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Introduction and Background
The situation with the graduate labor market in the UK is currently unstable due to the COVID-19 pandemic. However, lockdown and other economic problems only contributed to the instability of the graduate labor market, as there had been issues long before the coronavirus. In particular, the “massification” of high education during the last decade led to growing concerns that the supply of graduates would exceed the demand (Green, & Henseke, 2016). Even though the need for high-skilled workers in the UK was growing steadily during the past decade, it was disproportionate with the number of graduates seeking jobs (Green, & Henseke, 2016). This resulted in the growing number of graduates that failed to acquire a job that matched their skills (Green, & Henseke, 2016). Fortunately, over-education did not develop rapidly, as many specialists feared.
The COVID-19 outbreak had a significant impact on the UK’s economy in general and on the graduate labor market in particular. Experts believe that the direct health-related economic impact of the epidemic is at least £40 billion in 2020, which is 1.73% of GDP (Keogh-Brown, Jensen, Edmunds, & Smith, 2020). The overall losses for UK’s economy associated with coronavirus were estimated to be at least £308 billion (13.5% of GDP), among which £66 billion is attributed to labor lost (Keogh-Brown et al., 2020). In the graduate labor market, the level of vacancies is currently at a 50% level of normal rates (Ball, 2020). Even though the number is climbing, it will be long before the demand catches up with the supply level. Therefore, due to the COVID-19 pandemic, the graduate labor market will face many challenges. However, it will also provide opportunities for Business School graduates to help rebuild the economy. The present paper assesses the challenges and opportunities for the graduate labor market associated with the epidemic.
Assessment of Challenges
The challenges for the graduate labor market associated with the COVID-19 pandemic are evident. The epidemic had a direct impact on both students and university graduates. For students, the collapse in retail and service jobs will result in the inability of students with less advantageous backgrounds to support themselves in the university (Ball, 2020). In other words, even though the graduate jobs are usually high-skilled, the lack of low-skilled job offers will be crucial for some students. Additionally, the moral and mental health of students was damaged significantly, which will impact their ability to graduate from the university (Universities UK, 2020). Moreover, the COVID-19 pandemic is expected to reduce the number of graduates by affecting the students’ financial, mental, and emotional wellbeing. Therefore, the graduate job market will experience a slight decrease in supply.
The central problem, however, is that the demand for graduate workers will decrease significantly due to an overall fall in job offers. Even though the key employment sectors of the graduate labor market, including health, social care, IT, and finance, will be affected mildly, there will still be a downturn in job offers in these areas (Ball, 2020). The effect of COVID-19 on the graduate labor market will depend upon the speed of economic recovery and the duration of the epidemic. The emergence of the second and following waves of coronavirus and responses to them will also affect the pace of economic recovery. Thus, during the period of uncertainty, even the key labor markets are likely to be negatively affected.
The COVID-19 pandemic had a significant effect on arts, retail, hospitality, travel, and accommodation (Ball, 2020). Employers in these sectors have taken severe hits, which implies that graduates in these spheres will experience problems with employment. Even though the UK government is planning significant measures to help the employers live through the crisis, the recovery in these sectors is likely to be slow (Universities UK, 2020). Additionally, the self-employed parties will likely experience significant problems due to a lack of cash reserves to cover risks (Ball, 2020). This implies that it will be dangerous for graduates to open their practice or start a small business due to the instability in the sector.
The COVID-19 pandemic increased the competition for jobs in places with weaker economies. According to Ball (2020), there are eight times more candidates per job posting in Middlesbrough than in Cambridge. This forces graduates to be less specific while searching for jobs, which may result in acquiring jobs that lie outside of graduates’ spheres of expertise (Ball, 2020). Additionally, graduates become less satisfied with their new positions, which may result in a drop in efficiency and effectiveness. Currently, Middlesbrough, Sunderland, Luton, Birkenhead, and Dundee have the most competition for jobs, while Cambridge, Oxford, Exeter, Reading, and Bristol have the least competition (Ball, 2020).
Another problem that the graduate market will face is salary issues. According to Ball (2020), salaries are likely to stay stagnant or even decrease in all sectors. This is associated with an overall drop in revenues in the majority of industries. According to Ball (2020), 75% of businesses were forced to move to remote working, which resulted in a 25% loss in total sales. Thus, graduates will be forced to work for less money than they expected, which may affect their ability to pay off education loans and mortgages.
