Implications of Recession on Graduate Jobs, UK


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The Financial Recession that hit British economy recently resulted in severe unemployment and job loss across UK. The Recession did have many implications on the British labour market. This paper will have an insight into the implications of Recession on graduate labour market in UK. The data provided by the Association of Graduate Recruiters, Office for National Statistics and High Fliers Research Limited on graduate recruitment market in UK was used to carry out the study. The study will be based on the comparison of graduate recruitment market in the years 2009 and 2010. The comparison of graduate recruitment market will be based on the analysis of graduate labour market for the years 2009 and 2010. This paper will try predicting whether the year 2010 is a favourable year for graduates or not. It will also have an insight into the attitude of students towards recession and will provide necessary recommendations.

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Implications of Recession on Graduate Jobs, UK

  1. 1. Chapter 11.1 IntroductionIn Britain there will be very few people who are unaware of the „financial recession‟ or „thecredit crunch‟ that did affect the British economy recently. It was the central theme ofnewspapers and TV shows. The bankers, hedge fund managers and all people associated with„finance industry‟ bore the blame for several months as those responsible for triggering thecollapse of various organizations (Social Issues research Centre, 2009). The real cause ofcrisis though was different and it is a fact that people often need someone to blame for whenthings go wrong. The members of parliament, including cabinet ministers did expressdiscontent about the irresponsibility of short selling brokers who are in frame for theirfinancial misdemeanours (Social Issues research Centre, 2009).The British economy did enter into the recession during the last quarter of the year 2008. TheRecession did result in severe economic downturn and unemployment. The credit crunchforced the manufacturing and production services to be shut down resulting in negativeeconomic growth. The financial sectors, industrial sectors, housing and retail sectors werebadly affected as a result of poor return on investment. Various organizations did tackle theimpact of Recession by implementing new strategies like job cuts and salary cuts. Manycompanies did cut the graduates schemes as a part of their new recruitment strategies.Graduate unemployment is another issue that British economy faces at present, as there hasbeen a 25% rise in graduate unemployment during the last quarter of the years 2009. TheRecession did have many implications on graduate labour market during the years 2009 and2010. However the economy did start to shows signs of optimism with few improvements inmanufacturing and production sectors. After the impact of recession, for the first time theeconomy did have a positive growth of 1.2% during the second quarter of the year 2010.Does all this figures indicate a favourable year ahead for the graduates with more graduatevacancies in the labour market? However, the graduate labour market prediction for the year2010 indicates an increase in graduate vacancies. This paper will analyse the implications ofrecession on graduate recruitment market in UK and will carry out a comparison of thegraduate labour markets for the years 2009 and 2010. The paper will also have and insightinto the attitude of students towards recession and will provide necessary recommendationsfor the graduates to tackle recession.P age |1
  2. 2. Chapter 22.1 Literature Review2.1.1 The Financial Crisis“The Financial Crisis has many dimensions but three particular dimensions seem to be verycrucial” (Kilmister, 2008). The first dimension is build-up of both corporate and householddebt. The second dimension is the return of international monetary instability and refusal byrest of the world to fund UK trade deficits. The third factor is the effect of ecological crisis onthe world economy which brings an end to low commodity prices. Kilmister (2008) believesthat the crisis of 2008 is a result of breakdown of the temporary system that did govern theworld economy since the crisis of 1980‟s. The British economy officially entered thefinancial recession in the fourth quarter of 2008 for the first time since 1991. According tothe Office for National Statistics, UK economy contracted worse than expected 1.5% betweenOctober and December (Guardian, 26 January 2010).All the financial institutions in UK were hit hard by credit crunch and the banks were forcedto cut interest rates to as low as 0.5%. The consumer confidence had serious blow and therewas an increase in repossession by lenders as common people did struggle to meet mortgagepayments (Guardian, 26 January 2010). Inflation did reach a record value as food and energyprices did rise rapidly, but in the housing market there was a rapid fall in prices. The marketdid see a record rise in price for gold and crude oil as the stock market was flooded withinvestors. The economic growth during last quarters of 2008 was found to be almost 0 % asthere was fall in outputs in manufacturing and services sector; rise in unemployment, fall ofhousing and banking industry, fall in tourism industry and fall in retail sales as peoplestopped spending. In the first quarter of 2009 the national debts did reach a record value,interest rates did fall to 0.5% and economy did shrink by 1.9% in April. By June 2009 therewere some good signs as the output in manufacturing and services sector started to rise; butoutput did unexpectedly fall by July. But the economy did seem to catch up since September2009 with very slow improvements in all the sectors.P age |2
  3. 3. Even without media coverage or direct effect of financial recession, we might have seen otherpeople facing the implications of the crisis. The implications did include loss of jobs, loss ofbargaining power, reduction in vacancies, reduction in pay-scheme, weakening of financialprospects and increased competition in market (Social Issues research Centre, 2009).2.1.2 The Recession and Unemployment in UKThe collapse of banking industry, housing industry, manufacturing and services sector didresult in severe unemployment by the beginning of December 2008. There were severe jobcuts and employees were even asked to take long leaves until conditions improved. InFebruary 2009, there was a rapid job loss as many industrial and retail units were shutdown.According to the Recruitment and Employment Confederation (REC) in the first quarter of2009, the labour market was quite weak and job vacancies were falling at record levels. Theincrease in the number of redundant employees did coincide with the fewer job opportunitiesthat became available (Telegraph, 3 February 2009). The study conducted by REChighlighted the fact that there has been a sharp rise in the demand for part-time andpermanent jobs. The report did also notify a shift in bargaining power to employers as therewas a successive fall in the average salaries of successful candidates placed in permanentjobs. The rate of fall in pay scale was very high for both permanent and temporary jobs. Thestudy conducted by REC on figures did show that it was a matter of high concern for labourmarket and the market will continue to contract (Telegraph, 3 February 2009). According tothe UK National Statistics, total unemployment in UK did reach a record value nearing 2.5million by September 2009.The Financial Crisis has affected the sales revenue of all major companies as the profits fromretail markets went down due to reluctance of people to spend money. According to MikeStevens of KPMG, all the major companies in UK are implementing job cuts as a part of theircost cutting policies (Telegraph, 3 February 2009). Due to very low profits the companieshave decided to adopt cost cutting strategy to tackle the financial crisis. All organizationsconsider the wages to employees as their major cost and hence they believe that, a reductionin the wages paid can save money for the organization. Some organizations preferdownsizing as a means for cost cutting while some prefer Reduction in pay scale as a meansfor cost cutting.P age |3
  4. 4. Various Companies in UK did face recession by limiting the recruitment of new candidatesand cutting down existing jobs. The companies did alter their recruitment strategies andimplemented tougher recruitment strategies that did enable them to have access to the besttalent pool available in labour market.2.1.3 The Graduate Recruitment ProcessRecruitment can be defined as a process of identifying and selecting talented candidatesrequired for meeting the organizational needs. “Having the right person, in the right place, atthe right time, is crucial to organisational performance” (CIPD, 2009). The process ofrecruitment and selection is often carried out by the Human Resources Department of thecompany or by an external recruitment agency as contracted by the company. The peopleinvolved in the recruitment process should be aware of the employment legislation and thelaw related to various aspects like discrimination, immigration, disability and criminalbackground. All the stages in recruitment have to be designed properly in order to have aneffective recruitment process.Every organization will have a recruitment strategy based on the employee specification andthe current position of the company in market. Recruitment strategy is one soul factor thatdetermines the performance and sustainability of any organization. There are basically twotypes of recruitments, the internal and external. The internal recruitment is all aboutrecruiting a candidate who works within the organization for a specialized job or task. Theexternal recruitment is all about selecting the candidate from the available labour market asper the job specification. Graduate recruitment is a part of the recruitment strategy of theorganization to gain a talented pool of young graduates. It is a part of external recruitmentmethods adopted by organizations or the agencies contracted for recruitment. “Externalrecruitment makes it possible to draw upon a wider range of talent, and provides theopportunity to bring new experience and ideas in to the business” (The Times 100, July2010). Efficiency of the entire recruitment process will be questioned, if the company investmuch money into the process and they end up selecting a candidate who performs well in therecruitment process but not in practice.Let us analyse the different stages in graduate recruitment process; and highlight the possibleimpacts of recession on each stages of the recruitment cycle. The Figure below gives anoverview of various stages in an efficient graduate recruitment and selection process.P age |4
