Five predictions on what’s to come in graduate employment this year from graduate labour market guru Charlie Ball, head of labour market intelligence at Prospects, Jisc.
I usually start the year doing two things. The second is to write predictions for the coming year in graduate employment. The first is to warn you that I don’t have spooky prophetic powers and so everything I will write next is speculative and might – indeed, probably, will – be wrong.
But I have been doing this for a while, so I am reasonably confident that they won’t be very wrong.
Anyway, here are my five predictions for graduate employers on what’s going to happen in 2024.
1. The coming General Election will make the graduate labour market an electoral issue, and this will have no real impact on the actual graduate labour market in 2024 (it might have an impact on 2025).
Expect lots of talk about international students, hybrid working, the value of degrees, shortages of nurses, teachers, doctors, STEM professionals etc.
It will either be all talk or will have no discernible impact on 2024 recruitment.
If for example, there was to be a big drive to train more much-needed teachers this year, those teachers would already be training. If there was to be a big move to vocational qualification delivery, the students and staff would already be in place. They are not.
There has been some activity on international students (you will have your own views on the value and impact), but the students who will enter the jobs market in 2024 are already here under the old rules.
2. AI will continue to impact recruitment more than employment, and it will, at least in the short term, increase cost-per-hire.
A reasonable assumption right now is that all of your candidates are using AI. You’ve probably noticed. This means that a lot of automated/online methods you have been using are now almost useless as a selection tool. That, in turn, means more in-person, face-to-face assessment and selection.
That’s fine; you’re probably pretty practised at those anyway, but they do tend to cost more, and also mean you might lose good candidates who find travel to your interviews more difficult.
Over time, generative AI will be more effective for employers and cut costs again, but it will always be a balance between value for recruiters and for candidates so you may find that someone somewhere in your organisation will be constantly monitoring AI advances to see if they’ve cracked your selection tools yet. We’re in a new world now.
3. Labour shortages will ease a bit, but they are here to stay in many areas.
The Bank of England noted in mid December that some areas of professional recruitment were seeing reduced hiring issues as a consequence of a weakening economy. Business services is one area where the Bank has had considerable concerns but which is seeing less of an issue.
But those concerns haven’t gone away and they aren’t going to. A particular problem with experienced hires will remain; you struggle to find people with 10-12 or so years of experience in many sectors because 12 years ago we were in a recession and recruitment was down, so there just aren’t as many people with that level of experience available.
And we are short of nurses, teachers, doctors, social care workers, engineers and IT professionals, and will remain so because we haven’t been training enough to meet demand.
Indeed, I expect shortages to only worsen in most of those areas. Depending on what happens in IT, it might be the exception, but only if there are significant layoffs in the sector in 2024.
4. Hybrid working is definitely here to stay
Hybrid working is largely done by graduates, and the proportions of workers working hybrid remained remarkably stable throughout 2023.
There remains a tension in that generally, employees are keener on hybrid working than employers. In early summer there was a (very) modest, but perceptible drop in hybrid work in tech after a round of high-profile job losses convinced employers that there was a bit of slack in the labour market and they could get employees back into the office.
However, it turns out that a few thousand people losing their jobs in a market that is short of several multiples of that amount doesn’t really ease shortages much, and the rest of the year saw a quiet return of tech workers to hybrid working.
Largely the patterns are set. The reasons that they look as they are – about three quarters of IT/tech workers are working hybrid, about two thirds of business service workers – is because largely there are recruitment and retention problems in these sectors. If you stop hybrid working, unless you’re an absolutely marquee employer, it will cost you staff.
So, the current status quo will continue 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 in lieu of wage increases even when labour has been in short supply.
5. But business is running out of road on keeping wages down
The cost of living in the UK has become a very live issue for many workers, and increasing interest rates have particularly impacted many families’ largest budget item – rent and mortgage.
For the last few years, businesses have been able to keep a partial lid on wage inflation and offer below-inflation wage rises by offsetting against other perks, hybrid working being only the most recent.
But fundamentally, free gym membership and more holidays don’t pay your staff’s mortgages and 2024 is the year they want to see cold hard cash in their pay packets.
The more cash-rich businesses will be able to poach staff more readily this year, so if you don’t pay market rate, or have better-paying competitors eyeing up your talent, then 2024 might not be the best year for your retention metrics.
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