Tag Archives: employability

Seven reasons why employers may be unable to recruit

I’ve been reading the recent paper from Warwick’s Institute of Employment Research and IFF on skills mismatches in the UK economy.

It’s a long paper, and quite technical, and much of it deals with the vexed question of how to identify skills mismatches and shortages in the first place, which is something of great interest to me, but a trifle niche. But there are some important findings in here for policy, practise and employers, and I’m going to look at it from the perspective of graduate recruitment.

The report combines analysis of data from surveys such as the 2013 Employer Skills Survey (the 2015 survey has subsequently been published) and interviews and case studies of employers who are experiencing skills mismatches and shortages to explore why they’re happening and what the response is, and it’s this part that is particularly interesting.

The basics of the report are that the authors believe that there are not many absolute skills shortages – where there are just not enough people with certain skills and training to fill demand – in the economy and where they are tend to be in management, in graduate roles in IT, in engineering and in business services (the latter in roles such as procurement and marketing/PR), and in skilled trades. It also, interestingly, finds that there’s little evidence that we have too many graduates either, but does counsel that

graduates who were mismatched (over-qualified and over-skilled) in their first job had a higher likelihood of still being mismatched to their job five years later

which has implications for the way we advise graduates on their early stages of their career.

There is also a mixed view of the apprenticeship agenda – there is a clear potential role for apprenticeships in meeting certain skills shortages, but some employers still need convincing.

It is at an intermediate level where skills supply is not meeting demand. Apprenticeships are well placed to meet this demand but there is prima facie evidence that employers are unwilling to make what often amounts to a substantial investment in this type of training because of concerns about it meeting their specific, unique skill needs and being able to retain the services of the apprentices once they have completed their training…. Accordingly there needs to be some means of reducing the risk that employers face when investing in programmes such as Apprenticeships

But the part that interests me is where the researchers delve into why employers struggle to fill vacancies. The Employer Skills Survey gives the most common reason as ‘low number of applicants with the required skills’, which can give the impression that there’s nobody out there, or that applicants are not good enough. In actual fact, eight main overlapping reasons emerge from the work – I’ve condensed them to seven as I think two of them can be combined.

  1. Not enough people. The economy has grown relatively quickly since economic recovery began and so some employers who want to expand have found that there are not enough qualified employees in some fields to meet demand. Engineering, IT and business services are all affected here.
  2. Disadvantageous location. Anywhere that is off the beaten track and, in particular, does not have good public transport links, is often perceived as a less desirable job and those locations will need to be sold to potential employees. Graduates tend to be more concentrated in larger cities and areas outside those cities may find a smaller talent pool to draw upon. And not everyone wants to work in London, either.
  3. Narrow job specifications. The narrower you make your specification, the fewer people will have the skills you want and if the role is especially niche, the less likely training providers will run the specific courses you need people to have attended. This can often go hand-in-hand with other issues on the list. In these cases, employers may need to be a little more flexible with their requirements and readier to accept the need to train new graduates.
  4. Wanting cutting edge skills. Rapid technical change means employers seek skills mixes that may not really have come to the employment market yet in order to exploit new business opportunities. Obviously, this is particularly pronounced in the tech sector. We need to think about how universities can address issues of rapidly moving skills demand in the context of degrees that typically take three years to deliver, but also employer training may have to play a central role.
  5. Wanting skills that are on the way out. Skills supply can be falling faster than demand. This is best illustrated with an example – a lot of people have old gas boilers which need servicing, but the technology is obsolete and newly trained gas engineers are obviously trained in new tech. As experienced engineers retire, their skills are still needed at the moment, but new engineers are understandably reluctant to train in outdated skills. This is less of an issue in the graduate market, but it’s not one that’s readily soluble at the moment unless there’s a way to be very creative with training.
  6. Unattractive terms and conditions. Never assume that a company – particularly a smaller business – really knows what the current going rate for new employees in their industry and in their area actually is. They will pay what they think they can afford and when that happens to be below the local wages for the people they need, that’s a problem. This seems to be a particular issue for graduate roles in tech, where starting salaries can be quite high. Employers in this position may need to learn to sell their positions effectively, to write better job ads, and we need to help them fully understand local labour market conditions.
  7. Unwillingness to compromise. ‘I want the perfect employee’.  The employer has written a job spec, and if they don’t get exactly that graduate, why, they won’t recruit at all. This specification often asks for a specific mix of technical skills, soft skills, the right qualification (employers here are wary of what they see as overqualification as they see that as a signal that the employee will not wish to stay) and the right kind of employment history (such as not having moved jobs very often). There’s a lot going on here, to do with managing employer expectations, and with ensuring that graduates – particularly technical graduates – supplement good technical skills with soft skills to ensure they can get good jobs.