  5. 5. Figure 1: Stages of Recruitment Process (CIPD, 2009) i. Job Analysis – The Organizations spend much of the time studying about the nature of the job that requires recruitment. It involves an analysis of purpose of the job, output expected from the job holder and integration of job with the organizational structure. The personal attributes and skills required to perform the role is also taken into account (CIPD, 2009). In case of Graduate Schemes, the organizations stress the importance of skills and personal attributes and then try to integrate it with the purpose of the job. Graduate Schemes often include a training programme that will enable the job holders to meet the job expectations. ii. Job Description and Person Specification – It provides the information about the job to potential Graduates and recruitment agencies. It communicates about the performance requirements, skill requirements and often acts as the criterion for the recruitment process. Competency frameworks may be used as a substitute for Job or Person specifications (CIPD, 2009). Competency is defined as the behaviours that candidates must have in order to achieve high levels of performance in a particular task or job (CIPD, 2009).P age |5
  6. 6. Competency frame work of organizations will play a major role in the recruitment process as it determines the short-listing of graduate applications for the job. The Recession has affected financial position of many organizations. Many organizations did adopt methods like cost cutting and job cutting to tackle the recession. During the recession, organizations did tackle the increased number of applications with a change in recruitment strategy. Organizations adopt a broad competency framework so as to make sure that only the best possible candidates apply for the job and hence the number of applications can be limited.iii. Attracting and Managing Applications- There are internal and external methods of attracting applicants (CIPD, 2009). The internal methods include employee referral scheme, where the employees can assist the company in recruiting their family members. The graduate recruitment is an external method, where all the external means are used to advertise the vacancies. Organizations attract applicants through job advertisements in internet and media. Some organizations enable recruitment agencies to perform the advertisement of vacancies. Recruiters from the companies often visit the universities to provide better awareness about the job vacancies among the graduate applicants. As a result of recession many companies seem to take the assistance of graduate recruitment agencies to perform the task of recruitment as it saves money and time. The number of companies preferring graduate jobs websites to advertise their job vacancies has increased. Many companies tend to make use of the e-recruitment methods to manage curriculum vitae (CV) and applications; as online processing of applications is more efficient and less time consuming.iv. Selecting Candidates- Selection includes methods like short listing, assessment of applications and interview. Selection process is often done on the basis of time and resources available (CIPD, 2009). Some companies prefer campus recruitment, where they do the selection process at the campus. After the impact of recession companies seem to get a lot more of applicants than usual. Hence most of the companies have made their selection process much tougher than usual. Many companies did implement new selection strategies like „Strength Based Selection‟ which makes the selection process even tougher. In strength based process, the candidates are made to attend a 45 minute long interview in which all their strengths and skills are tested.P age |6
  7. 7. v. Making Appointment – Before providing the offer letter to the candidates, companies make an appointment with the selected candidates to very if all the legal requirements are met and if the candidate it eligible to work in UK. An employment offer should always be in form of writing. Any offer made in verbal form during the interview is as legally binding as letter to the candidate (CIPD, 2009). vi. Joining the Organization/ Induction- Graduates joining the organization is given proper training and induction in order to make them efficient enough to perform the task; and integrate them to the existing organizational structure (CIPD, 2009).2.1.4 The Recession and Graduate recruitmentThe Students of present world have grown up in an era of Globalisation and EconomicProsperity. But they seem to have a daunting challenge of tackling the financial recession tohave better career prospects. The once buoyant graduate job market seems to look a littlebleaker now; due to large number of job cuts across UK as a result of financial crisis.Majority of the graduate labour market was constituted by the financial institutions that wereaffected badly by the recession. The process of graduate recruitment is time consuming andexpensive; but many organizations believe that cutting back of graduate recruitment willaffect their talent pool. Majority of organisations did prefer a cut in graduate recruitmentirrespective of the fact that it will affect their talent pool.The unemployment among graduates aged less than 24 did rise by 25% from 11.1% inDecember 2008 to 14% in December 2009, according to the Higher Education PolicyInstitute (BBC, 4 July 2010). There was a fall of 8.9% in graduate vacancies for 2008/2009recruitment season though the anticipated fall in vacancies was 24.9% (AGR, 2010). TheAssociation of Graduate Recruiters (AGR) anticipates a further fall of 1.6% in graduatevacancies in the year 2010, this suggest a reduction in the rate of fall of vacancies. In 2009half of the graduate market was dominated by financial institutions and oil companies. Thesecompanies are planning to increase their graduate vacancies by 2010 which is a good sign ofhope for all the students graduating in the year 2010(AGR, 2010).P age |7
  8. 8. However public sector is likely to have more job cuts in the year 2010. The Companiespredict that they are likely to experience high dropout rates as candidates are likely to applyfor jobs in many organizations simultaneously (AGR, 2010).According to the Association of Graduate Recruiters in the year 2009, around half of thecompanies did offer a starting salary in the range of £22,000-£26,000 for the graduates. Onlyone in ten did offer the graduates a starting salary above £30,000 pounds. It is anticipated thatin the year 2010 graduates will be offered an average starting salary of £25,000 by thecompanies. But at present most of the companies even seem to offer a salary as low as£15,000 for graduate jobs. According to the National Bureau of Economic Research (NBER),graduating at times of recession will result in large initial earning losses. This loss doesaccount to around 9 percentages of annual earnings in the initial stage and they tend to recedeslowly with time. It might take around 10 years after graduation for the loss to get nullified(NBER, 2010). The AGR employers did spend around £20,000 in the year 2009 for graduaterecruitment marketing though the predicted amount was around £80,000. The AGR membersplan to make use of the company websites and campus recruitments more than just onlinepromotions. This seems to be a contradiction to general observation the there is an increase inonline promotion of job vacancies. The Real ProblemMuch did happen to the UK economy in the years 2008 and 2009; and this did have a gooddeal of impact on the graduate recruitment market. To what extend did the recession affectgraduate recruitment market in UK, is the real question before us now. To answer thequestion to an extend it is very essential to analyse the graduate labour market in the years2009 and 2010. Analysis of the graduate labour market will also help to highlight the impactof recession on labour market and its implications on students graduating from universities inthe year 2010. A study on the graduate recruitment market will be vital enough to predictwhether the market will shrink or expand in the year 2010.P age |8
  9. 9. The students are much worried about the career prospects as they face the implications ofrecession. The National Union of Students (NUS) did conduct student surveys to find out theattitude of students towards the possible implications of recession. According to the surveyaround 80 percentages of the students are very much worried about their future careerprospects and around one-third of the students prefer higher studies as soon as they graduatefrom the universities. One of the major questions arising is that, do the students prefer highereducation as a result of implications of recession on graduate recruitment market.At present most of the companies tend to offer very low starting salaries for the graduates. Itmight be the reason why many of the students prefer to go for higher education than workingfor very low salaries. But it might not be the case with all graduates as some even prefer totake up jobs with low salaries or unpaid internships to gain work experience. Graduates whocannot afford higher education may even prefer part-time jobs to settle their student loans.The real question before students graduating in the time of recession is that, whether theyshould take up unpaid internships for work experience or prefer higher education. Thegraduate who prefer low paid jobs tend to shift the jobs randomly and it will result in lessdedication to the job they do and lack of expertise in any particular field. In contradiction tothis moving from one job to another might prove productive to some graduates. The qualityof the job and job mobility might be a factor of concern for the graduates as it will have longterm effects on their career prospects.We all realise the fact that many organizations did have to alter their graduate recruitmentpolicies and practices so as to tackle the financial crisis situation. The graduate recruitmentpolicies adopted by the organizations will be the soul factor that will determine the graduaterecruitment market in 2010. In this paper we will first have an analysis of the graduaterecruitment market in the years 2009 and 2010. We will discuss about the implications ofrecession on graduate recruitment market in UK; and will provide an overview about thepossible graduate recruitment market in the year 2010. The paper will try to find out whetherthe graduate labour market will possibly shrink or expand in the year 2010 and will trybringing out possible recommendations for the students graduating in times of recession.P age |9
  10. 10. Chapter 33.1 Methodology3.1.1 IntroductionThe British economy did officially enter into the financial crisis in the fourth quarter of theyear 2008. The implications of the recession on British economy seem to be a matter of highconcern for the young graduate population in UK. One of the major implications of therecession was widespread unemployment in UK. Unemployment was the major issue that theBritish economy faced in the year 2009 and it still facing. Unemployment did have severeeffects on the graduate recruitment market in the year 2009 and 2010. It is essential toanalyse the graduate labour market to understand the implications of recession on graduaterecruitment. We will have to carry out a study on the graduate labour market in the year 2009and then compare it with possible graduate labour market predictions for the year 2010. Thegraduate labour market survey reports for the years 2009 and 2010 will be very vital to carryout this study. For carrying out the study we will require information on graduate salaries,graduate vacancies and graduate marketing. The study will help us to predict if the graduaterecruitment market will shrink or expand in the year 2010. It will thus enable us to find outwhether the year 2010 will be a favourable year for the graduates in UK.3.1.2 Research MethodsSince 1950‟s the information industry started to expand and it obtains, stores and even sellsthe information in one form or the other. The introduction of computers in informationindustry has increased the ability of individuals and organizations to identify and use the data.There are basically two types of data, primary and secondary data. Primary data is rawinformation collected directly by organizations or individuals for general needs or to answer aparticular question. Secondary data is basically the information collected by otherorganizations and archived in one or the other forms. In case of a primary research, theanalyst is responsible for the research design, data collection, analysis and making thesummary. But in case of secondary research collection of information is not the task of theresearcher.P a g e | 10
