Graduate recruitment slumps after Brexit vote

Posted on September 2, 2016

maths graduates pitching for a job in the financial district of London Michael Olagunju - 07856 229299©Chris Batson

Britain’s large employers have scaled back their graduate recruitment plans this year for the first time since the economy started to recover from the financial crisis.

The number of graduate vacancies offered by top companies has dropped 8 per cent from last year, according to the annual survey from the Association of Graduate Recruiters.

    This is partly because employers are swapping some graduate traineeships for apprenticeships in response to the government’s attempts to boost apprentice numbers. But graduate vacancies and apprenticeships combined have still dropped 3 per cent from last year.

    Stephen Isherwood, the AGR’s chief executive, said employers had probably been rattled by the country’s vote to leave the EU in June.

    When the AGR asked employers earlier in the year about their plans, they had pencilled in a 2 per cent increase in jobs.

    “Something has changed over the past few months,” he said. “There are a smaller number of vacancies this year than there were last, and the level of economic uncertainty has to be a major contributing factor.”

    The AGR figures add to the mixed signals about how the Brexit vote has affected the labour market. While they offer a fairly gloomy signal about employers’ long-term confidence in the economy, there has been scant evidence of employers making knee-jerk decisions to freeze recruitment entirely or lay people off.

    Chart: UK Graduates

    The AGR surveyed 154 major employers in July and August and found they had 19,732 graduate positions to fill this year, down from 21,427 last year.

    IT and telecoms companies were the only ones to hire more graduates than last year, while the sharpest drops were among retail, engineering and construction companies (down 16, 14 and 11 per cent respectively).

    This follows four years of strong growth in graduate recruitment as university leavers’ prospects brightened with the strengthening labour market.

    Last year, the AGR’s vacancies measure rose 13 per cent, while government data showed graduates were finding it easier to secure good quality jobs straight out of university. More than two-thirds were in professional-level jobs six months after graduation, and there was a sharp drop in the number who had taken sales, retail and routine office jobs that did not require a degree.

    UK manufacturing activity at 10-month high

    Shipping containers sit on the dockside at London Gateway port, operated by DP World Ltd, in this aerial photograph taken over Stanford-le-Hope, U.K., on Wednesday, July 22, 2015. British manufacturers are struggling to build exports because of the unfavorable exchange rate and uncertainty in the euro area, the Confederation for British Industry said. Photographer: Chris Ratcliffe/Bloomberg

    Weaker pound helps to drive up export orders

    Meanwhile, the survey highlights a shift in how employers are hiring young people. The number of apprenticeships on offer from graduate employers rose 13 per cent to 10,095 as employers responded to the government’s plan to introduce an apprenticeship levy in April 2017.

    The apprenticeship levy — a tax of 0.5 per cent on employers’ wage bills over £3m — will shift much of the cost of funding apprenticeships from the state to employers and is expected to raise about £3bn a year.

    Under the scheme, companies that pay the levy will have that money allocated to a “digital account”, which they can only spend on training for apprentices. The government promised in 2015 to create another 3m apprenticeships by 2020 and it sees the levy as a key lever to encourage employers to invest in them.

    The AGR said that seemed to be working: more than one in 10 employers in its survey were repackaging some graduate roles as “higher apprenticeships” due to the levy. However, some critics of the levy policy have warned that if employers simply “rebadge” existing training as apprenticeships, it will not boost the overall level of skills in the economy.

    Mr Isherwood said the composition of the labour market for young people was changing as employers invested more in school leaver programmes and apprenticeships.

    “While there remain thousands of vacancies available for university graduates, school leavers will find many more different options open to them for high quality jobs.”

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