Last week I had the pleasure of attending the Prospects Breakfast Seminar, “What do Graduates Do?”. Dr Charlie Ball, Head of HE Intelligence at Prospects presented some interesting statistics and research looking at the UK current labour market for graduates in comparison to the overall labour market. We’ve all heard the conversation starter (or stopper!) questioning whether a degree still holds any value these days.….it might be an easy assumption or off-the-cuff remark to make but it doesn’t really stack up when you get down to the nitty gritty….
Dr Ball started off with debunking some of the most common myths:
- “Everyone has a degree nowadays”
Only 38% of the UK adult population (16-64) had a degree at the end of 2016 and 43.5% of the UK workforce has a degree or equivalent qualification. Less than half of students currently aged 14-18 will ever go to university.
- “You’re better off not going to university”
The 2016 unemployment rate for graduates is 2.9% compared to 5.9% for non-graduates. The gap is comparable even when looking only at the 21-30 age group with graduate unemployment rate at 4.6% vs non-graduate rate at 7.7%. On balance, you’re actually more likely to be out of work as a non-graduate with work experience than you are as a recent graduate.
- “There aren’t any jobs for graduates”
71.3% of UK graduates from 2016 were in professional level jobs six months after graduation compared to 45% of the overall UK workforce. The UK added 441,000 new professional level jobs last year but only 291,000 new graduates (all levels and nationalities) are known to have entered the workforce
- “Graduates only work for big business or on large training schemes”
Last year 34% of graduate started working for companies with fewer than 250 employees
- “All the graduate jobs are in London”
Only 19.4% of UK graduates live in London. 21.6% of 2016 graduates started their career in London (but in a relatively small area). London is definitely a unique labour market but graduate numbers are rising in cities across the UK, notably Birmingham, Manchester, Glasgow and Leeds. More on the regional / London dynamic later….
Having firmly debunked these myths with some cold, hard facts, he then took a look at what graduates actually do, how that has changed over the years and what changes may yet come. Fifty years ago, 40% of graduates were working in the UK 6 months after graduation and that has now risen to almost 55% - the unemployment rate of 5.3% is the lowest since 1988/89.
Astonishingly, on top of that, c42% of graduates now work in industries which simply didn’t exist 40 years ago! There is wide range when you consider the type of work 2016 graduates do. While, the majority by far are in health-related work (e.g. as nurses, medical practitioners), with the second and third most popular being Retail/Service (c11%) and Business & Finance (10%), it is disappointing to see that Science-related work is on the decline with only 1.1% of graduates working in science-related jobs. Maybe not surprisingly, the science skills shortage also extends to IT and Quant-related roles.
For those who may wonder what the overseas graduates do after finishing their study in the UK, by far the majority continue to post-graduate study (c40%) and almost 20% leave the UK to work. Only 19% are actually working in the UK in a graduate job and less than 5% in a non-graduate job.
I think one of the most interesting parts of the session for me was the section looking at graduate migration patterns……for those employers with hard-to-fill locations but challenging hiring targets, it can sometimes feel like an uphill battle to attract the right graduate talent. Dr Ball’s research splits graduates in to 4 categories based on their domicile, study and work preferences which can help somewhat with understanding motivations…
- Loyals – 45% - domiciled, studied in and now work in the same region
- Stayers – 13% - moved region to study and stayed there to work
- Returners – 24% - moved region to study but returned home to work
- Incomers – 18% - work in a region where they were neither domiciled nor studied
It would be interesting to look at how and if these percentages maybe differ when looking at specific diverse groups but the above breakdown does show that graduates are far less mobile than we commonly assume. Only just over 1 in 5 graduates will work somewhere where they didn’t previously have a connection (Incomers). You might assume (see myth number 5 above) that London would be the primary destination for graduates keen to change cities. However, looking at the proportion of employed graduates in the major cities across the UK who had no previous ties to that city, London is not even in the top 5. Manchester, Glasgow, Bristol, Leeds, Nottingham and Edinburgh are all ahead of London. Over half of employed graduates in Manchester are new to the area compared to just 34% in London.
There are many more insights to be had in the office report (download it for free here) – too many to recount here but the overwhelming story is that the graduate labour market is fundamentally sound with low unemployment. However, skills shortages are significant in some sectors and that combined with a reduced rate of increase in graduate numbers may lead to increased pressure on supply, particularly if graduate mobility continues to fall. There is obviously also the unknown impact of Brexit - little evidence of significant impact at the moment but we all know to watch that space!