Employers who struggle to recruit find increased pressure on existing staff, lose business,  and struggle to innovate and adapt to change, so it’s in everyone’s interest that we support them to understand the labour market, to make sure they write good  job adverts and have realistic expectations of the talent that is out there so that business can find it easier to get – or train – the people it needs to grow.

There is a finite supply of talent out there and every time you specify a skill or an attribute, you exclude a few more people who feel they don’t match that specification. It’s not hard to get your potential employee pool down very quickly, and so we all have to work to make sure that pool has the best talent mix we can.

 

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Moving through history

The development of the Teaching Excellence Framework and the way that it will use measure of graduate employment as a metric to judge institutions makes it all the more important that we get a real grip on how the graduate labour market works.

Graduate migration – see my most recent piece for the latest data – is a phenomenon that has subtle but profound effects on the way we can and should think about graduate employment.

To help understand the migration groups, here is a graphic developed by my excellent colleague Ellen Logan.

migration patterns

Let’s revisit this year’s migration patterns.

leavers etc
Employment groups for UK domiciled graduates from 2013/14

It is now a slightly alarming 11 years since I first conducted an analysis of this kind, so let’s have a look at the data from graduates from 2002/3.

2003 migration patterns
Employment groups for graduates from 2002/3

There are some differences – most notably, Loyals have increased for all regions except London (and, interestingly, Northern Ireland), Incomers are also up in most places, and Stayers are down, quite a bit, in some places (especially Scotland).

But the basic patterns have not moved in over a decade. We may find that, in the future, regions retain slightly fewer people who moved to the area to study, but more people will not move far to study or work but these patterns are what graduates do to find work, and we can assume that this will continue. .

This shows that graduates are not as mobile as a lot of thinking has them and that many can’t or won’t move far or to locations that they do not have a connection with for work. There are practical implications – most graduates who go to work in London, for example, are either originally from the region or studied there. And the same effect is intensified for every labour market outside London.

If you’re a recruiter, this ought to make you think about how you source your talent. If you recruit in Leeds, your new recruits will largely have lived or studied nearby. If you a London-based recruiter with a diversity agenda, even if you see yourself as attracting talent from all over the country, in reality many of those attracted to your offer will have existing ties to the capital, with  implications for your ability to recruit BME graduates and graduates from less affluent backgrounds.

If we are to have metrics based on salary, therefore, we have to understand that they are at least to some degree a measure of where an institution is sited and where they draw their graduates from.

Much has been made of the IFS finding that a group of institutions have graduates who earn under the national average for all workers; anyone familiar with the graduate labour market can probably have a good stab at the identities of those institutions, predominantly universities in less affluent parts of the country, serving labour markets with low wages. We should not allow a situation to develop where institutions with a valuable function in developing local economies feel incentives to send their talented graduates outside those economies to ensure metrics are met.

For institutions, it makes it clear that you will need to be absolutely on point about your local labour markets and to understand where your student cohort comes from. There’s a lot more to understand about how and why graduates move to find work, and what this means for the UK. Is it right to think of the ‘UK graduate labour market’ at all as anything but an abstract, or is it really a series of overlapping markets with their own character and needs? And, crucially, how do we ensure that a framework develops that does not effectively penalise universities for not being near London? We have work to do.

 

 

 

2016 – the year of graduate undersupply

This morning, RICS, the Royal Institute of Chartered Surveyors, released their Q4 Construction Market Survey. 66% of construction professionals reported recruitment difficulties to be the most significant barrier to growth in the last quarter of 2015. 60% of survey respondents had difficulties finding quantity surveyors.

At the same time, HESA’s new figures on student numbers showed that the number of students enrolled in UK higher education fell 1% last year.

The RICS data follows a pattern emerging from many sources in recent months. The British Chambers of Commerce noted in their Q4 Quarterly Economic Survey that 79% of manufacturing companies and 64% of service companies had trouble recruiting last quarter (more data on their excellent web site). The image below, taken from their site, puts those difficulties into context.

BCC recruitment difficulties
The British Chambers of Commerce do some very good graphics

And a recent report from Universities UK (to which I contributed) notes that we currently have an undersupply, in total, of graduates.

We will shortly get Employer Skills Survey data from the UK Commission for Employment and Skills that will help us to map the nature and extent of many of these undersupplies, but even data from the 2013 survey outlined widespread shortages of graduates across multiple sectors.

Some of the most serious are in engineering, where we simply don’t have enough graduates in most disciplines, and in IT, where there are not enough graduates with the skills to meet demand. The RICS report shows that allied professions particularly surveyors, but also planners and related roles, are in short supply. But the focus on STEM skills does tends to distract from the fact that we also have widespread graduate recruitment difficulties across many service industries.