  11. 11. According to Stewart (1984), secondary data sources will include government reports, surveyreports by organizations, industrial reports and syndicated information services. Usually thesedata are collected for general information needs or as a part of research effort to answer aspecific question. The secondary data source can vary from large statistical studies publishedby government to unpublished information provided by a reputed observer. Secondary dataanalysis can be defined as the process of carrying out an analysis of information gatheredfrom various secondary sources. It will include integration of secondary data from varioussources and reanalysis of data from a particular source. The main task behind every researchthat uses secondary data analysis is to gather published statistical material related to thesubject of research.“Secondary data analysis offers relatively faster and inexpensive answersto many questions and is always the point of departure for primary research” (Stewart, 1984).In this paper I will mainly adopt traditional method or secondary data analysis in order toanalyse the research problem. There are some distinctive advantages for secondaryinformation over primary information collection (Stewart, 1984). But use of primaryinformation is also required to support certain arguments within the research. The costrequired to conduct a primary research investigation is much more than the cost required forobtaining secondary data (Stewart, 1984). Large amount of time is required in carrying outprimary data collection while secondary data can be obtained from the information industryin a very short period of time. When budget and time limitations are imposed on a researchproject, it will be efficient enough to select secondary research that will provide high qualitydata. The secondary sources will be a foundation for further development of researchproblems and research methods (Stewart, 1984). Secondary research improves the efficiencyof research by targeting the gaps and oversights in knowledge. It also enables researchers tohave a comparative research study by comparing existing data with new data. In this researchpaper I will be making use of comparative research method for comparing the graduaterecruitment market statistics available for the years 2009 and 2010. Adopting primarymethod alone in this research will require developing questionnaires and getting it answeredfrom graduates and graduate recruiters. It will also require interviews with various graduaterecruiting agencies and HR professionals. Conducting these interviews and surveys willconsume much time and money. Reliability of primary data is another matter of concernwhile choosing the research method. There will generally be some cost for obtaininginformation by primary research methods like surveys.P a g e | 11
  12. 12. The use of secondary information has disadvantages also. In case of primary research, datacollection will be on the basis of research purpose. Secondary sources of information have tobe collected in random and integrated so as to achieve the data required for analysis.Evaluation of secondary sources must be done carefully. Hence I will use both primary andsecondary data analysis in a complimentary fashion. Since this research is a comparativestudy of graduate recruitment market in the years 2009 and 2010, it will require theinformation regarding graduate vacancies, graduate salaries and graduate recruitment process.Since collecting primary data is difficult, I have decided to use the secondary data providedby reputed organizations like Association of Graduate Recruiters (AGR), National Union ofStudents (NUS), Highfliers Research Limited, the Chartered Institute of PersonnelDevelopment (CIPD) and office for National Statistics. The Association of Graduaterecruiters, CIPD and Highfliers research limited provide graduate labour market surveyreports for the years 2009 and 2010. The National Union of Students provides survey reportson the attitude of students towards recession. A short interview with one of the careeradvisors at career and employability services of University of Liverpool was vital enough tobring more light into the research situation. This primary information collection did not dealwith any data or figures as it was indented to answer some arguments that arise within theresearch. The interview was basically intended to bring in more arguments for discussion bycollecting more personal values and facts about the research situation. The research methodadopted in this paper is mainly secondary data analysis; while primary data analysis is alsobeing used. Let us now have an insight into the various secondary data sources that is beingused in this research.3.1.3 The AGR Graduate Recruitment SurveyThe Association of Graduate Recruiters (AGR) is a non-profit and independent organizationthat was formed in the year 1968. It offers support to employers on all aspects regardinggraduate recruitment process. There are around 800 organizations working along with AGRin the process of graduate recruitment and it contributes to large proportion of graduateopportunities in UK (AGR, 2010). The mission of AGR is to provide professional advicesand support to all graduate recruiters in UK equally and thus help them excel in their business(AGR, 2010). The Association of Graduate Recruiters recognises that the market place isglobal, diverse and dynamic. It thus offers services to all its members equally by influencingtheir policies and challenging their status quo.P a g e | 12
  13. 13. The Association of Graduate Recruiters also provides access for all its members to thevaluable market surveys, research findings and briefing papers. All the members of AGR areallowed to form a connected network and thus share their views and practices. Variousactivities like seminars, discussions and online forums are enabled for interaction among theAGR members. The Association of Graduate Recruiters makes sure that all the problems oftheir members are heard and is dealt with. The Association makes sure that the voice ofgraduate recruiters in UK is heard by the decision makers in government, universities andcareer services (AGR, 2010).The AGR graduate recruitment Survey is a research related study about the AGR employermembers and the recruitment practices adopted by them. The study provides a wider insightinto various conditions and trends related to the graduate recruitment market. The key marketindicators like graduate vacancy and salary is used as benchmarks for the survey. It is one ofthe topmost surveys in UK dealing with graduate recruitment practices. It is a continuoussurvey process which includes all the recruitment seasons. This survey acts as the primarysource of information about the graduate recruitment levels, graduate recruitment methodsand recruitment practices among all the AGR members. It enables the AGR members forevaluation and optimization of graduate recruitment activities. The graduate recruitmentsurvey is conducted twice a year. In this research paper we will be using the AGR WinterReview 2010 and AGR Summer Review 2010. It provides assessment of graduate vacancylevels and graduate salaries for the corresponding year. It also examines the AGR employer‟spredictions about graduate recruitment market for the near future. The winter reviewdescribes various methods adopted by AGR employers for marketing their graduatevacancies in 2009 and then provides an insight into the marketing plans for the year 2010.The summer review did deal with graduate applications, selection process, graduate retentionand salary progression. The survey is conducted by a research consultancy called CFE onbehalf of Association of Graduate Recruiters.The required data was collected by means of an online survey hosted in CFE website for fourweeks. The winter survey was open for four weeks between November and December 2009and the summer survey was done during May 2010. All AGR members were invited toparticipate in the survey by an email that included the link to survey and a personalisedpassword.P a g e | 13
  14. 14. The participants were allowed to complete the survey in multiple settings and eachparticipant was diverted to different survey sections based on their answers to previousquestions. Some correspondents were contacted by phone to further explore the themes thatdid emerge from analysis of survey reports. In case of summer review the online survey wasstructured into two parts. Part A did include six sections and Part B did include three sections.Part A did include questions related to vacancies, salaries, applications, selection, internshipand placement. Part B did include questions related to graduate development programs andgraduate retention. A wide range of questions were included in the survey to collect variety ofdata and some questions were made mandatory so as to route the survey to other sectionsbased on the answers.The survey results were analysed using statistical software and were presented in form ofcharts and graphs. The number of organizations that respond to each question is representedin graph as the base. The percentage increase or decrease in any quantities has been tested fortheir statistical significance by means of appropriate inference tests. Data relating to the year2009 is as per the actual graduate recruitment market data for the year 2009 and data relatingto year 2010 is as per predictions made by AGR members. An important factor to be kept inmind is that the graduate recruitment practices and developmental activities adopted by AGRmembers vary with sector. Since the survey is being done during the recruitment season thenumber reported will not be final. A total of 215 AGR members participated in the surveyand there was around 62.1% response rate. The respondents from a wide range of businesssectors were drawn into the survey. Online survey is easier to be organised and is effectivetoo. In the case of Association of Graduate recruiters with large number of membersparticipating in the survey, a face to face survey might be very difficult. It will consumemuch of the time and money. The link to survey questions can be easily mailed to theparticipants and they can carry on answering the questions according to their convenience.3.1.4 High fliers Research Limited Graduate Labour Market SurveyHigh Fliers Research is an independent market research company that specialises in areasrelated to students and graduates. It was established in the year 1994, since then it has workedalong with many graduate employers to measure the impact of their recruitment activities incampuses and their position in graduate market. It is often know as The UK Graduate CareersSurvey and covers all the graduates from around thirty leading universities in UK.P a g e | 14
