The entry-level jobs market is stagnating as many employers plan to substantially reduce graduate recruitment in 2020, an Institute of Student Employers (ISE) poll has found.
Its Pulse survey 2020, which gathered responses from 197 employers across the UK on their student and graduate recruitment plans, found employers are planning to increase their graduate vacancies by just 3 per cent this year, compared to the 18 per cent growth predicted by businesses in 2019.
The ISE warned that if this pattern continued, the graduate market would stagnate in 2020, with the slowest growth since 2016.
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Planned increases in public sector and third sector recruitment were currently preventing the market from shrinking, the ISE found, with a combined 14 per cent increase planned between these sectors.
The retail sector had the second highest planned growth at 2 per cent. The construction sector reported the largest decrease in graduate recruitment plans, with a 5 per cent drop forecast. This was followed by the energy, engineering and industry sector, which planned to decrease grad recruitment by 4 per cent.
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Stephen Isherwood, chief executive of the ISE, said the survey’s findings were concerning because the graduate jobs market served as an early indicator of the UK’s economic health.
“What we’re seeing now is particularly concerning as employers are normally over optimistic at this time of the year,” Isherwood said. “As we move through the recruitment season, they typically recruit less than they had anticipated.”
The ISE called on the government to “get the economy moving” to prevent the stagnation of the graduate labour market, and to address employer concerns about how the apprenticeship levy works.
Tom Hadley, director of policy and campaigns at the Recruitment & Employment Confederation (REC), said traditional grad recruitment is in some quarters being superseded by apprenticeship schemes as employers look to open up roles to candidates of all ages, demographics and academic backgrounds.
“There is greater emphasis on life skills, competencies and resilience, so practical experience of the world of work is really important,” Hadley said. “Young people are responding to this challenge by seeking new ways of working and building their careers.”
Hadley said REC research found an increasing number of workers under the age of 35 were seeking flexible working arrangements, and he expected this trend to accelerate.
The ISE survey found employers planned a 2 per cent rise in apprentice and school leaver recruitment in 2020, compared to a 7 per cent increase last year.
The digital and IT (25 per cent) and construction (11 per cent) sectors projected the largest increase in non-graduate entry-level hires, while the legal sector reported a substantial decline of 14 per cent.
However, Dan Hawes, co-founder and marketing director at the Graduate Recruitment Bureau, said the decrease in grad recruitment among larger businesses could provide smaller employers and start-ups with more opportunity to attract young jobseekers.
“If the war for talent among ISE members eases, then this historically creates a vacuum for thousands of recruiters with growth plans to invest in their future with less competition,” Hawes explained.
“For recruiters who have ducked out of graduate recruitment this year, a word of warning: the effects of inactivity on campus can [mean] students not applying for many years to come.” He advised recruiters to invest in a stripped-back student marketing plan and not lose sight of the bigger, longer-term picture.
The ISE survey follows a recent report from the Resolution Foundation, which found the number of young people in work has almost halved in the last 20 years.
The Never ever report found 8 per cent of people in the UK aged 16 to 64 (approximately 3.4 million people) had never had a paid job. This is a 52 per cent increase since 1998, when only a reported 5 per cent said they had never worked.
The think tank attributed this largely to a 25 per cent fall in the employment rate of 18 to 19-year-olds studying for degrees from the early 2000s, a 15 per cent fall among 20 to 21-year-old university students and a 33 per cent fall among 18 to 19-year-olds studying for non-degree qualifications.