Is the graduate job market really set to increase in 2016?

Anybody who has studied for a degree knows the drill. Three years of building up your intellect culminating in a gruelling dissertation and exams. The big celebratory blowout has been and gone so you're ready for the working world. But will you get the job you're after?

Owing to economic and social shifts, the graduate job market is vulnerable to fluctuations, and considering we've endured a global recession, this has been the case in recent years. Has the job market recovered from this and can graduates be hopeful that the job they want is available?

Key findings

  • Graduate unemployment is at 6% - a drop from the year before.
  • A 2% increase of first degree graduates in professional employment has been recorded
  • Graduate vacancies at highest level thanks to a 20.5% increase in last three years
  • A predicted increase of 6% in graduate jobs during 2016.

What is a graduate job? 

It can mean something very different to any number of people. Does it include any vacancy that requires a degree? Prospects investigated whether a degree results in employment that would otherwise be impossible without the qualification.

This research resulted in five categories of employment:

  • Traditional graduate occupations (Eg: medical practitioners)
  • Modern graduate occupations (journalism, teaching)
  • New graduate occupations (rapidly expanding and changing areas of labour market)
  • Niche graduate occupations (contain specialist skills that may require a degree)
  • Non-graduate occupations (do not necessarily require a degree)

Student/graduate trends

Before interpreting graduate jobs, it is appropriate to look at the patterns of students entering higher education and the numbers recorded of those graduating. In both cases, it is clear that employers have an ongoing responsibility to furnish their businesses with graduate opportunities. 

UCAS has produced a comprehensive End of Cycle report for 2015. This explains in depth what has been "another record year" for those entering university. The report described the findings as "eye-catching" and it is little wonder when you consider that a whopping 532,300 applicants were placed in higher education by UCAS. This number is up by almost 20,000 from 2014 - a 3.9% rise. 

University acceptances are up to 74.1% - one of the largest increases since 2006 and this shows entering university is as popular as ever. It does however, increase the pressure on employers to create the appropriate jobs.

Higher education enrolments 

More detailed analysis is available from the Higher Education Statistics Agency (HESA), who provide data about publicly funded higher education. Published two weeks into the new year, the number of higher education enrolments at UK higher education providers (HEPs) in 2014/15 was 2,266,075, a 1% decrease from the year before. 

The main reasons for this drop are a decline in undergraduate and part-time students. Indeed, this gradual decrease in enrolments could have far-reaching effects for the graduate job market given that there seems to be pressure on growing such roles. Looking at the figures from the medium term, at the turn of the century, the number was 1,757,200 and even during the recession, enrolments increased. The decreases began when tuition fee rises were implemented. 

Changes in tuition fees have been felt by some recruiters. Summera Amir at CCA Recruitment says the changes have made the recruitment process more difficult. She said: "Since university fees have gone up there are less people who have qualifications equivalent to a degree which makes it harder for us to recruit. The tuition fees have had a massive effect on students finishing their degrees and starting a job in their field has become hard."

Since 2012, total undergraduate enrolments have decreased by a combined 10% and for first year undergraduate enrolments, from 2011/12 - 2012/13, the fall was 17%. Although this went up by 2% the year after, the latest annual figures show a 1% fall. Overall, the pattern painted from the latest HESA document suggests there are less graduates, with 745,005 qualifications obtained in the UK in 2014/15 - a 4% drop from the previous year. The number of first degree graduates fell by 6% in the past year as well. 

It is clear that employers have an ongoing responsibility to furnish their businesses with graduate opportunities.

Graduates in employment

However, despite the slight drop off in the past couple of years, there is still a clear thirst to complete higher education studies. HESA's sterling work on chronicling the movement of students stretches to their destinations too. 
In this 2013/14 Destinations of Leavers from Higher Education (DLHE), there was a response rate of 79% from the target population of 564,205 of first degree leavers. Of the 443,110 respondents, destinations were known for 424,375 of these, with 71% working either in the UK or overseas in a full or part-time capacity - 1% more than the year before. 

What is interesting to note is the level of unemployment is recorded at 6% and encouragingly, the number of both males and females out of work fell; the year-on-year pattern shows employment increasing and unemployment dropping. This clearly suggests that jobs are available for graduates. But are these the ones they crave and took on those years of study for?

Professional/non-professional positions

With figures available for 2013/14, there is a clear picture of the occupation of full-time, first degree leavers who entered employment. This takes into account job areas classed as professional and those that are not, all with the subjects in which degrees were achieved also laid out. 

More specifically, of all those students graduating with a Science subject area qualification, 77% were in professional employment with 23% registered as non-professional. This also covers those whose positions are unknown, though this figure is negligible. Medicine & Dentistry is the best-performing degree with a 100% record of its graduates finding a professional occupation, while graduates with Agriculture and related subjects had less success, with 50% in non-professional employment. 

As an overall figure, 68% of those first degree graduates who found employment were in posts you would classify as professional - a 2% rise from the year before. This itself was 2% better than 2011/12 so in the past two years of data we have available, a 4% rise in graduates finding professional employment was recorded. 

