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UK Graduates of 2024 are Officially in the Labour Market. Is the Labour Market Prepared to Welcome Newcomers?

3 June 2024

Graduation season is here again, and the newest cohort of graduates is preparing to enter the job market. Although newcomers have defined their career goals, is the market ready to welcome them?

Key Takeaways: 

The State of the Job Market

The UK's Office of National Statistics reported 898,000 job vacancies in May 2024, demanding excellent opportunities for students and skilled foreign workers. Employers continue to show strong hiring intentions in 2024, with a Manpower Services Group survey indicating that 42% of UK employers plan to expand their workforce in 2024, while 41% anticipate maintaining current staffing levels. 

This positive outlook is reflected in the hiring intentions of the three industries with the strongest growth prospects - Finance, IT, and Communications (with Healthcare close behind). These sectors, known for their substantial graduate recruitment, drive the overall hiring momentum. Through the newcomers, there is high demand for job roles in sectors like IT Services, Banking, Engineering, Healthcare, and Social Media. 

Salary & Benefits 

Students’ salary expectations are the highest they’ve been in five years, according to Cibyl. 70% of students worry about money daily or weekly – hardly surprising when you consider the current economic situation in the UK. 

According to ISE, despite graduate salaries decreasing overall when prices are adjusted to 2023 levels using the Consumer Price Index, the median wage reported by employers was £32,000 for graduates (a 3% increase from last year), £22,000 for school and college leavers (5% increase), £23,306 for interns (6% increase) and £23,000 for placement students (7% increase). 

Investment banking stays among the highest-paying sectors for new graduates, and offers a median starting salary of £55,000. The median salary for trainee lawyers at the country’s top law firms is £50,000, and the graduate pay at the leading strategy consulting firms is £47,500, — according to Warwick University's annual report. 

Remote or Office? 

The only correct answer for the graduates is hybrid. Graduates primarily do hybrid work, and the proportions of hybrid workers remained remarkably stable throughout 2023. 

The hybrid mode will stay with newcomers because it works for everyone; there's little drop in productivity, it improves retention in a market where replacing experienced staff remains very difficult, and it has helped keep a lid on wage inflation as workers have accepted flexibility instead of wage increases even when labour has been in short supply, suggests Charlie Ball, head of labor market intelligence at Prospects.

Career Planning 

A quarter of newcomers (26%) were planning to start applying for a job, and a significant proportion (22%) considered further full- or part-time study. Interestingly, 27% kept their options open by exploring job and further study opportunities.

Most students planned to continue their studies full-time (59%) or part-time (7%), with apprenticeships and degree apprenticeships also a popular choice (14%). A small minority of 7% hoped to enter employment after completing their studies, while 9% said they would explore job and further study options.
Nearly three-quarters (72%) confirmed that they sought a job or apprenticeship within the last 12 months. However, more than a third (36%) of respondents felt that they had been disadvantaged in the job application process because of their age, a quarter (26%) because of their ethnicity, and just over a fifth (22%) due to their social class.

Challenges 

Hiring for fresh college graduates is forecast to decline 6% from a year earlier, according to a recent survey of more than 200 employers from the National Association of Colleges and Employers, a group representing college career services employees.

Last year’s survey saw the rise of ‘money’ as a key issue, as the cost of living crisis started to have a real impact on this demographic. The problem has not eased in 2024 - in fact, it has become more stark. This time around, 54% of respondents said money was one of their biggest challenges, up on last year’s 52%, and it was the only challenge to affect more than half of respondents.

The most alarming trend for young people is a deterioration in the number of jobs for those just starting out in a career. Those departing universities are facing a disproportionately tough market, according to the Adzuna data.

What’s next?

As 2024 progresses, we can most likely expect a gradual fall in overall vacancies, but not a dramatic one, and the jobs market in the next six months is likely to be more of the same that we have had in the early part of 2024.

For those expecting to graduate, it means that tech, finance, and business services such as marketing and HR will remain reasonably buoyant, as well as health, education, and social care. However, there may be a more challenging job market in the creative industries, which still suffer from the legacy of Covid.

For employers, it means little respite is likely in difficult hiring situations such as tech – IT and engineering in particular – and a new graduating cohort that is unlikely to be big enough to fill existing gaps — Charlie Ball, head of labor market intelligence at Prospects, Jisc states. 

 

Valentyn Peltek, CEO and Co-Founder at Jobsora 

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