Graduate and school-leaver recruitment intentions have slowed down substantially and could result in an overall drop in entry-level hires if firms fail to meet recruitment targets, a report has suggested.
The Institute of Student Employers (ISE) found organisations planned to increase graduate hires by just 3% this year – a stark contrast to this time in 2019, when employers expected an 18% increase in university leaver recruitment.
This is the worst rate of growth in graduate recruitment since 2016, ISE claimed.
“The graduate jobs market is an early indicator of the health of the economy as employers tend to plan further ahead when deciding their graduate recruitment needs,” said ISE chief executive Stephen Isherwood. “What we’re seeing now is particularly concerning as employers are normally over optimistic at this time of the year. As we move through the recruitment season they typically recruit less than they had anticipated.”
The 197 respondents to ISE’s Pulse Survey 2020 anticipated recruiting 19,290 graduates in total. Although this figure was up 3% on last year’s, employers reported that they failed to fill around 3% of graduate roles on average, suggesting that there is likely to be no overall growth in graduate recruitment.
Most of the planned increase in graduate hiring was driven by public sector and charity organisations, which expected a 14% increase in the university leavers they hired. This, ISE suggested, could be in response to the government’s plans to hire more police officers and increase spend in the NHS.
By contrast, employers in the built environment sector expected a 5% reduction in graduate hires, while energy, engineering and industry firms predicted a 4% decrease. One employer in the energy, engineering and industry sector said it was choosing to offer degree apprenticeships over some graduate positions.
Almost three-quarters (74%) of firms said it was no easier or more difficult to find graduates than last year.
Isherwood said: “Outside the public sector the market is not looking particularly healthy. Government needs to get the economy moving otherwise this year we’ll be in for a stagnant graduate labour market at best.”
Firms also expected to increase the number of school leavers in entry-level positions, with predicted vacancies for this year up 2% to 8,104. However, last year’s survey found employers expected a 7% increase in non-graduate hires.
ISE said this suggested that the increase in non-graduate recruitment driven by the apprenticeship levy had peaked, and warned that there could be a slight decline in hiring if firms failed to hit their recruitment targets.
Organisations across many sectors wanted to increase apprentices for reasons including making use of their apprenticeship levy funds, addressing skills gaps and business growth. Some firms said they were looking to increase the number of higher apprentices at level 5 and above, instead of sponsoring “traditional” higher education qualifications like university degrees.
When asked whether they had any messages for policy makers, one-third highlighted issues with apprenticeships and vocational training. The most common apprenticeship concerns were the need to reform the apprenticeship levy, the 20% “off-the-job” training element of apprenticeships and the need for increased flexibility in how apprenticeships operate.
One in five (19%) claimed those leaving education were not ready for work, while 12% said the availability of skills was an issue.