How can universities support the graduate labour market?

At Christmas, the Institute of Student Employers (ISE) surveyed employers to ask them about their graduate recruitment plans for 2020. Their responses told us that they were planning to recruit about the same number of graduates as last year. We breathed a sigh of relief; it looked like the student labour market was going to weather Brexit OK. Little did we know that Covid-19 was just around the corner and that our worries about Brexit were soon going to look like small potatoes.

Less than six months later, we are in the middle of the biggest labour market crunch ever experienced. There are 7.2 million people who have been furloughed by their employers, and the number of universal credit claimants is growing every day. Very few new jobs are coming on to the market, and while many of these phenomena are temporary, the end of lockdown is stretching out through the summer and into the autumn.

For current students looking for work experience, this has been a disaster. Our latest research – “Covid-19: The impact of the crisis on student recruitment and development” – with employers tells us that they offered 40 per cent less interns and placement students this year.

Lots of the Easter vacation internships were cancelled altogether, with summer internships either being cancelled, delayed or delivered in a virtual form. Meanwhile, placement years that are integrated into degrees have been disrupted and may continue to be difficult next year.

But the big problems are still to come. In June and July, final-year graduates will finish their courses and seek to join the labour market. They will be joined by school and college leavers, meaning that a total of 800,000 young people will be attempting to enter the workforce through the summer and autumn.

At the same time, the government’s Coronavirus Job Retention Scheme will be coming to an end, which will likely result in a substantial number of existing workers (many of them recent graduates) being made redundant. This is an unprecedented level of churn in the labour market and one that is likely to create big problems for new graduates.

Our research shows that large employers are mostly trying to honour the jobs that they have already offered to graduates. They have rapidly switched their recruitment approaches online and are trying to move ahead with the 2020 recruitment cycle as planned. Our recent research predicted a 12 per cent fall in the number of graduates that larger firms are recruiting this year, but worryingly suggested that in small and medium-sized enterprises, where about a third of graduates work, the drop would be much bigger (41 per cent).

This is not a good picture for graduates, but clearly it could be much worse in the current climate. Our research certainly shows that the impact is likely to be much greater on those young people who leave education without a degree.

Many employers learned hard lessons in the last recession about the long-term consequences of stopping graduate recruitment. Most will be trying to preserve their talent pipelines, but economic reality may intervene. Employers are still deciding on their recruitment numbers for the 2020-21 season, but we can expect them to be very sensitive to wider economic currents. In other words, the problems in the graduate labour market are not going to magically disappear in September, but may even deepen as the recession takes hold.

While employers are doing their best to minimise the impact of Covid-19 on the graduate labour market, they have only limited control over the demand side of the labour market. There is also a need for universities to step up and shape the supply of graduates moving into work.

Employers are very keen for universities to keep in touch with them. They are concerned about the awarding of degrees, the dates of graduation and what is going to happen next term. They are searching for clarity about how the post-coronavirus higher education sector is going to work.

Businesses are also looking for universities to be flexible and forward-looking about new ways of working. Careers fairs, employer-led workshops and even substantial amounts of work experience are likely to be moving online next year. Employers have made the shift online incredibly quickly, and they are expecting universities to adjust to this new normal as well.

Finally, it is important that universities commit to continuing to support students and recent graduates to build careers and transition to the labour market. Now is not the time to be cutting careers services, placement offices or employer liaison activities. Such services will have to be reimagined for the new environment, but the need to create strong dialogue and alignment between education and employment is going to be more pressing than ever.

Tristram Hooley is the chief research officer at the Institute of Student Employers.