UK jobs market tougher for grads, says new research

11 Apr 2024

The availability of job opportunities for grads in Britain is decreasing twice as rapidly as in other sectors of the labour market, leading to concerns that businesses need to be adequately investing in their prospective employees. New research published by jobs search engine, Adzuna reveals the number of vacancies for graduates declined 30.2% in February over the previous year. This compares to a 15.1% fall across the entire economy.  

"Those new entrants are fundamental to the success of the economy and to the future labour market," said Kate Shoesmith, deputy chief executive officer of the Recruitment & Employment Confederation (REC). "Businesses need to be thinking about how, in this type of market, they are bringing new entrants in, and what their long-term workforce strategy is."

Decline in hiring

The fall in graduate opportunities is indicative of a more relaxed labour market, as employers are cutting back on hiring following last year's recession. This trend mirrors the Bank of England's efforts to control inflation by implementing the highest interest rates seen in 16 years, which has contributed to easing the upward pressure on prices caused by rapid wage growth.

An additional survey carried out by the REC on Monday revealed demand for staff dropped for a fifth month, close to a 37-year low. The group's measure of starting salary growth increased at its slowest pace in three years. Furthermore, it showed a higher number of candidates are looking for jobs, Bloomberg reports.

"Persistent economic uncertainty has led to many business leaders delaying major investment decisions," stated John Holt, a senior partner at KPMG, which contributed to the REC survey.

Subdued wage growth

So far in 2024, wage growth has remained stagnant across graduate job postings, as employers refrained from offering the significant wage hikes they had previously provided just after the pandemic to attract the required staff.

As a result, fewer young individuals are working, leading to a decrease in the available labour pool. Between October and December last year, over 500,000 individuals aged 16 to 24 were economically inactive, meaning they were not engaged in education, employment, or training. Although this number is lower than the peak observed after the pandemic between July and September last year, it still represents a 7.5% increase compared to a year prior.

The REC findings added that employers' reluctance to hire entry-level candidates stems from diminished confidence in the future outlook, as shown by an REC survey revealing that sentiment regarding hiring and investment decisions has reached a 12-month low. Shoesmith added that lower interest rates would help to give firms "wiggle room" in their budgets to hire more. "Giving an opportunity to a new starter can be deemed a risk," said Shoesmith, "and many employers just don't have that economic support right now."