There are two main ways we can address this issue wrongly. The first is to assume that the problem is that graduates are not good enough and berate the education system. Although not all graduates will be as ready to enter the workplace as they could be, this only applies to a minority. The 2013 ESS found that the large majority – well over 80% – of recruiters felt that graduates were well-prepared for work. The second is to blame graduates for their career choices. Now we charge students £9,000 a year to take a higher education degree, explicitly on the grounds that they will personally benefit from their study, they quite reasonably feel they can then do as they choose with that qualification.

The issue is that there are not enough graduates, and that those we do have are not always easily convinced or trained to enter the professions where we most need them, and that this undersupply of graduates is an active barrier to growth in some industries.

This can be frustrating. A majority of graduate occupations are, at least in theory, open to graduates from any discipline, and this goes particularly for occupations in business service industries. We see this most starkly in marketing, an expanding occupation with significant demand for graduates and where marketing graduates made up a relatively small minority of entrants in 2014 because there were simply not enough to meet demand.

But it’s not always that easy. For many graduates in less vocational degrees that allow significant career flexibility, the sheer range of options can itself be paralysing. It becomes very difficult to choose from the dizzying range of career options available, especially when a student is not really familiar with what they all entail. And whilst there is more some sections of the economy can do to persuade workers with the right skills to join their industries, the same is not true everywhere. If we want to fill mechanical engineering vacancies, we need suitably qualified people.

But are we doing enough to help that process along? Do we make it easy enough for graduates with appropriate qualifications to convert to professions like engineering or surveying where the lack of qualified staff actively harms economic growth?

As we go into 2016 with recruitment difficulties towards the top of the agenda, these are some of the questions we need to wrestle with.

For institutions, we need to ensure that students get the right support and guidance and to build their confidence so that they feel equipped to make decisions. Just because the market is rather better for graduates in 2016 than it was in 2012 doesn’t mean that the decision making process is any easier.

For employers, this year will see more recruitment and retention difficulties. It will mean being more innovative about addressing them, looking more widely at the likely supply of graduates in their business areas, examining reward packages and ensuring that they remain competitive and about developing new strategies to cope. These issues are not likely to go away until we have another recession, and even then they will be only temporarily put on hold before they return.

For students, this means recognising that good graduates will be in demand from multiple sectors, but only those who keep their options open. Good advice and guidance can help make those difficult decisions – but they should never forget that they have a long working life ahead of them, and it’s ok if they don’t quite know what they want to do, or even if they spend a little while doing something that they later conclude isn’t for them. Better to make career mistakes early.

As recent economic news, and the worries expressed from some quarters shows, there is a lot that can happen in 2016. But the most likely outcome at the moment is that in 2017 we’ll have more shortages of graduates over more areas. Let’s try to mitigate that as much as we can.

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?

What’s going on in the graduate labour market?

It’s been a busy old summer.

This isn’t another blog about the Green Paper – much ink has been spilled on that subject already and more will be in the future, I am sure. But it is about some of the issues that are brought up in the Paper and will arise in the course of debate and implementation.

First, what is the current state of the labour market for graduates? The answer is reasonably simple – the recession, at least for graduates, is over, we are in recovery and prospects for new graduates are what we’d expect from a reasonably healthy graduate jobs recovery. The evidence is manifold, but perhaps the simplest comes here, from historic early unemployment rates for graduates as shown in the graph below.

historic unemployment rates for UK domiciled first degree graduates since 1976
That’s a lot of recessions.

We’re clearly in a state of falling graduate unemployment (note how often we end up in graduate recession, though). The early part of 2015 had a great deal of positive news, but the second half suggests that the rate of recovery has slowed and we can see that hiring intentions are slowing, especially in manufacturing. I would expect things to improve marginally this year and then flatten out in 2016 – but as we can see from the graph, we’re getting close to historic lows in the early graduate unemployment rate anyway.

This has a number of effects, but probably the most crucial is in skills shortages. This is where the Green Paper can come across as a little misleading. The Paper acknowledges that employers are now struggling to find the graduate skills they need, but the section, ‘The Productivity Challenge’ says the following

However, at least 20% of graduates are not working in high skilled employment three and a half years after graduation, and most employers of STEM graduates are concerned about shortages of high quality applicants

and then follows with

Too many organisations find it hard to recruit the skilled people they need; this poses serious risks to the competitiveness, financial health and even survival of many businesses. Surveys by the UK Commission for Employment and Skills (UKCES) reveal a sharp rise in skills shortages. Such deficiencies are longstanding in some sectors, preventing us from rebalancing the economy and underlining the need for decisive action.

