomorrow, but this Pathmotion survey, although relatively small in size, found that half the employers surveyed would reduce recruitment and the other half would leave it the same. Nobody surveyed expects that leaving the EU would allow or require them to hire more people. So this reinforces the idea that there would be a short term, negative impact on graduate recruitment. It may well be that simply having had the referendum in the first place might reduce the number of opportunities for new graduates this summer, simply because of the inhibiting effect that uncertainty has had on the labour market, but if Remain wins tomorrow, pent-up demand may well be released and graduates may not experience much overall difference with last year once the dust settles.

If we vote Leave? As is always the case, on any kind of economic shock, the first people to be affected are new entrants to the labour market. In the case of new graduates, a shock sufficient to cause a recession – as most authorities expect – would be expected to cause an increase in early graduate unemployment after six months, from the present level of 6.3% to around 8% or higher (it’s usually higher in a recession). Approximately 350,000 first degree graduates are expected to complete this summer, and a 1.7% rise in the rate of unemployment  equates to just under 6,000 fewer of them getting work.

Next we try to gauge the effect on the employment rate in professional occupations. Ordinarily, economic shocks hit lower skilled workers first, but Brexit is expected to hit sectors such as financial services and HE particularly strongly – indeed some financial services firms, such as JP Morgan and Goldman Sachs have stated that leaving the EU will probably affect where jobs go in their companies in the future and that it is likely that fewer will be in the UK.

So we’ll assume that we have an ‘average’ recession for one year, and that the proportion of graduates in well-paid professional roles at the start of their career will fall from approximately 68% of the cohort as it is now to 63% – about what we saw in the last recession. Around 245,000 graduates will enter the workforce this year, so a decrease in the professional employment rate of 5 percentage points comes to 12,250 fewer graduates in professional level jobs. This is a price to be paid by the individuals whose careers could be set back and by society, by having underemployed, able young people contributing less in tax to the Exchequer than they otherwise might.

I’m not saying if we vote to Leave the EU, exactly the scenario outlined will take place. Like all predictions about the future, my prediction is wrong and all we will find out later is quite how wrong I was. I don’t think it’s significantly wrong and if anything underestimates potential impacts. The figures outlined – 6,000 fewer graduates in work, 12,000 + fewer graduates in professional employment – is about what you’d expect if we suddenly fell into recession from the position we’re in now. It gives you some idea of the immediate effect that thousands of this year’s young university leavers might experience in the event of a Leave vote and likely subsequent recession.

We will have recessions in the future. We’ll probably have one within the next decade. None of them will be much fun. I’d rather we didn’t have an avoidable one right now.

I’m going to vote Remain. This is less about the labour market and more because of my long-held and deep-rooted belief in national and international co-operation. The campaign from both sides of the argument has rarely been edifying, and has too often showcased much that is bad about public discourse, political thinking and the UK media. But the Leave campaign has been especially grim and they have failed to give anything resembling a clear view of exactly how the UK will leave the EU, what will happen afterwards, or how they expect the country to look when the process is complete.

Ultimately, I feel the nation is strengthened, not weakened, by a close bond with our neighbours. The EU is a deeply imperfect set of institutions with many serious faults, but I do not see that in an increasingly interconnected world, isolating the nation from our existing bonds and agreements strengthens us. We’re all part of an international community, facing the same challenges on issues climate and population, and I feel we’ll achieve more as an enthusiastic agent to improve the EU than by withdrawing from a group we’ll nevertheless still have to work with, but with less say on the rules we will have to abide by. That’s why I will vote to Remain in the EU.

Why it’s ok for graduates when a company broadens recruitment

There has been a lot of excited comment about Penguin’s decision to open out their recruitment process to people who have not been to university. Some people have seen it as a sign that a degree is not as valuable in the workplace, and some links have been made to other companies broadening their talent searches. But to me, it seems like a perfectly reasonable move, and nothing to get too excited about. Why is that?

Firstly, publishing, as an industry, is not as diverse as it could be. In 2014, 86% of graduate entrants to the industry were white (as opposed to 79% of graduates), 85% had 2:1 or above (as opposed to 68% of graduates) and 61% came from a area of high participation in university, as opposed to 54% of all graduates. The book publishing industry is normally even more socially selective than the industry as a whole. Any measure that addresses this is to be applauded, although, I don’t think it’s too cynical to suggest that Penguin are probably still going to recruit a lot of white, middle-class graduates.

