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Down but not out. How the student labour market is responding to Covid-19

18 May 2020

Tristram Hooley (ISE) and Gabi Binnie (AGCAS) discuss the findings of Covid-19: The impact of the crisis on student recruitment and development.

We have just published new research which presents the perspectives of 179 student employers on the student labour market and the recruitment and development of entry-level talent in the era of Covid-19.

While the last ISE report gave a hot take on student recruitment at the start of the crisis this report gives us a much clearer idea about what the new normal is going to look like.

It concludes that the student labour market is ‘down but not out’ and that while it is a challenging time for young workers to be entering the labour market, employers are continuing to recruit and adapting their recruitment processes to the new situation.

 

Recruitment is down

The research finds that the heightened level of uncertainty cause by Covid-19 along with concerns about the financial sustainability of firms is leading to a reduction in planned recruitment. On average firms are cutting entry level recruitment by around a quarter (23%) this year. The reduction in hiring is worse for SMEs than larger firms and for firms in the Built environment, Finance & professional services and Energy, engineering & industry sectors. Most of the reduction in hiring is being achieved by ceasing ongoing recruitment, but a minority of firms (14%) report that they have already reneged on a job offer and a further 14% of firms considering the possibility of reneging on more offers this year.

The reductions in recruitment are impacting on all types of hires, but, at present, graduates seem to be less severely hit than other types of entry-level hire. Respondents report that they plan to recruit 12% less graduates than they were going to before the Covid-19 crisis. However, they anticipate recruiting 32% less apprentices and school leavers and 40% less interns and placement students.

 

Firms are shifting online

While overall recruitment numbers are down, firms are continuing to operate with most still planning recruitment and most entry-level staff (86%) still working. Consequently employers are having to adapt the way that they organise recruitment and development processes, with a clear preference to shifting activity online.

Firms have shifted their recruitment and selection processes online and cancelled most face-to-face activities. There is still a lot of uncertainty about what will happen in the next recruitment season, but there is a strong indication that online recruitment may become the new normal. While the shift to online recruitment means that the relationship with education providers is likely to change next year, most employers are keen to stay in close contact with all education providers and are particularly eager to keep communications open with universities. Employers are also keen for universities to take the lead and use their expertise to facilitate new ways for them to virtually engage with a diverse range of students and graduates.

It is not just recruitment that is moving online. Over half of employers expect to induct new staff online, and almost three-quarters (73%) are shifting their learning and development programmes into an online format. 

 

Looking forwards

While the recruitment picture for this year is becoming increasingly clear, with 86% of firms now able to provide a picture of their hiring, the picture for next year remains opaque. Only around 60% of firms are sure on what their recruitment for next year is going to look like with 15% of employers anticipating a fall in recruitment next year. The situation with Covid-19 and the wider economic picture remains volatile and it may be well into the autumn before the medium-term outlook for recruitment starts to become clearer.

Larger employers are more positive about the future than SMEs. While all employers are experiencing challenges and problems due to Covid-19 and the lockdown, large employers were more likely to highlight the upsides of the crisis by discussing potential changes to business flexibility, the introduction of new technologies and increased homeworking. SMEs were typically more concerned with financial problems and business survival.

Overall, the recruitment picture for 2020 is becoming increasingly clear. The student labour market is currently down but not out. However, the future is extremely volatile and all actors (employers, educators, young people and the government) will have to work hard to ensure that the next generations of student talent are utilised to their full potential.

Read Covid-19: The impact of the crisis on student recruitment and development.