There’s been a recent flurry of press activity in reaction to a survey that suggests the graduate employment market is improving. Here’s a couple of examples. (Link to AGR and the BBC report 27th Jan)

The gist of the coverage seems to be that willingness of employers to recruit at Graduate level is rising, and so students should be pleased.

We have commented for some time that students are at risk of making conclusions about education and employment without having the full facts available to them. Consequently, some of them might be reaching unfortunate conclusions.

Within the UK, there were 21,682 Graduate level vacancies in 2013-2014. This was 4.3% increase on 2012-2013 (ie 20,788). There are predicted to be an 11.9% rise in 2014-2015 (ie 24,262).

The article also mentions that “Despite there still being an average of 74 Graduates competing for each position, some sectors are struggling to recruit”.

This story raises lots of questions, so where to start…………?

The 74 applications per vacancy statistic needs some context. The Association of Graduate Recruiters, who conducted the original study upon which the BBC report is based, is an organisation that represents a certain type of employer. Typically the companies that are members of the AGR are large, “blue chip” corporations. They might have the time and resource to engage with the on-campus “Milkround” activity.

This type of recruiter is the minority when it comes to UK employers. There are many more employers outside this category than within it. Which means that these statistics do not necessarily give the entire picture of job opportunities for the graduate community. More on this later.

The second half of the statement “some sectors are still struggling to recruit”. Is reinforced by some statistics broken down by industry sector which shows that, despite having applications, these graduate recruiters still can’t fill all of the vacancies. Which means that some graduates are not sufficiently skilled for the vacancies on offer.

This is an alarm bell for anyone thinking of investing in a university course. It seems that 6% of the Blue-Chip graduate vacancies can’t be filled because of a lack of suitable skills. More on this later, too.

This story has two notable numbers that are missing altogether. In our opinion, the most important numbers haven’t been discussed yet. By ‘most important’ I’m talking about the most important for parents and individual students (aka the people who will fund time spent at university).

Firstly, we need to know the total number of graduates in any single year. The figures quoted in the article relate to the total number of graduate vacancies, but how many students are chasing these jobs? The total figures of graduates in each year isn’t quoted in the article, but the information is available from HESA (Higher Education Statistics Agency, beware some data has to be paid for!)   In 2012-2013, there were 403,770 graduates from “first” degrees (which means “Bachelor” level). There were a further 122,115 students graduating with “other” undergraduate qualifications (such as HND, Foundation degrees etc). That’s 525,885 “graduates” in a single year. That’s a big number.

The AGR tells us that there are 20,788 Graduate Jobs in that same period 2012-2013. WARNING, I’m about to make a disingenuous statement………… You might conclude from this that there are only enough Graduate vacancies for 3.95% of all Graduates in that academic year…….. what about the remaining 96%?

OK, why is the conclusion incorrect…………… the total figure includes certain graduates who won’t ever be likely to compete for the “Blue-Chip” graduate jobs. Let’s consider the medical professions, the education stream and Agricultural students. You might say that they aren’t part of the “Blue-chip” “Milkround” recruitment scene. There might be other factors hidden in the macro data. So we need to refine the numbers.

Let’s take the “Bachelor” grade figure alone, and then halve it. This gives us 201,885 as a very rough and ready figure of the total number of graduates who might be interested in a “Blue-Chip” Graduate vacancy. In other words we have halved the figure to exclude people who are never going to be in the frame for a AGR, corporate style job. Ideally we’d be much more exact, but the nature of the available statistics make this difficult.

The upshot is that there are 20,788 “Graduate” Vacancies in 2012-2013, and let’s say 201,885 Graduates keen to secure one of them. This gives us a ratio of roughly one in ten graduates securing employment at “Graduate” level. Of course, the vacancies and students numbers will vary according to subject, and so the ratios will also vary by subject.

Our aim is to highlight the fact that these Macro-scale statistics should be compulsory at the point of choosing and committing to university. What happens to the Graduates who don’t get a “Graduate” level job, and who are therefore potentially “under-employed”? Is the under-employed figure 80% or 90%? Even if we get super generous and assume it’s “only” 40-45% of under-employed graduates, where is the data?

In order to avoid a moral hazard, we need universities or the Government to rethink the marketing of universities………… Instead of the vague reference to the lifetime earning potential of a graduate, we need more explicit data about outcome probability.

Another reason that my conclusion is incorrect is because of the Employers who aren’t in the Blue-Chip, corporate, Milkround, AGR category. I mentioned before that there are many more employers within the UK who are outside this category. Roughly 60% of the workforce in UK is employed by SME employers (Small, medium sized employers means companies with up to 250 employees). These employers represent about 95% of the total number of companies in the UK.

Of course, some of these SME employers might recruit at Milkround level (possibly in their local areas) but by and large the employment opportunities for graduates will fall outside AGR market. The implication of this is that SME vacancies for graduates might not look (or pay) the same as a corporate, “Milkround”, blue-chip vacancy. Remember the stuff about “lifetime” earning potential of a graduate. Who’s graduate salary is used to calculate this headline benchmark?

Why is this detail important? We fear that the encouragement and marketing messages about university and student debt do not apply to the majority of the students concerned.

Bizenko concern ourselves with the ability of individuals to make a living out of their qualification. Part of that process is to ensure that individuals have realistic expectations about what those qualifications are worth. If everyone entering university thinks that their destiny is to be employed within a secure “Graduate” career, on a top salary, then they need to be made aware of the actual probability of this. So whilst there are errors in my conclusions, they have some relevance and are meant to start a debate, rather than be the “last word”.

I recently read about a similar denial dilemma in the world of student athletes in the American college system. The American system of funding and student sport is clearly different to the one we have in the UK, but there is a clear comparison with ‘expectations-of-outcome’. The article discusses outcomes for different sports, but the most marked is Basketball. The statistics suggest only about 1.2% of College Graduates get to play in the NBA, with others earning a living in other professional leagues around the world. But fully 76% of “Division 1” students expect to play in the NBA itself. That is a huge difference.

I want to reiterate the fact that I’m a huge fan of the idea of university. It’s a vital and empowering force for good in society. I just don’t want everyone to be forced in this direction under false pretences. I would rather that there were alternative options that were as respected and well-funded as the UCAS (University entrance) system.

Incidentally, the BBC article also talks about the changing dynamic for employers, and how the proportion of employers planning to offer “opportunities” to school-leavers has risen to 72.7% this year (2013-2014) from 68.2% (2012-2013) and 54.7% (2011-2012). Overall, the clues in this article seem to be strong evidence that Employers (at least those at the AGR scale) are beginning to find an alternative to the graduate model. It’s time for school-aged students to spot this trend and incorporate these market signals into their UCAS and career decisions.

For help on how this topic affects you or your child, please contact Bizenko. We offer a range of services (subscription and free-to-use) that can assist in your deliberations!