Secondly, it’s clear from even a cursory glance at employment data for the industry, or vacancies, that some of the jobs that will be on offer don’t need a degree, and that’s fine. Just like every other industry, publishing needs office clerks, sales administrators, goods packers, receptionists and other roles which are vital to keep the company running, but don’t need a degree. Last year, just 38% of new graduate recruits to the publishing industry said they absolutely needed their degree for their new job (another 35% said it wasn’t an absolute requirement, but it did help). Graduates have options in the current market, and it does them little harm for employers not to ask for degrees for jobs that don’t need them.

Thirdly, I keep talking about skills shortages, and publishing is not immune. This year the Higher Education Statistics Agency, HESA, are projecting that, for the first year in some time, we will have fewer graduates than in 2015. Yes, that’s right. We already have shortages, we’re likely to have more vacancies this year, and we’re likely to have fewer graduates, in total, than last year. Publishing is a popular industry, but it’s very London-centric, it doesn’t always pay the best wages, and London will be a battleground for a shrinking pool of graduate talent this year. And we know that graduates are declining job offers because of the strong position they find themselves in. Smart companies will acknowledge that in a market where graduate talent is in demand, it makes sense to broaden their options. Graduates have no need to lose sleep over it.

And finally, last year, Penguin did this to recruit new marketing talent. ‘The Scheme’. Open to anyone, regardless of qualifications. Yes, they already did this last year. But it got a lot more column inches in 2016. Penguin have some savvy marketers.

Charlie’s Crystal Ball – how did I do in predicting the graduate labour market in 2015?

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.

Continue reading Charlie’s Crystal Ball – how did I do in predicting the graduate labour market in 2015?

Which industries are most likely to demand a 2:1 or better?

70% of graduates from 2012/13 who took a degree with a classification got a 2:1 or above, and 76% who were employed in a professional-level job after six months, had got a 2:1 or above. That 2:1 is pretty important.

I have taken a look at the industries that employ the largest and smallest proportions of 2:1s and above, only looking at degrees with the usual classification system, as otherwise health looks weird.

Publishing was the hardest industry to get into without a 2:1 – 86.6% of new entrants had at least a 2:1, and that rises to 93.8% for book publishing. Those who got in without a 2:1 tended to be in journalism or marketing roles, to have got their jobs through personal contacts or agencies, and to be from areas of the country with a high level of HE participation. This is probably worth bearing in mind the next time we hear media commentators telling us about standards; their industry is a very atypical one (and far more London-focused than almost the whole rest of the economy).

Law and accountancy are the next toughest, with 86.2% with 2:1 or above. Accountancy is harder than law – 90% with 2:1 vs 79% with 2:1. Small businesses were more likely to recruit 2:2 or below, mostly as paralegals in law, or as accountants or accounts managers in accountancy, and personal contacts were paramount to get into both industries without 2:1 (although agencies were also important in law).

The third in the list is the ‘other vehicle’ – ie aerospace and defence vehicle – manufacturing industry. 86.1% of new entrants had 2:1 or above. This is quite a small industry for annual recruitment of graduates, and the main roles are in engineering, where skills shortages mean that engineers with 2:2 or below sometimes get jobs in the sector, often through personal contacts.

Best get a 2:1 if you want to get in these. Better still, a First
Industries most likely to demand a 2:1 from new graduate entrants from 2012/13

At the other end of the scale is the residential care industry, where 61% of new professional entrants had a 2:1. 50.4% of new entrants to residential care nursing had 2:1 or above, rising to 63.4% to roles specifically in the care of the elderly and disabled. Many of these jobs are in nursing or general welfare roles, and are filled through agencies and the data suggests there are recruitment shortages, especially in London, but it also looks as if some jobs that are being coded as graduate and being taken by graduates may not really require a degree.

64% of new entrants at graduate level to the food and beverage service industry had a 2:1 or above – much the most common roles here are as pub or restaurant managers, where a 2:1 is useful but not vital, and a similar story is in the sports and leisure industry where 65% of new entrants had 2:1 or above, and the crucial subsector is in sports and leisure centre management, where a 2:1 is not absolutely vital.

Industries least likely to ask for a 2:1 for new graduate entrants from 2012/13
Industries least likely to ask for a 2:1 for new graduate entrants from 2012/13

It is possible to get into a professional job without a 2:1, but you might need to be realistic about your target industries and to work whatever contacts you have available to stand a decent chance of getting in. This may ease as skills shortages really begin to bite, but it’s always best to assume you have a fight on your hands and to prepare for it.

The 2015 graduate jobs market – how will it look?

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.

Oil

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.

In summary

 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.

Charlie’s Crystal Ball – how did I do predicting the 2014 graduate jobs market?

