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Should the latest graduate destination data cause concern?

02.08.17

2. Stephen Isherwood (Greyscale)

Stephen Isherwood, AGR Chief Executive, considers the latest graduate destinations data and why it may give cause for concern.

The Higher Education Statistics Agency has released its employment of leavers’ data, which charts the destinations of UK domicile undergraduates from 2015/16, six months after leaving university.

The headlines are positive: a small increase on last year’s data in the proportion of graduates in full-time work and/or further study (93.9% to 94.3%) and the unemployment rate for graduates has dropped from 5.7% to 5.2%. Not bad, especially when compared to an unemployment rate of 10.7% for 16-24 year-olds not in education. A degree still pays.

So why might I be worried?

The AGR’s current graduate vacancy data suggests that after post-recession, pre-Brexit double-digit growth rate, the graduate market is now flat. Interrogate the HESA data and the proportion of graduates entering full-time employment actually fell. Equate the rates with the previous year and it appears 8,300 fewer UK domiciled graduates entered the labour force. They went on to further study, possibly fuelled by the availability of a postgraduate student loan and a tighter labour market – I’ll come back to this.

Now none of this is any reason to scare students - yet. The market isn’t in a 2008 style slump and employers tell me of their constant need for talented, educated graduates with high potential. And year-in, year-out, we show that nearly half of our employer network do not find all of the graduates they need. vacancies go unfilled, particularly in the tech and engineering sectors. Not only are graduates more likely to be employed than non-graduates, they are also more likely to earn more.

A prospective student now has more pathways to choose between. The employment market that is growing is in apprenticeships, especially higher level apprenticeships – up a predicted 21% this year. The Apprenticeship Levy is starting to influence how many employers hire, train and retain their early talent pipelines. Some are switching to recruiting apprentices instead of graduates, some have bought into degree apprentice programmes, some are still increasing graduate headcounts. Many are still working out what to do.

But back to post-graduate study for a moment and access to student loans. Universities have a vested interest in promoting the take up of post-graduate study but how savvy are students about the investment decision they are making? Only 4.1% of employers stipulate a masters qualification. So a graduate that thinks the extra investment will directly improve their employment prospects may be mistaken. To further complicate matters, many employers are exploring how to offer masters level apprentice programmes.

What does this all mean for the uncertain graduate, undergraduate or teenager deciding whether to do a traditional degree or a new degree apprenticeship? It means, do your homework! Guiding our young people on the pathways they take, where to invest their time and resources, whether they want to be an electrician, scientist or lawyer, is more critical than ever.

One thing we can’t rely on in the foreseeable future is a growing labour market to fuel the demand for graduates. Employment opportunities tend to correlate with the economy. Slow GDP growth leads to stagnant employment outcomes. Graduates have a lot at stake in the Brexit negotiations.

 

This blog was published by Media FHE

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