Opinion seems mixed in the industry though, as a report from the Chartered Institute of Personnel and Development (CIPD) last year proves. This study warned of a "saturation point" regarding over-qualification after their findings showed more than 58% of graduates were in jobs deemed to be non-graduate in nature. Peter Cheese is the Chief Executive of the CIPD and he believes the graduate process is "flawed." He said: "The assumption that we will transition to a more productive, higher value, higher skilled economy just by increasing the conveyor belt of graduates is proven to be flawed."

There may be some weight to this opinion. In the Graduate Labour Market Statistics April-June Q2 2015 from the Department for Business Innovation & Skills, statistics show that since Q1 2006, graduates in employment have gradually decreased to its current level of 87%. Meanwhile, those in high-skill employment as a percentage of all those in work has gone from 80.3% in Q1 2006 to its Q2 2015 level of 76.3%. 

These figures are for all graduates between the ages of 16-64. But unemployment is also down in the timescale mentioned above, from 3.2% to 3%. It is favourable when comparing year-on-year when you consider in Q2 2013, unemployment of these graduates was measured at 4.2%.

However, regarding high-skill employment, the report states: "Among the working age population, the past decade has seen gradually decreasing high-skill employment rates for graduates, postgraduates and non-graduates. These trends could be driven by various factors, such as a shifting of job composition towards the medium and low skill sectors of the economy, or an increasing demand for high level skills across sectors of the economy that have traditionally focused on medium or low skills. These changes may make the current classification of high-skill employment less relevant than in the past."

At the beginning of the 2014/15 graduate recruitment season, it was clear that a renewed confidence had returned to the graduate job market, following the substantial increase in graduate vacancies in 2014.

Employment prospects for graduates

The trend shows, even though it is gradual, high-skill employment is going down, but the same report suggests the term as such is less relevant. The inference is an interesting one, especially after the CIPD described explained the "flawed" process. 

Trends regarding creation of graduate positions

But what of opportunities for those finishing university? The Graduate Labour Market figure still boasts an impressive number of people in work. The research and statistics available from employers suggest a much brighter picture. In the latest High Fliers Research paper - The Graduate Market in 2016 - an in-depth review of graduate jobs at the leading British employers is given and the picture it paints is positive for graduates across the UK. 

Compiled in December 2015, the report "examines how many graduates the leading employers recruited in 2015 and assesses their latest recruitment targets for 2016." For the purpose of this research, 18,412 students in their final year of study were posed this question: "Which employer offers the best opportunities for graduates?" It led to in excess of 1,200 organisations being named and from this, the most popular 100 formed The Times Top 100 Graduate Employers for 2015. 

From this, those employers, which comprise the likes of Barclays, PwC and Microsoft, were included in the research for this report. It concluded that employers increased their graduate positions by 7.9% in 2014 - the biggest rise since 2010 - and recruitment was expected to rise a further 8.1% last year. Although graduate vacancies actually increased by 3.3% in 2015 from the 2014 levels, employers are "very upbeat" about the outlook and expect that figure to rise by more than 7% this year.

It is very promising for the vast number of students graduating from university that there seem to be jobs waiting for them and if employers meet targets this year, it will put graduate jobs at their highest level since 2007. It has not all been plain sailing for the graduate job market in the last few years, with dips in 2008 and 2009 due to the recession and a further fall three years later. 

What is significant to note is that throughout those two years in particular where every industry suffered from a contracted market, university enrolments remained strong and actually grew in that time. 

Despite the drop in 2012, the report says: "At the beginning of the 2014/15 graduate recruitment season, it was clear that a renewed confidence had returned to the graduate job market, following the substantial increase in graduate vacancies in 2014. The leading employers were preparing to expand their graduate programmes even further and planned to hire almost 1,500 additional new recruits in 2015."

This buoyancy is confirmed by the change in graduate vacancies by sector in 2015. In all but five of the 13 sectors surveyed, jobs went up. Consulting roles rose by 29.8% while Accounting & professional services and IT & Telecommunications increased by 12.3% and 14.9% respectively. Armed Forces, Banking & Finance and Engineering & Industrial are just three sectors projecting big rises in graduate jobs this year. 

Changes between 2006 to 2016 show once again that there is a lot to be excited about in the graduate job market. Despite the global financial crisis causing an "unprecedented" 24.5% fall in 2008 and 2009, there is an abundance of graduate jobs available, to the point that more than 1,000 positions were unfilled last year.

In terms of sectors, there is a clue as to which areas of business are expanding the most, with IT & Telecommunications roles for graduates up by an astonishing 219% from 2006. Public sector jobs have also gone up by more than 100%, while Consulting employers expect to offer 63% more jobs this year than in 2006.

Barclays in Scotland are enjoying this resilient graduate job market and Julie Philp, the Resourcing Lead, told Agency Central how the banking giant maintains its "market leading graduate programme" - helped in no small part by the abolition of tuition fees in 2000.

"As a result (of free higher education) our graduate market is buoyant and our talent pool continues to grow. As one of the leading global financial services providers, Barclays prides itself on having a market leading graduate programme and we support this locally here in Glasgow by nurturing our existing relationships with Scotland's 19 higher education institutions."