This is taken from my work blog, but it worth sticking here along with the companion piece.
The start of the year is a time for traditions, and one of the blog traditions is that I pretend to hate making predictions and then do exactly that, but first, let’s check if it’s worth actually reading them, by examining last year’s speculation and seeing if I were right.

I predicted:

STEM – on the up?

The jobs market will probably improve for graduates from most science and engineering disciplines – particularly for engineers, who have really suffered over the last few years. Although there may well be growth in employment in small specialist engineers, especially those with a good export presence, engineering recruitment will continue to be dominated by the larger firms, and if you want to gauge the engineering jobs market as the year goes by, you could do worse than keep an eye on the big players. I’m not sure that the prospects for biology graduates will necessarily improve though – their jobs market seemed to worsen last year.

Yep, pretty spot on, although biology graduates did see a slight improvement in their fortunes. It wasn’t much, though.

Financial and business services to grow

Economic recovery in the UK will necessarily involve growth in finance and business services. Marketing and PR has been a graduate success story in the last few years and has been drawing graduates in from all sorts of disciplines – the rise of digital media and content means that graduates with good IT skills have a niche in marketing – and I don’t see any reason why that won’t continue. I’m not sure we’ll see a huge increase in financial services recruitment but we will probably see a little growth.

Right here as well. Financial services is interesting, though and will bear close inspection in 2015.
 

Cities on the rise

Although things are broadly positive, this recovery doesn’t look very evenly shared out at the moment. It’s pretty focussed on London and the south-east, although I’d expect those cities that have weathered the recession reasonably well – Edinburgh, Glasgow, Leeds, Birmingham, Manchester, in particular – to probably share some of the joy. Aberdeen’s unique jobs market will probably mean another good year for engineers and technical graduates wanting to move up there. But if you’re outside those areas, particularly if you’re in a smaller town, or in the north of England or Wales, you probably won’t see much of a sign that the graduate jobs market is picking up at least at the start of the year. I expect regional and local differences to become more pronounced in the early part of the year – more graduates in the north-west and north-east moving to Manchester and Newcastle respectively, more graduates everywhere heading for London. It remains to be seen whether it’ll be a temporary phenomenon or whether a small but subtle permanent realignment of skills concentrations is underway.

The regional agenda became more important during 2014 as it became more clear that the benefits of recovery were not being equally shared. I’d say I was reasonably right – I may have missed Newcastle, Cardiff, Sheffield and Belfast from the list – but I was hoping for a bit more even growth around the country. Aberdeen is another interesting case – I’ll talk about that in my 2015 predictions.

In summary

I think the Class of 2014 will find the jobs market a little more welcoming than their counterparts from the last two or three years. Not where it was pre-recession, but a little kinder. Unemployment in DLHE will be about 8% and starting salaries around £20k as they were this year. They’ll still have to work hard – very hard in many cases – to find work, but they might find it a little easier and they’ll have careers staff who are now well-versed in recession job-hunting to help them out. Happy New Year, and good luck to everyone.

If anything, I erred on the side of caution – actually, the overall market improved more than I expected.

I also suggested that other reports of a surge in the IT market were a bit overblown and that computing graduates would still have high unemployment rates. Well, I was half right. Computing graduate unemployment rates are still high, but the IT market did improve markedly and there are now skills shortages. I’m trying to get to the bottom of how both these things can be true at the same time with the help of data kindly provided by the UKCES, so watch this, and other, spaces.

So, in the end, I really didn’t do too badly at all. I clearly have terrifying psychic powers, like a graduate labour market Professor X.

Next up, using those powers for good by making predictions for 2015.

Employability versus Recruitability.

I was on the plenary panel for the QAA’s Annual Peer Reviewer’s Conference in Leeds this week, and was struck by one of the many interesting remarks made by a fellow guest, Nalayini Thamber, the Director of the Careers and Employability Service at Nottingham University.

Nalayini’s point was the potential tension between ‘employability’ and ‘recruitability’. Continue reading Employability versus Recruitability.

I just don’t know what to do with myself (slight return)

(I originally put a version of this post on the HECSU blog but have taken the opportunity to expand it a little).

Have been thinking about my visit to the Thomas Deacon Academy in Peterborough, and my thoughts turn to Dusty Springfield.

I was impressed with the building and with the staff, but particularly with the excellent and perceptive questions I got from the students themselves. Audience feedback is one of the highlights of this sort of talk for me, and students tend to keep you on your toes.

Continue reading I just don’t know what to do with myself (slight return)