So, what’s happening? Let’s look at the second point first, ‘most employers of STEM graduates are concerned about shortages of high quality applicants’. This comes from a new paper by the Institute of Employment Studies and HECSU for BIS, “Understanding employers’ graduate recruitment and selection practices”, of which, happily, I am a co-author. What’s actually going on is, as the UKCES Employer Skills Survey also shows (and I spent most of the summer looking at this data), we just don’t have enough graduates applying for jobs in a whole swathe of graduate roles across the economy. Not just in STEM, although engineering in particular is affected, but across most sectors, including health (we are so short of nurses), manufacturing, finance and business services. As the Bank of England wrote in July.

Recruitment difficulties had edged up and were at levels last seen during 2007, having broadened recently across a wide range of skills, levels of experience and occupations. For example, reports of a scarcity of experienced middle and senior managers had become fairly common. … In consequence … apprenticeship, graduate and school-leaver recruitment programmes had been either maintained or increased.

Recruiters are concerned with getting enough talent, and with retaining that talent when they have it, and there’s little evidence of those issues easing at the moment.

Let’s now turn to the first point, “However, at least 20% of graduates are not working in high skilled employment three and a half years after graduation”. As we address in great length in Chapter 2 of the new report, there is no consensus on what a graduate job is, nor are we actually sure what a high-skilled job is, but there seems to be a lot of evidence mounting that even were you to identify what these terms might mean today, the nature of industrial change is such that a job that might be ‘non-graduate’ or ‘low skilled’ this year may no longer be in three years time. Just today we had news that exactly these forces seem to leading the College of Policing to conclude that police officers should now have degrees. At present, we are using definitions of ‘graduate job’ and ‘high-skilled employment’ that are based on an occupational classification system developed before the recession and not designed for that purpose, and so it is difficult to be clear what these measures really mean.

So, where are we now? The market has recovered, most graduates will get jobs quickly (although that’s always been the case) and there are several areas where there are not enough to meet employer demand. These are the current challenges in graduate recruitment. We are not in a situation where, broadly, we have too many graduates chasing too few jobs, although we might in individual industries. We do have a mismatch between supply and demand but that is often not because graduates are not good enough but because in a time of relatively healthy graduate prospects, many employers are now finding that their offer is not attracting the graduates that they want. Are the graduates there at all? Do they need to refine their offers? Whatever the answer, the labour market for graduates is not the one we had started to get used to from 2008, and we all need to adjust.

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.

Forging Our Future

Been reading the new report from UUK and UKCES, Forging Futures. It has a few things to say about the way HE can help with the skills needs of employers, with this section the most interesting to me from an LMI/careers view.

There are strong reasons to collaborate in industries or regions expecting significant employment growth (known as expansion demand) or where demographic changes are likely (for example, where an industry needs to replace skilled staff because of retirement – known as replacement demand). Even when there is likely to be significant demand for new employees, attracting new talent into an industry can be challenging, and this is particularly the case when existing career pathways lack clarity. Attracting new talent is also important in industries that have traditionally struggled to promote themselves as attractive career options, even though pathways into them already exist. Working with universities to encourage new talent means employers have access to a wider range of new recruits with both theoretical and practical experience, who have a greater understanding of work culture and employability, an increased motivation for learning, and an insight into possible career avenues.

Business-university collaboration
Business and universities collaborating, yesterday

Talking to colleagues in the careers and employability arena, it does seem to me as if the line about ‘industries that have traditionally struggled to promote themselves as attractive career options’ has a particular resonance. From time to time I hear of certain sectors or jobs groupings that do sometimes have difficulty finding graduate entrants because prospective employees have not heard of, or are not convinced by, the opportunities on offer (logistics is one that springs to mind – an area where we may be developing a skills shortage). I also have a strong suspicion that some sectors where we have, simultaneously both a purported skills shortage, and yet a lot of unemployed graduates (parts of STEM, IT) might benefit from a more structured dialogue between employers and HE about the exact nature of current and future skills demand. The report concludes:

Universities and employers should seek opportunities to create new collaborations, and build on those that already exist. Collaborations can provide universities with an important component of their response to the changing higher education landscape. They support employers that recognise skills needs and want to improve their productivity and performance. They provide employers with relevant pathways into and through employment that meet their higher level skills needs. They provide existing staff and prospective new talent with the opportunity to gain the skills required to succeed in the current and future labour market. Now is a great time to grasp these opportunities, and support economic growth based on high level skills and quality jobs across the UK.

It’s a bit ‘Motherhood and apple pie’, but nonetheless good, (if well-worn for many in the HE sector), points for all that. if it sparks interest in more employer engagement with HE, then that’s good news.

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.