The point about free tuition is an intriguing one. As we have seen, enrolment numbers in England dropped off because of the hike, but Barclays expect graduate growth to continue because of Scotland's education stance. "With a clear mandate from the Scottish government that higher education will remain free for all, we expect to remain these statistics and perhaps even improve them," Julie said. 

Destinations of graduates

The statistics that Barclays are referring to come from HESA's Destination of Leavers from Higher Education (DLHE) Longitudinal Survey 2010/11 which reports the activities of UK- and EU-domiciled leavers three-and-a-half years after leaving higher education. Graduates who left universities in Scotland fared better than anywhere else, with unemployment at a lowly 1.9% compared with a UK average of 2.6%.

More were assumed to be in positive destinations too, at 95.5%. The reassuring aspect for students coming towards graduation is that on average, 93.5% of UK domiciled graduates described their destinations as positive more than three years after completing their course. 

There are of course two sides to any story and some areas of business have had to cut their cloth accordingly to adapt to the changing economic conditions of the last eight years. Lancashire County Council is one example of an organisation that has had to make changes due to the "significant impact" of finances available. Tellingly though, the Council still runs a programme for graduates. 

A spokesman for Lancashire County Council told Agency Central: "Due to the national state of the economy, this is having a significant impact on the government monies available. "In turn we have needed to look at our recruitment of graduates for professional posts and redesign our programmes. The intake of graduates at Lancashire County Council has therefore been reduced, but still remains as a programme, to recruit professional apprentices and trainees."

What Do Graduates Do?

Despite this reminder that the graduate market may not be as prosperous in some areas, the vast majority of opinion seems bullish about the jobs out there. In the 'What Do Graduates Do?' document released in October 2015, Charlie Ball in the foreword commented: "More graduates found work than ever before."

Compiled with responses from 267,735 students graduating from full or part-time first degrees, the survey records positions six months after graduation. Although there is potential for graduates to move into different roles in the long term, the survey has been described as a "reliable mechanism" for finding out the employment trends for graduates. 

It shows that more graduates found work than ever before, with 76.6% of UK-domiciled graduates in 2013/14 either in work or combining work with study - an increase in excess of 10%. Significantly, numbers in professional employment were also up by 11,000 from the year before and encouragingly, graduates entering the job market below professional level fell in percentage and absolute terms. 

The most popular place to work for graduates is unsurprisingly in London, with more than a fifth of all working graduates starting out their career in London. As we have explored in depth, there are considerations with living in the capital that leads people to find work elsewhere. It is no different for graduates, who have plenty of options according to the survey. The south east and north west each had more than 10% of graduate jobs available and many of the larger cities employed more than 2,000 university leavers.

There is evidence that the sectors of Consulting, Accountancy, Insurance and Construction are seeing an increase in graduate roles available and the retention rates are impressive, with 79.2% of graduates still in the same role three years after starting.

Further positive news comes in the form of the Association of Graduate Recruiters (AGR) Annual Survey. AGR has 700 members who recruit the best student talent for their needs as well as those of the UK economy. Members include AECOM, BAE Systems, Facebook, and Network Rail. 

Although there was a recorded drop in applications per vacancy (65 in 2014-15 compared with 69 in 2013-14), employers are offering more and more jobs, with 11% further offers made. Graduate vacancies for AGR's members are at their highest ever level. In 2014, a further 4.3% graduate jobs were available and predictions say this will have jumped a further 13.2% when 2015's figures are completely collated.

Although a 2015 Winter Review has slightly revised this number to 11.9%, graduate positions have been plentiful in the last 10 years. Since 2004, there have only been two years where the number of jobs has been less than the previous year (2009, 2012), and the last three years have seen a combined 20.5% increase. 

There is evidence that the sectors of Accountancy, Insurance and Construction are seeing an increase in graduate roles available and the retention rates are impressive, with 79.2% of graduates still in the same jobs three years after starting. Indeed, all but three sectors saw more vacancies offered to graduates last year when compared with 2014. And with the opportunities available, graduates know these qualifications allied to hard work and application will lead to a fulfilling career.

Amanda Walls is Head of Digital at Evolutia - a web design and digital marketing agency, and she said people who possess skills will progress in the industry: "Graduates with an array of skills can find themselves performing well within the industry, as long as they have the commitment and drive to learn new skills and apply them appropriately."


Can graduates leave university with genuine optimism that they will have careers to go into?
The outlook for those entering the graduate job market in 2016 is very positive. Of course, we can never say it will be the case across the board, but employers are predicting vast increases in available jobs this year. Add to this a genuine effort by companies to create more positions, and it is obvious that there is a real commitment to the continuing growth of the graduate job market.  

The trend over the last 10 years suggests that opportunities are as good now as they have ever been, and the ambition is there to continue the trend; an ambition that is necessary considering that on the whole, university remains a popular route to an ideal career, guaranteeing a continuation of the stream of graduates ready to enter the big wide world of work each year. 

By John Train

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