The graduate retention rate in Nottingham is the lowest among the core cities of United Kingdom (Graham 2016, p. 2). There are many factors that contribute to this issue: for instance, the high level of small and medium-sized enterprises (SMEs) and a low number of graduate job opportunities (Graham 2016, p. 2). The brain drain of graduates in Nottingham affects the local businesses, which are forced to employ less qualified staff, and the overall economy of the region since many business owners are required to increase their training expenditures to promote workforce competency. As a consultancy agency, our team is required to analyse the current situation and explore it in terms of the economic theory to find a suitable solution to propose to policymakers. We will be using the law of supply and demand to explain the higher prevalence of graduate retention problem in Nottingham comparing to other cities, such as London. The main question for this research, therefore, is whether or not the economic theory can be used to explain and solve the brain drain of graduates in the city of Nottingham.
Method
In economic theory, supply refers to the amount of goods or services delivered by the producer to the market, whereas demand reflects the customer’s willingness and ability to purchase the said goods or services (Gerhard 2009, para. 1). The law of supply and demand states that the relationship between supply and demand determines the price of the products supplied, and for the economy to be in equilibrium, the two variables must match (Gerhard 2009, para. 1-2). When looking at the job market, the law of supply and demand is still in force (Metcalf 2016, para. 1). Applying the economic theory to the issue of graduate retention, we assume that supply represents the number of graduates in the area, while demand stands for the number of job opportunities. Another variable at stake is the unemployment rate, which depends on the relationship between the two: if the supply is greater than the demand, the unemployment rate will be higher than if there is equity between the supply and demand. Thus, it is important to look at all three variables in our research to determine the application of the law of supply and demand to the issue of the brain drain of graduates in the city of Nottingham. Moreover, it will be necessary to look at the relationship between the variables in London to test our theory further.
We will be utilising qualitative research as our primary method of inquiry. The literature review will allow us to clarify the reasons for the application of the law of demand and supply, whereas looking at job websites will build a better understanding of the issue. We expect to find the number of graduate job opportunities to be low and the number of graduate students to be high, creating an excessive supply leading to the higher rate of unemployment and relocation of graduates to other cities. We will also research London graduate job market to prove that the graduates are more likely to choose places with a high number of opportunities and low rate of unemployment.
Critical Analysis and Findings
Nottingham has two large universities: the University of Nottingham and Nottingham Trent University, which are second homes to over 60000 students (Lawton & Blackley 2016, p. 20). In their research on graduate retention in Nottingham, Lawton and Blackley (2016) state: “Nottingham has the fourth largest student population of any students per population head than average” (p. 20). The supply of graduate labour in Nottingham is, therefore, high. The demand for graduate workers, on the other hand, is, indeed, low: out of 20 jobs posted on The Guardian Jobs as of 21st December 2016, only two positions are graduate-level. When applying to non-graduate-level positions, graduates face what is called ‘overqualification’ or ‘overeducation’, which either means that they will not be accepted for the job due to the or that they will not earn as much as the graduates whose jobs match their level of expertise (McGuinness 2006, p. 387-388). Either way, lack of demand for graduate-level workers contributes to a higher rate of unemployment: indeed, Nottingham city has a higher rate of unemployment among under 25s than the East Midlands’ average (ONS Claimant Count 2016, p. 1). London, on the other hand, shows a different trend. The vast majority of job opportunities available as of 21st December 2016 required either an undergraduate or a postgraduate degree (606 and 47 respectively out of 791 vacancies). Thus, the unemployment rate in London is quite low for such a large population and has been decreasing over the past years (Office for National Statistics 2016). Moreover, as Prynn (2016) adds, the steady decrease has brought the rate of unemployment in the capital to a record low of 5.8 per cent in the first four months of 2016 (para. 1). Despite the fact that the overall figure does not reflect the rate of unemployment among the graduate students, the high number of qualifying job positions and the overall rate of unemployment allow us to conclude that graduate unemployment in the area remains low, which makes many of the graduates choose London as their destination after the degree course is finished.
Overall, the variables in the issue of graduate retention in Nottingham show the same relationship and trends as per the law of supply and demand and, thus, we conclude that economic theory may be used to explore the problem. To solve the issue, however, it would be necessary to consider other factors. For instance, the overall mismatch of jobs among the U.K. graduates also contributes to the rate of graduate unemployment nationwide (McGuinness & Sloane 2009, p. 1), whereas the fact that many of the students enrolled in Nottingham are not originally from the area and tend to leave once their degree courses are over (Lawton & Blackley 2016, p. 8) affects the graduate unemployment rate in the Nottingham area. A suitable strategy for the policymakers to address the issue would answer to all of the factors. As Lawton and Blackley (2016) suggest, the problem of graduate retention in Nottingham is not single sided: it includes graduates being reluctant to work in SMEs that are far more prevalent in the area than large companies, and SME owners not understanding the ways and benefits of recruiting graduates (p. 13).
Conclusion
Overall, whereas economic theory can definitely be used to explain the brain drain of graduates in Nottingham, an effective strategy for policymakers to address the problem would need to address issues that run deeper than just the lack of graduate positions. Our proposition is for the policymakers to devise a strategy that would:
- Educate SME owners on the need for graduate students and on how to attract them
- Promote local work experience among students
- Provide help in connecting graduates to the local employers
Developing a strategy in all the directions mentioned above would, according to research (Graham 2016, p. 3), help in decreasing the brain drain and promoting graduate retention in Nottingham.
Reference List
Gerhard, A 2009, ‘Economic theory – supply and demand’, Science 2.0, Web.
Graham, A 2016, Report of the Chief Executive of Rushcliffe Borough Council: graduate retention in N2, Web.
Lawton, C & Blackley, N 2016, The Great Nottingham Debate, Web.
McGuinness, S 2006, ‘Overeducation in the labour market’, Journal of Economic Surveys, vol, 20, no. 3, pp. 387-418, Web.
McGuinness, S & Sloane, P J 2009, ‘Labour market mismatch among UK graduates: an analysis using REFLEX data’, IZA Discussion Paper, no. 4168, Web.
Metcalf, T 2016, ‘How do the laws of supply & demand affect the labor market?’, Chron Small Business, Web.
Office for National Statistics 2016, ‘Unemployment rate, region’, London Datastore, Web.
ONS Claimant Count 2016, Web.
Prynn, J 2016, ‘London’s unemployment rate drops to a record low of 5.8%’, Evening Standard, Web.
The Guardian jobs 2016, Web.