  15. 15. 3.1.5 National Union of Students (NUS) Survey reportThe National Union of students is a non-profit organization that works for the benefits ofstudents in UK. It offers voluntary membership for all students studying in variousuniversities in UK. It is a confederation of around 600 students unions and represents theinterest of around seven million students in UK. The National Union of students operates inall universities through the guild of students. The mission of NUS is to protect the rights ofall the international and native students in UK. It helps students to experience quality learningand shape the world around them (NUS, 2010).The National Union of Students did carry out a nationwide survey to find out the impact ofrecession on students. The theme of the survey was to carry out a study on attitude of studentstowards recession. The survey did include around 19 sections and each section having onequestion each. The questions did focus on implications of recession on students at universitiesin UK and they intend to bring more light into the various dimensions related to recession.The survey did include questions related to graduate employment levels, student fees andStudent loans; decisions regarding higher education and attitude of government towardsstudents. The research was able to gain much response from the students, as recession andunemployment seems to be the major matter of concern for all students. The research wascarried out during March 2009 by an opinion panel on behalf of the National Union ofStudents. Around 521 under graduate students did take part in the opinion panel. NUS didalso get the help of Guild of Students at various universities to carry out survey within theuniversity. The survey results very published at the NUS national conference on 31 March2010 (NUS, 2010). The survey conducted by the national union of students did include onlinequestionnaires, interviews and printed questionnaires distributed among students. All thesemethods were adopted by NUS to make sure that they receive response from a wide range ofstudent crowds.3.1.6 Labour Market Outlook by CIPDThe Chartered Institute of Personnel and Development (CIPD) is one of the largest HumanResources development professional bodies in Europe. It is a recognised as a globalorganization that supports and develops those responsible for management and developmentof people within various organizations.P a g e | 15
  16. 16. It offers its services among 135,000 members around the globe. Main mission of CIPD is tohelp organizations develop better Human Resource management practices that will render ahigh performing organization (CIPD, 2010). The CIPD labour market outlook is releasedquarterly every year. It provides indications towards the future changes in labour market inrelation to recruitment, redundancy and pay scale. The Human resource professionals ofvarious organizations will be able to make much accurate predictions about the possibleamount of recruitment and redundancy for the coming year. It will be very much easier forCIPD to conduct this survey as almost all the HR professionals of various companies aremembers of CIPD.There are around 135,000 Human resource professionals as the members of CIPD. Thissurvey and study was conducted with the help of around 787 CIPD members who are HRprofessionals in various organizations. It was an online survey which got useful responsefrom around 787 members with a response rate of 5.6%. Online method of carrying outsurvey will save much time and money. The participants were asked to answer a series ofquestions related to employment issues. Survey was conducted during the month of March2010. The results were then reanalysed on the basis of size of company, sector and region(CIPD, 2010).3.1.7 Labour Market statistics by ONSThe Office for National Statistics (ONS) is a non ministerial department and is the executiveoffice of UK statistics authority. It is the largest statistical producer for the UK governmentand reports directly to the parliament. The Office for National Statistics produces the mosttrusted and accurate data regarding labour market. The ONS always keeps in track of all thevital statistical data for observational and research purpose. Various statistical data‟s likeemployment rate in UK, number of jobs available, total working hours and unemploymentrate is vital for my research paper. It also provides the details regarding the number of malesand females employed and those out of job. All the data is being represented in form of linegraphs. I will have to use the labour market statistics provided by ONS to carry out a study onthe labour market to in order to reach conclusions regarding possible labour market in theyear 2010.P a g e | 16
  17. 17. 3.1.8 ConclusionIn this research study I will be adopting more of a quantitative approach than the qualitativeapproach. The quantitative approach is also termed as traditional approach and is more ofobjective in assessing the situation. As mentioned above, the various secondary sourcesavailable are statistical data about the graduate labour market in UK. This research study willrequire reanalysis of available data in order to reach certain conclusions. “In case of aquantitative approach the researcher remain distant and independent of that being researched”(Creswell, 1994). When using this approach I do not have to carry out any direct interviewswith the graduate employers or the graduates. In case of a qualitative approach theresearchers has to interact constantly with what they study and they have to observe theinformants for a prolonged period of time.The researcher will try his best to minimize the distance between himself and those beingresearched. In case of a quantitative study all the statements from a written report aboutvalues are omitted and just the facts are taken in account. These facts are used to createarguments by relating it with the evidence gathered during the study. In case of quantitativeapproach the researcher cannot use his own values; while in case of qualitative approach hecan use his own values into the study. Hence this research paper will carry out a quantitativestudy of graduate labour market for the years 2009 and 2010, with the help of varioussecondary data sources as mentioned above. In this paper I will carry out reanalysis ofvarious facts so as to create arguments by relating it with evidences collected along the study.P a g e | 17
  18. 18. Chapter 44.1 Data Analysis4.1.1 IntroductionIn order to have proper insight into the implications of recession on graduate recruitmentmarket, we must carry out a study on the labour markets. We will first consider the facts andfigures related to the labour market in UK, as provided by Office for National Statistics andthe Chartered Institute of Personnel and Development. After carrying out the analysis of thesefacts and figures, we will have a good insight into the labour market. Then we will carry outstudy on the graduate recruitment labour market for the years 2009 and 2010 by analysisgraduate labour market data provided by Association of Graduate recruiters. In the finalsection we will carry out a study on the attitude of students towards recession. Study on allthe above mentioned facts and figures will enable us to make predictions related to jobprospects of graduates in the year 2010.4.1.2 Recruitment and RedundancyThe Labour Market Outlook for spring 2010 published by CIPD, shows signs of emergenceof UK economy out of the recession. The CIPD says that, this improvement in economy isdue to great optimism among the private sector employers who plan to increase theirrecruitment for coming recruitment season. The data shown in the figure1 indicates anexpansion in labour market during the second quarter of 2010. Net employment intentions areconstituted by the difference in the proportion of employers who expect an increase in thestaff level over those who expect a decrease in the staff level. According to the graph in thesecond quarter of 2010, the net employment intentions balance and equals to +5%. The netemployment intensions were -5% in winter 2010, -3% in autumn 2009, -10% in summer 2009and -19% in spring 2009. The rise in employment intensions are driven mainly by the privatesector growth. According to the Office for National Statistics, during the first quarter of 2010the net balance for the private sector did rise to 29% from 5%. The private sector services,production services and manufacturing services will have an increase in employment as therewas an increase in net profit during the last quarter of 2009(ONS,2010).P a g e | 18
  19. 19. According to the Office for National Statistics, net balance for public sector stands at a verylow value of -43% and hence the public sector will probably continue with a very lowemployment rate. Figure 1: Overall Recruitment and Redundancies in Britain Courtesy: Labour Market Outlook, CIPD (2009)In figure1 shown above, the percentage of unemployed people seems to increase gradually inthe first half of the year 2010 compared to a peak rise during the last quarter of the year 2008.When you consider the fourth quarter of 2009, there has been a slight increase in the stafflevels compared to the third quarter of 2009. This shows that there has been a slightimprovement in the recruitment process. Statistics shows that around 68% of employersintend to recruit more people during the second quarter of the year 2010(CIPD, 2010). Whilethe recruitment intentions by employers seem to increase, there is a slight increase in theredundancy intensions as show in figure2. In the second quarter of 2010 around 29% ofemployers expect job cuts compared to 26% in previous quarter. In private sector there is agradual fall in the redundancy rate, but there is a steep rise in redundancy rate at the publicsector. The employers in public sector expect 38% redundancies compared to 24% by privatesector employers. The redundancy rate among the central and local government authorities isabout 46% according to CIPD labour market outlook for the second quarter of the year 2010.P a g e | 19
  20. 20. Figure 2: Redundancies Intensions by business sector Courtesy: Labour Market Outlook, CIPD (2009)4.1.3 Labour Market Statistics for the year 2010The employment rate for first quarter of 2010 was 72% as shown in table1. The employmentrate was down by 3% in this quarter and the rate of fall was very low compared to previousyears. This decrease in the rate of fall of employment indicates slight progression in thelabour. The number of people being in employment did fell by 76,000 to reach a total of28.83 million in the first quarter of 2010. Number of people employed in fulltime jobs did fellby 103,000 while there was an increase of 27,000 people being employed in part time jobs.The unemployment rate for the first quarter was 0.8% and was up by 0.2% compared toprevious quarter. The number of unemployed people did increase by 53,000 adding to a totalof 2.51 million. The inactivity rate was 21.5% in the first quarter of the year 2010 and was upby 0.2% compared to previous quarter (ONS, 2010). Table 1: Labour Market Statistics for first quarter of 2010 Courtesy: Labour Market Statistics, Office for National Statistics (2010)P a g e | 20
