Tag Archives: reports and reviews

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.

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.

UniverCities and graduate retention

The UniverCities report from the City Growth Commission that came out this week has a number of interesting things to say about graduate retention and migration.

(The authors kindly asked for my views and I am credited in the report).

Continue reading UniverCities and graduate retention

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.