  21. 21. Table 2: Labour Market Statistics for second quarter of 2010 Courtesy: Labour Market Statistics, Office for National Statistics (2010)Let us consider the age group 16-64 as per mentioned in table2. Net employment rate forsecond quarter of the year 2010 was 70.5% and was up by 0.3% compared to previousquarter. The number of people employed was 184,000 adding up to a total of 29.02 million.According to the Office for National Statistics (2010), it is one of the largest increases in thequarterly employment rate since 1989. The quarterly rise in employment was mainly drivenmy increase in part time jobs, which increased by 115,000 in the second quarter to reach atotal of 7.84 million. The number of people employed in fulltime works increased by 68,000to reach a total of 21.18 million. The unemployment rate was 7.8% and was down by 0.2 %.The number of unemployed people fell by 49,000 to reach 2.46 million and the inactivity ratewas 23.4% and was down by 0.2% compared to previous quarter. The number of inactivepeople fell by 49,000 to reach a total of 9.35 million in the second quarter (ONS, 2010).4.1.4 Graduate Labour MarketIn this section we will first analyse the graduate labour market for the year 2009 and thenanalyse the graduate labour market predictions for the year 2010. After this we will carry outa comparative analysis of the actual graduate vacancy and salary levels, experienced by theAssociation of Graduate Recruiters (AGR) employers in the year 2009 with those predictedfor the recruitment season in the year 2010. The recession did have impact on graduatevacancies and graduate salaries. By carrying out an analysis on graduate labour marketstatistics we can find out extend of impact of recession on graduate vacancies and salaries.P a g e | 21
  22. 22. Graduate Vacancies in 2009In September 2008, just before the collapse of banking industry and chaos in the globalfinancial markets, all the leading employers in UK did publish their recruitment targets forthe year 2009. All the recruiters together did expect to recruit 19,551 new graduates duringautumn 2009 recruitment season. The targeted amount was similar to that of the number oforiginal targets for the year 2008. With the progression of recession in world market and asthe country did move into credit crunch all the employers did revise their recruitment targetsfor the year 2009. The targeted amount was decreased and many of the employers did scale-back their graduate schemes. By January 2009 nearly 3,500 graduate jobs were cancelled andthe job cuts did have impact on all major employment sectors (see figure 3). The worstaffected sector was the investment banks; they did have around 1,000 graduate jobs cancelledin around three month‟s time. Figure 3: Change of Recruitment Targets in the year 2009 Courtesy: The Graduate Market in 2010, High Fliers (2010)P a g e | 22
  23. 23. In July 2009, there was further reduction in graduate recruitment and all the employerstogether did expect that no more than 14,370 graduate will start job with their organizationsin the autumn recruitment season. It did represent a drop of 13.5% in recruitment levelscompared to the year 2008. During December 2009, these figures did prove to be muchoptimistic as the final graduate recruitment figures for the year 2009 did show that just13,651 graduates did start their work with the leading employers in UK. It did indicate that, a6,300 fewer graduates have been recruited compared to predictions at the beginning of theyear 2009 and 17.8% less than those compared to the year 2008. Expected Graduate Vacancies in 2010Taking into account the considerable reductions in graduate recruitment during the year 2008and 2009, prospects for the students leaving the university in the year 2010 seems quitedifferent. There is a new feel of optimism among the various leading employers in UK andthey are planning to step up their graduate schemes for the year 2010. When we consider thelist of Times Top 100 Graduate Employers, almost half of these employers are expecting toincrease their graduate recruitment in 2010. Around fourteen organizations were confidentthat they will be hiring at least 50 additional graduates this year (see figure 4). One third ofthe employers intend to recruit the same number of graduates as they did in the year 2009 andaround one fourth warns that they intend to reduce the number of graduate vacancies in theyear 2010. This optimism in graduate recruitment market indicates that graduate vacanciesare set to increase in at least ten of the main employment areas. The biggest growth ingraduate recruitment is seen in investment banking sector that did cut the jobs by half in theyear 2009. They plan to have one fourth increase graduate recruitment during the year 2010.Accounting and professional services firms aim to have an increase of 14% in graduaterecruitment. The public sector plans to have jobs cuts this year and they plan to recruit veryfew graduates this year. Despite these improvements in graduate recruitment market, theemployers have confirmed the fact that one fourth of the vacancies allocated for the year2010 have been filled by graduates from 2009. This highlights the fact that more than 4,000vacancies will not be available for the students graduating in the year 2010(See Figure 5).P a g e | 23
  24. 24. Figure 4: Graduate Vacancy Change for 2010 Courtesy: The Graduate Market in 2010, High Fliers (2010) Figure 5: Graduate Vacancies in 2010 Courtesy: The Graduate Market in 2010, High Fliers (2010) Vacancies for the year 2010 Vacancies for the Already Filled by year 2010 2009 Graduates Available For 2010 Graudates 26% 74%P a g e | 24
  25. 25. Comparison of Graduate Labour Market for the Years 2009 and 2010In the year 2009 the decrease in vacancies observed was 8.9% and it seems to continue with1.6% drop expected for the recruitment season by AGR employers in the year 2010. As showin figure 6, during the year 2002 the decrease in vacancies stood at 6.5% and it was followedby a small further drop of 3.4% in the year 2003. We can find similar trends when we observethe drop in vacancies for the years 2009 and 2010. However, the drop in vacancies expectedby the AGR employers for the year 2010 seems to be low and it suggests the fact that fall invacancies have started to level out. Another important fact adding to the situation is that, thepredictions for decline in vacancies for the year 2009 by AGR employers was a high value of24.9% but the real value did turn out to be a low value of 8.9%. Figure 6: Graduate Vacancy Change at AGR employers 2000-2010 Courtesy: AGR Graduate Recruitment Survey 2010, AGR (2010)P a g e | 25
  26. 26. The Office for National Statistics survey on total job vacancies available across UK seem tobring out the fact that, decrease in vacancy is less among AGR employers. During the firsthalf of the year 2009 total decrease in vacancy observed across all occupations according toOffice for National Statistics was 29%. But the decrease in vacancy experienced by AGRemployers was 8.9%. This shows that recession has not adversely affected the graduaterecruitment market and there are signs of optimism for the recruitment season in year 2010.In figure 7 given below we can find much evidence to the fact that there are signs ofoptimism in graduate recruitment market. Around 51.5% of organizations predict to havemore vacancies in 2010 than in 2009. The vacancy expected by AGR employers for therecruitment season 2009 was just 34.5%. These facts suggest that the significant slowdownexperienced during the graduate recruitment season in 2009 was an implication of recessionand it do not look set to continue. Even though 24.5% increase in vacancies offered by AGRemployers is a small value, it represents good news for all the students who graduated in2009 and those set to graduate in the year 2010. The percentage of organizations reporting adecrease in the number of vacancies has declined from 46% in the year 2009 to 31%. Thisdecrease is mainly seen in the category of one to ten fewer graduates and it accounts foraround 16.8% as show in figure given below. Figure 7: Change in Vacancy Levels 2009 to 2010(Predicted) Courtesy: AGR Graduate Recruitment Survey 2010, AGR (2010)P a g e | 26
  27. 27. An analysis on the number of graduate vacancies offered by AGR employers in the year 2009and those predicted for the year 2010 indicates that, there has been a decrease in the numberof organizations reporting no new vacancies. There was a small decrease from 5.1% to 3.6%as show in figure 8. But this value is still more than the value 2.9 % as reported in 2008recruitment season. But still there are signs of improvement in the 2010 recruitment season.As shown in figure 5, the percentage of AGR employers predicting vacancies between 26-50,101-250 and 251-500 have slightly increased compared to the recruitment season in 2009. Figure 8: Graduate Vacancies Offered by AGR employers in 2009 and 2010(Predicted) Courtesy: AGR Graduate Recruitment Survey 2010, AGR (2010)P a g e | 27
  28. 28. Changes in Vacancies by Business SectorThe expected percentage change in vacancies from 2009 to 2010 by sector is show in thefigure 9 given below. In contrast to the situation during the first half of the year 2009,majority of the bars in the graph are in the right side of the vertical axis which indicates andincrease in the number of graduate vacancies. The major increase in vacancies for the year2010 is reported by the traditionally big graduate recruiters like Banking or FinancialServices (24.5%), Investment Banks and Fund Managers (16.2%) and Accountancy orProfessional Service firm (0.4%). All this figures indicates a better graduate recruitmentseason ahead (AGR, 2010). The largest increase in vacancies predicted between the years2009 and 2010 is for oil companies (49.7%) and consulting or business service firms(47.2%). There are almost half as many more vacancies in the year 2010 compared to 2009recruitment season (AGR, 2010). However a smaller number of sectors are predicting adecrease in the number of vacancies by the year 2010. It includes third sector (49.2%),transport and logistics (13.5%), Insurance Company (8.9%) and government sector (7.5%). Figure 9: Expected Percentage Change in Vacancies from 2009 to 2010 by sector Courtesy: AGR Graduate Recruitment Survey 2010, AGR (2010)P a g e | 28
  29. 29. Those employers with anticipated (4.32) and actual (4.25) growth in business were rated asthe major factors for expected increase in vacancies between 2009 and 2010 as show in thefigure 10 given below. But in the year 2009 increase in vacancies was considered as a resultof a strategic change adopted by organizations to focus on graduates and the anticipatedgrowth in business was given less significance. The strategy of having increased focus ongraduates still continues in the year 2010 though it is not the primary driver for the situation.Figure 11 indicates that the impact of recession is one major cause for the decrease ingraduate vacancies. The direct impact of recession is considered as the major cause than anyother factors mentioned in the figure. The intention of young graduates to join highereducation was considered as a less important factor. Figure 10: Reason for Expected Increase in Vacancies from 2009 to 2010 Courtesy: AGR Graduate Recruitment Survey 2010, AGR (2010) Figure 11: Reason for Expected Decrease in Vacancies from 2009 to 2010 Courtesy: AGR Graduate Recruitment Survey 2010, AGR (2010)P a g e | 29
  30. 30. Graduate Salaries in 2009 and 2010According to the AGR employers in 2010, the average starting salary for graduates willremain unchanged for the second consecutive year. The Association of Graduate Recruiterspredicts stagnation in graduate salary levels and expects that the average graduate salary willremain at £25,000 similar to that of year 2009. Even though the salary expectations for theyear 2010 are just predictions, it seems to prevail in the current economic climate. There is a0% change in the median graduate starting salary predicted for the year 2010(see figure 12). Figure 12: Change in Graduate Median Starting Salary for 2009 and 2010 Courtesy: AGR Graduate Recruitment Survey 2010, AGR (2010)In the year 2009 the banking industry did top the salary chart with a median starting salary of£ 38,250 and it was a £ 3,250 more compared to the year 2008. The law firms come second inthe list with £ 35,000 as they had a drop in median starting salary. Oil companies come thirdin the list with a starting salary of £ 33,000 for the graduates. Figure 13 indicates that, 25% ofthe employers who comes under AGR are expecting to offer a starting salary which comes inthe range of £ 24,001 to £ 26,000 in the year 2010. As show in figure around 20.1% ofemployers expect a salary range of £22,001 to £ 24,000 and 20.7% expects a salary rangefrom £ 26,001 to £ 31,000.P a g e | 30
  31. 31. Figure 13: Graduate starting salaries in 2009 and 2010 Courtesy: AGR Graduate Recruitment Survey 2010, AGR (2010) Graduate Recruitment during 2009-2010This section of the paper will examine the views of leading employers in UK regarding the2009-2010 graduate recruitment season, based on the response of graduates from variousuniversities. This section of the paper will have an insight into, the possible challenges thatgraduate recruiters will face in the year 2010 and will highlight the attitude of studentstowards recession. The employers under Association of Graduate Recruiters reveal that theywill face a number of challenges in the 2010 recruitment season due to various reasons. Oneof the major reasons is the high dropout rate of candidates as they apply for large number oforganizations at a time. Another main reason is the graduate perception of the industry sector(See Figure 14). Graduate perception of the recession is an important factor that leads to thechallenge of high graduate dropout rate. It is a reflection of the economic downturn that didresult in severe youth unemployment (AGR, 2010).P a g e | 31
  32. 32. Figure 14: Likelihood to face Graduate Recruitment Challenges Courtesy: AGR Graduate Recruitment Survey 2010, AGR (2010) Promoting Graduate ProgrammesIt is a very clear fact that, recession has significant impact on resources available for thegraduate recruiters. Nearly half of the graduate recruiters have reported that their recruitmentbudget have been cut down for 2009-2010 recruitment season compared to previous seasonand nearly 18% of the recruiters report a considerable decrease ( see figure 14). According toHigh Fliers Research Limited, many organizations that did reduce their spending onrecruitment did actually increase their graduate vacancy targets. Highest cut in recruitmentbudgets was seen in public sector and industrial sectors. Many organizations have adopted achange in their recruitment marketing strategies as a result of reduction in recruitment budget.They did stop spending much money for online recruitment advertising and printing newbrochures. Around Two-Fifth of employers were able to maintain their usual recruitmentbudget while around 13 employers did announce and increase in the recruitment budget.P a g e | 32
  33. 33. Figure 15: Graduate Recruitment Budgets for 2009-2010 Courtesy: The Graduate Market in 2010, High Fliers (2010) Graduate Applications Received in 2009-2010Majority of the graduate recruiters did face and increase in the number of graduate jobapplications during the early part of 2009-2010 recruitment season. According to the surveyconducted by High Fliers Research Limited, around three fourth of the organizations havereported an increase in the number of applications and two-fifth of them did report a largeincrease in the number of applications ( see figure 16). The investment banking sector did seea huge increase in the number of applications compared to other sectors. Some recruitersclaim that even though the number of applications has increased, the quality of applicants hasnot improved. The survey results shows that, two-fifths of the graduate job applicationsduring September to December of 2009 where from graduates who did already graduate andwere in search of job.P a g e | 33
  34. 34. Figure 16: Graduate Applications Received during 2009-2010 Courtesy: The Graduate Market in 2010, High Fliers (2010)4.1.5 Attitude of Students towards RecessionThe National Union of Students did conduct a survey in the year 2009 on how recessionaffects the students personally. According to survey, 32% of students anticipate a tough timefinding jobs after university, while 20% of the students anticipate an increase in cost of livingand difficulty to meet student loans. Around 23% of students think that recession has affectedthe ability of their parents to provide financial support while 40% of them believe thatrecession has not affected their parents‟ ability to pay student fees. As per the survey report,nearly 50% of the students feel that the current economic climate will have impact on theirability to find a job while studying and 30% of students are very much concerned about thepresent graduate employment levels. One of the major implications of recession is increase innumber of students preferring postgraduate studies. Survey results shows that around 28% ofstudents prefer postgraduate studies as a result of recession. These figures indicate thatgraduates are very much concerned about the implications of recession.P a g e | 34
  35. 35. The Research conducted by High Fliers shows that, some students are confident thatprospects for graduates will improve in the year 2010(see figure 17). Around one third of thegraduates believe that there will be fewer graduate opportunities in the year 2010, whileanother one third of the graduates anticipates a recruitment level similar to the year 2009.Only 28% of the students believe that the graduate labour market will improve for thatstudent class graduating in the year 2010. Even though the graduate recruitment market seemto have a positive outlook, students graduating in the year 2010 will find it difficult to getjobs as there are many graduates from previous years still searching for jobs. According tothe data provided by office for national statistics there were around 100,000 unemployedgraduates during November 2009. Figure 17: Student views on Graduate Labour Market 2010 Courtesy: The Graduate Market in 2010, High Fliers (2010)The final year students from various universities in UK are more pessimistic about graduaterecruitment in the year 2010 than compared to the year 2009. Just 30% of the final yearstudents think that employers will increase the number of graduate vacancies this year andmore than 60% is little confident that they will find a job soon after their graduation. Aroundhalf of the students expect to take up any job there are offered and is ready to work evenunder low salary. A significant number of students have given up applying for jobs ininvestment banking, retail, property and accountancy due to recession. Many students preferto go for higher studies hoping to improve their career prospects than taking up low paid jobs.Some students are even ready to take up unpaid internships so as to improve their careerprospects.P a g e | 35
  36. 36. Chapter 55.1 DiscussionThe Recession did have much impact on graduate labour market during recent years and thecompanies in UK did adopt various recruitment strategies to tackle the impact of recession.Organizations realise the fact that even in times of recession it is essential to develop theirfuture talent. Graduate employment tends to remain strong in key sectors and employers tendto attract graduates through work placements and part-time jobs. Some organizations did cutdown the graduate job vacancies while some did maintain the level of graduate job vacancies.Various factors like reduction in the graduate salaries, lower budget for recruitmentmarketing and change in recruitment methods might have enabled many organizations tomaintain the graduate vacancy levels irrespective of the recession. The graduate recruitmentpractices of small scale and medium sized companies were much affected by the impact ofrecession. But, it did not have much impact on the graduate recruitment strategies andpractices of bigger companies.In this section we will discuss about the possible implications of Recession on graduaterecruitment market in UK. A discussion on the topic Graduate Recruitment Market was heldon 3rd August 2010 with Fiona McNamara, the career advisor at University of Liverpool. Thediscussion did enable me to gather some general information regarding the GraduateRecruitment Market, though the information was unofficial. The opinion given by the careeradvisor on various issues related to graduate recruitment will be discussed in this section.Apart from this, I will be using my personal experiences to support the arguments that arise.With the Recession casting a long shadow all over the graduate recruitment activities in theyear 2009, there was an obvious reason for the graduates to worry. But a noticeable fact isthat the decrease in reported graduate vacancies seems to be lower than the anticipateddecrease in graduate vacancies. The Association of Graduate Recruiters did expect one-fourthdecrease in vacancies during the third quarter of the year 2009. But the reported fall invacancies 8.9% was much low compared to the anticipated decrease of 24.9% (AGR, 2010).According to the Office for National Statistics there was reported 29% fall in vacanciesacross UK economy compared to previous year. This shows that AGR employers seem to beless affected by recession compared to all employers in UK.P a g e | 36
  37. 37. The possible reasons for the difference between expected decrease in graduate vacancies andthe reported decrease were concluded from the discussion with Fiona McNamara. There willalways be some difficulty while making a comparison between the mass recruitment atgraduate level and general vacancies. Graduate recruitment is the biggest mass intake for theblue chip companies; other vacancies do not usually occur in such large numbers and tend toarise during company expansions or when an opening arises. The small scale and mediumsized companies claim that they do not plan to recruit any graduates in the year 2010.Recession has affected the small scale companies badly and they are in no position to investmoney in graduate recruitment. The main reason for less of a drop than was predicted wasprobably for the reasons as stated below.  The graduate recruitment budgets are set about 12/18 months in advance. So any probable job cuts will not be introduced until the following year.  Many companies were ultimately afraid of cutting their talent pipelines which are supplied through the graduate recruitment schemes. Many companies did learn very hard lessons from the recession in the early 90s, when they did cut their graduate recruitment schemes. This did have major affects to the reputation of the company in terms of bad publicity and it did bring trouble in filling the senior executive‟s positions.Following facts were concluded from the discussion with Fiona McNamara, on variousaspects related to implications of recession on graduate recruitment. The students ofUniversity of Liverpool who did apply for various graduate jobs in the year 2009 did providefeedbacks to the career and employability services about the graduate recruitment process.Most of the companies who recruit graduates did have a very tough application and testingprocedure. The interviews did seem to cover all complex areas related to business andmanagement of the companies. Some companies did even have very long application processdemanding in depth knowledge about the clients. Companies like Ernest & Young didimplement a new recruitment method called „Strength Based Recruitment‟ in which there wasan hour long skill based interview. These tough recruitment processes highlights the fact thatmost of the companies wanted to recruit very few graduates, but wanted the best talent pool.Since the Recession was a global phenomenon it did affect most of the developing countriesof the world.P a g e | 37
  38. 38. Students from these countries did join the universities in UK for post graduate degrees so asto improve their career prospects. This resulted in further increase in the number of graduatesseeking job in UK. Even though the employment law prevents any kinds of discrimination onbasis of nativity, many recruiters are unaware of the legislation and tend to prefer nativegraduates over international graduates. Some recruiters believe that, if they start acceptingapplication from international graduates then the number of applications will increase andhence the recruitment cost will be more. The impact of recession and graduate unemploymentwas the main theme of mass media for a long time. This often did affect the attitude ofgraduates towards recession and unemployment. Some students did prefer to go for PostGraduate studies soon after graduation; some did go for holidays, while some did prefer tojoin for unpaid internships and part-time jobs to improve their employability. According tothe Office for National Statistics, nearly 150,000 graduates did remove themselves fromgraduate labour market by undertaking further studies. Another shocking finding is that manystudents have given up sending applications for graduate schemes as they assume thatcompanies have stopped recruiting. Some companies did not advertise the cut in graduateschemes as it will send wrong message out into the public. Many graduates did comment that,even though they were selected for graduate schemes they were not given the joining dates orwere invited to the assessment centres. The Royal Bank of Scotland and Barclays Bank didcontact the university authorities to inform that they are down with student applications forgraduate schemes. Students even started to pay for agencies to help them get an unpaidinternship for few months (BBC, 25 November 2009). Are these unpaid internships legallyand morally right? It has been a major subject of debate for long time. Internship shouldprovide least minimum wages as the company gains from it; else it will not be morally right.From my personal experience in sending graduate job applications and attending interviewsas a part of recruitment process, I have observed the following facts. I did send around 200applications in three months time and did get interview call only from two companies. Thetwo companies who contacted me did offer an internship with a very low salary despite myexcellent academic performance and skills. I did contact most of the companies where I didapply for job to know why my application was rejected. Major reason provided by the HRmanager was that they prefer only graduates from European Union and that I lack workexperience. Most of the companies did not give much importance to the post graduate degreebut demanded for previous work experiences or internships.P a g e | 38
  39. 39. It did convey the fact that it is better to gain work experience than investing on highereducation. But in a long term run higher education will prove more relevant than internshipjobs and work placements. In this time of recession only students with financial aid fromparents or other sponsors can afford higher education. The recession has resulted in fewergraduate jobs and increased competition in graduate labour market. Lack of jobs did evenforce some graduates to take up unpaid internships to gain work experience and thus gain abetter career prospects. Some graduates even prefer to work under very low salary so thatthey can pay their student loans and also gain better work experience, while some prefer to gofor higher studies. More students are now taking master‟s degree so as to stand out in thetough graduate labour market. But is this the best option? Do employers value the MastersDegree? Probably, it is one major question before every unemployed graduate in UK. Therehas been a huge growth in taught master‟s courses in the UK universities during the last fewyears. The employers in UK seem to prefer the graduates with more of work experience thana master‟s degree (Guardian, 28 July 2010).According to the report by Guardian careers, the employers seek graduates to performinternships than investing in higher education. Hence in the current economic climate it willbe wise for students to prefer internship jobs than investing in higher education. The graduateunemployment has forced many students to take up unpaid internships to gain workexperience and hence improve their employability. Most of the companies at present preferwork experience over a postgraduate degree. Hence more students are likely to take upinternships soon after graduation. The under graduates often join summer internshipprogrammes during the second year of their degree. They spend time training in companythan going for holidays. Most of the students get placed in graduate schemes soon after theirinternship. Students who take up internship in companies are often selected to the graduateschemes in that company. Work placements and internships are becoming a major part of therecruitment stream and helps students to build their CV. This enables recruiters to get the besttalent in short time with minimum investment. Internships and Work placements havebecome almost a guaranteed rite of passage in an increasingly competitive job market (BBC,9 August 2010). It has become a new way for many recruiters to screen for potentialcandidates and ensure that the new employees have a good grasp of workplace dynamics.P a g e | 39
  40. 40. According to critics, interns are a group of unpaid graduate labours which benefit theorganizations a lot (BBC, 9 August 2010). According to Higher Education Statistics Agency(HESA), around 21.7% of students who graduated in the year 2009 had been employed bythose companies were they had previous work experience. Many students feel that internshipshave replaced graduate jobs. The legal definition of work includes set period of time, definedrole and pay scale. Law says that anyone working must be paid the minimum wage.Recruiting graduates for unpaid internships jobs for a period of 6 months has led toaccusations of exploitation. Students increasingly face much concern about their graduateemployment and career. In the past there was always a general sense that graduates wouldeasily find a good job and they did not have to worry much about paying back the studentloans. Hence there was much more of experimentation and exploration from the side ofstudents encouraged by family and institutions. At present choices are limited for studentswith highly competitive job markets and heavy student debts. Unemployment and hugestudent debts have forced graduates to choose even low paid jobs to pay of the debts. Manygraduates have been forced to give up the idea of job satisfaction on course to attain financialstability. Student loans often impart severe pressure on the graduates and often influence theirchoice of job sectors (Green, 2009). Beyond economic and career challenges another majorchallenge that students face at present is graduating into a recession (Green, 2009). But theeconomists claim that the impacts of recession will soon be minimised and skills acquired bythe students during their educational years will be matched in market place with appropriateoffers. But the present recession is likely to be more damaging to lifetime earnings of agraduate as it will add up to the debt and loan repayments. Lack of job satisfaction whileworking in an organization affects the skills of the graduate and hence affects the careerprospects (Green, 2009).When we have a look at the graduate labour markets for the years 2009 and 2010 we will findthe following facts. The employer who comes under the Association of Graduate Recruitersanticipates a small drop of 1.6% in graduate vacancies for the year 2010. But the graduatelabour market figures suggest that the market has already begun to stabilise. The oilcompanies and consulting services firms are expecting to recruit more in the year 2010 and51.5% of the AGR employers expect to have more vacancies in 2010 compared to previousyear. Irrespective of the implications of recession the constructions companies expect 32%more vacancies in the year 2010 (AGR, 2010).P a g e | 40
  41. 41. The most common reasons for recruiting more graduates was due to the expected or actualgrowth in business. The UK economy did grow by 1.2% compared to the expected value of1.1% in the second quarter of 2010. It was as a result of high performance by the constructionsector (BBC, 27 August 2010). Unemployment in UK falls to 2.46 million in the year 2010during three months to June. The number of people employed increased by 184,000 and itwas mainly as a result of increase in part-time workers (BBC, 11 August 2010).The economy shows signs of improvement and all the employers seem to be very optimisticabout the year 2010. Around 31% of companies expect fewer vacancies while 3.6% do notexpect any changes in the vacancy level for the year 2010. The average graduate salaryoffered by the blue chip companies seem to be same as previous year. But the small scale andmedium companies seem to offer internship jobs with very low salary scale than graduateschemes. It is the public sector that will face they greatest fall in vacancies in the year 2010.Among The Times Top 100 Graduate Employers an 11.8% rise in graduate vacancies hasbeen predicted for the year 2010. But according to High Fliers Research, around 17.8% moregraduates were recruited to start work in 2010 compared to the year 2009. So, what does allthis figures indicate? Probably, 2010 is going to be tough for graduates who want to join thelarge blue chip companies. But it may not be as difficult as in the year 2009. Themanufacturing and construction sector seem to improve in the current economic climate, butthe public sector shows no signs of improvement. But, will the students who graduated in theyear 2009 and had gained much work experience be given more preference than the studentsgraduating in the year 2010? Is this the case with all graduate recruiters? Will the graduaterecruiters give more preference to students with a master‟s degree? However, these questionsstill remains unanswered among the young graduates. Only the Graduate recruiters whoframe their recruitment policies and practices can answer these questions.P a g e | 41
  42. 42. Chapter 66.1 Conclusion and RecommendationsThe British economy officially entered into the Recession during the fourth quarter of theyear 2008. Since then the economy has seen the collapse of various sectors like InvestmentBanking, Housing, Financial Services, Manufacturing services and Production services. TheRecession did badly affect the bargaining and purchasing power of the common people. Dueto low turnover most of the industrial and retail units were shutdown. Since the Recessionaffected the financial sector badly, all financial institutions were shutdown. Collapse of allmajor sectors did result in severe unemployment in UK. The Organizations that survivedRecession did cut down the number of employees and job vacancies as a part of costreduction strategies. Some organizations did cut down the salary levels of the staff and dideven stop all the available graduate recruitment schemes. All these factors constituted tograduate unemployment in UK. During the first and second quarters of the year 2009graduate unemployment became severe. The total unemployment rate in UK did soon reachto record value of 2.5 million during September 2009.The reports about recession and unemployment have been the main theme of all mass media.This did play a major role in moulding the attitude of young graduates towards recession. Thestudents graduating in the year 2009 was very much worried about getting a job and payingthe student loans. Most of the students did find it very difficult to get a job and earn enoughto pay back the student loans. Many students did give up applying for jobs and did joinuniversities for a post graduate degree hoping for better career prospects. Some did take uppart-time jobs to pay the bills and student loans, while some students did take up unpaidinternships and work placements to improve their employability. The companies did adoptchanges in the recruitment strategies in order to tackle the impact of recession. Companiesdid come up with many internship and work placement schemes instead of graduate schemes.Most of the companies did prefer graduates who had done internships or work placements intheir company. According to the Graduate recruiters taking up work placements will makethe graduates more employable than going for a post graduate degree. In the currenteconomic climate organizations prefer students with work experience than those with amaster‟s degree.P a g e | 42
  43. 43. However in the first quarter of the year 2010 graduate labour market did show signs ofoptimism. More graduate vacancies were reported in the year 2010 compared to the year2009. The average graduate salaries offered by graduate recruiters did remain same comparedto the previous year. All the figures related to graduate labour market in the year 2009 and2010 indicates a favourable year for the students graduating in the year 2010 compared toprevious year. Even though there are more graduate vacancies available in the year 2010, thestudents graduating in the year 2010 won‟t have many chances as they have to compete withthe unemployed graduates from the year 2009. However the improvement in graduate labourmarket is very gradual and will take time to nullify the impact of recession. The currenteconomic climate is not much favourable for graduates and hence they must be very carefulin making decision related to career prospects. Graduates should see the wider picture andshould take long term perspective to prosper during and after recession. The current graduatejob market might be uncertain, but it will soon adapt with the economic downturn and morechances for graduates will rise gradually. The job market is competitive, but having goodwork experience and qualification will help graduates gain high paid jobs.We will conclude this paper on „The Implications of Recession on Graduate Recruitment‟ byproviding necessary recommendations for graduates on how to survive in times of recession.The recommendations have been framed based on the discussions I had with the careeradvisor at university of Liverpool. Following are the recommendations for graduates toimprove their chances of success during the time of recession.  Graduates should engage themselves in some activities than doing nothing and waiting for the recession to get over. The companies will not often prefer graduates with an extended period of unemployment even though it was during recession. They will only prefer graduates with work experience or a fresh graduate. It will be better for the graduates to get involved in voluntary activities, temporary jobs, higher education or internships to improve their career prospects than remaining unemployed. This will enable them to improve their skills and experiences and thus become more employable.P a g e | 43
  44. 44.  All the graduates should keep in mind that, they should never get stuck with low profile jobs or part-time jobs that they used to do during their student days, thinking that it is recession time and it is hard to get a graduate job. Graduates should select part-time jobs related to their area of interest and should try developing all possible skills. They should take up more roles and get expertise in more areas of operation. These skills and experiences gained will be taken into account when they apply for high profile jobs.  Graduates should be very much flexible with the job options available. In times of Recession it might be difficult to get into what called a „Dream Job‟, so graduates must be ready to take up the available job opportunities to build their career prospects and meet basic necessities.  Graduates should try reflecting on their strength and weakness. They must identify their strength and try building it to maximise their potential. Graduates should carry out further study, work experience and try learning for people with expertise in order to build their strengths. These strengths will prove vital on course to their dream job.  Graduates should seek for help than struggling in own feet. Graduates should seek help from family, friends and colleagues when ever required. Graduates should seek help from the career advisors at their universities to get proper guidance how to efficiently get through the graduate recruitment process. Get advice from university on issue related to life after graduation and on how to gain financial stability.  Social networking is very essential for graduates. They must try making good contacts with professionals, executives and business men who can provide an initial break into graduate labour market. Networking is all about making the most of contacts graduates have through university, family, friends and workplace. It is not about seeking a job, but building relationship and understanding that will help the graduates market themselves and identify the relevant job opportunities.  It is very essential to carry our job market research. It is not all about going through job vacancies advertised, but should read business magazines and news papers and-P a g e | 44
  45. 45. have a good idea about what is happening around. Should keep in track of new projects coming up and should carry out a research on them so that you can try for a job in there even before the vacancies are advertised.  Graduate should be able to sell themselves to the recruiters. They must be able to stand out to the recruiters from among other graduates. There must be something in you that are not in the other graduates. So making the Covering Letter and CV in the right manner is very essential. The help of career advisors must be taken while preparing the CV and covering letters.  Graduates should celebrate each success they had. Most of them remain reluctant to celebrating their success fearing that others will think they are boasting around. In a very competitive market, employers will prefer only those graduates who can provide the most convincing evidence of their potential.  Graduates should try build on what they are by reflecting on themselves and developing their skills each time. You should have an idea on what you can offer to the companies and should try building those abilities.The career and employability services in almost every university are taking initiatives to helpgraduates tackle the recession. They are providing the graduates with guidance sessions andtrainings on how to face graduate recruitment process in times of recession. Career andemployability services at University of Liverpool have started a new initiative in the year2010 called „Gradvantage‟ which provides training for students on carrying out labour marketresearch, research on companies, making CV & covering letter and provides all internshipopportunities available in Merseyside area. Initiative likes this brings confidence amongstudents about their career prospects. Almost every university in UK is providing support tothe students graduating in the year 2010 by providing them with trainings and internshipsopportunities. This brings in a new light of hope and confidence into the graduate recruitmentmarket in the year 2010. Hence in the year 2010 graduate labour market will be morecompetitive and optimistic. However the graduate labour market in the year 2010 will witnessmore graduate jobs and a wide talent pool of optimistic graduates.P a g e | 45
  46. 46. BibliographyAGR (2010): Graduate Recruitment Survey 2010. Winter Review. of Graduate Recruiters (4 July 2010): Graduate Unemployment. (24 August 2010): UK Economy grows. (11 August 2010): UK Unemployment falls. (25 November 2009): Intern fees. (9 August 2010): The unstoppable rise of work experience. (September 2009). Recruitment: An Overview. (June 2009). Competency and competency frameworks. August 2010). About CIPD. Labour Market Outlook, Spring 2010. -D58BAD9D9785/0/5221_Labour_Market_Outlook_Spring_2010.pdfCreswell,J.W.(1994). Research Design. Qualitative and Quantitative approaches.P a g e | 46
  47. 47. Green.R.(2009). Journal of College Student Psychotheraphy. Washington DC.Guardian (3 December 2008). The Road to Recession and Recovery (3 February 2009). Job vacancies in record fall (28 July 2010). Do employers value master‟s degree? Fliers Research Limited: The Graduate Market in 2010, A. (2008). World Economy: The Economic Crisis and Its Effects (August 3, 2010). The Career Effects Of Graduating In A Recession Union of Students (March 31, 2009). Recession and its effects on students. for National Statistics (May 2010): Labour Market Statistics for National Statistics (August, 2010): Labour Market Statistics Issues Research Centre (July 2009). Generation Recession,D.W.(1984).Secondary Research : Information Sources and Methods.Telegraph (24 July 2010). Financial Crisis: UK Job Loses Times 100 (July 2010): Recruitment Selection and training. a g e | 47
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