The graduate market is expected to experience a significant decline in job offers that cannot be performed by remote workers. This implies that the majority of graduates will be forced to work remotely even if they find a suitable job offer. Working from home is associated with several difficulties that graduates will need to overcome. First, they will need to adjust to working conditions without social interaction with co-workers ends employees (Schad, 2020). This may result in a lack of social support and professional help (Schad, 2020). Second, graduates will need to learn to separate work and social life, which may be associated with emotional problems (Schad, 2020). Finally, people entering the workforce will need to work under the threat of constant distraction. Graduates will need to learn self-discipline, which may be challenging, as generation Z is prone to distractions and instant gratification effectiveness (Schad, 2020). In short, the problems of remote working contribute to the issues associated with the COVID-19 pandemic.
While new graduates will face significant problems with employment immediately after graduation, the COVID-19 pandemic holds significant opportunities for Business School graduates to help rebuild the economy. The first opportunity for graduates is to continue their education to receive postgraduate degrees. Currently, the postgraduate demand is growing steadily, as people see the opportunity to improve their qualifications and postpone entering the labor market (Ball, 2020). The interest in postgraduate education is associated with decreased interest in Postgraduate Master’s Loan, which was created as a supportive mechanism for the UK economy (Universities UK, 2020). Progression onto postgraduate studies does not only help the graduates to avoid a challenging economic environment, but it also helps the country to acquire future skills and the workforce needed to rebuild the economy after the epidemic (Universities UK, 2020). Thus, the pandemic can allow graduates to acquire a postgraduate degree due to decreased interest rates.
The government also creates financial incentives for employers to hire graduates in the form of salary subsidies. In particular, the UK government initiated a kickstart scheme for England, Scotland, and Wales, which covers six months of employee wages, if they are aged between 16 and 24 (KPMG, 2020). This initiative provides Business School graduates with the opportunity to receive employment and utilize the knowledge they acquired during studies to improve the UK economy (KPMG, 2020). Additionally, the government offers money to companies that accept new trainees and apprentices, which can help the new graduates to receive additional training in the sphere they want to work (KPMG, 2020).
Another opportunity that can be exploited by the Business School graduates is the new monetary policy implemented by the Bank of England. The current interest rate is as low as 0.1%, which decreases the cost of capital for businesses and households (Bank of England, 2020). Additionally, the Bank of England (2020) offers additional support to banks that increase their lending to small and medium-sized enterprises (SMEs), which creates incentives for the development of the SMEs. This implies that Business School graduates can easily acquire capital to start their business and implement the knowledge they have gained during their studies. The development of SMEs is the foundation of the UK economy and the key component of the strategy for rebuilding it after the COVID-19 pandemic.
The government also supports new start-ups with Coronavirus Business Interruption Loan Scheme (KPMG, 2020). The scheme covers all the interest payments and any lender-levied fees to help SME survive through the first year of existence (KPMG, 2020). Thus, Business School graduates are even more incentivized to start their businesses and implement their skills and knowledge acquired during their studies. Thus, coronavirus provided graduates with opportunities to rebuild the UK economy in many different ways, from continuing education to taking calculated risks and opening their own business.
The pandemic can also be helpful for new graduates, as Generation Z is the most connected people among all other generations (Schad, 2020). The new generation is great at multitasking, which makes them excellent remote workers (Chillakuri & Mahanandia, 2018). The new generation of graduates is sure that they can do more in less time, which implies that effectiveness and efficiency is their core value (Chillakuri & Mahanandia, 2018). The new graduates are more technology-savvy than the previous generations, which makes them valuable in the current circumstances. Remote working can help the graduates to maintain the work-life balance to ensure mental and psychological stability. Unlike people with families, new graduates can accept lower wages to start their careers, as they do not have as many financial and social obligations. Thus, the new generation of graduates has certain advantages, which they may exploit to revitalize the UK economy.
The COVID-19 pandemic had a drastic effect on the UK economy in general and the labor market in particular. New graduates will experience significant problems with finding a job in 2021 due to a substantial decline in job offers. Even though crucial graduate labor markets were not hit as hard as arts, retail, hospitality, travel and accommodation, it may still be difficult to find a job after finishing Business School. At the same time, the pandemic can be viewed as a time of opportunity for graduates. First, coronavirus provided students with the opportunity to get a low-interest loan to continue their education and acquire a postgraduate degree. Second, the response measures created incentives for entrepreneurs to high graduates and take trainees and apprentices. Business School graduates can also receive low-interest loans and utilize their knowledge and acquired during studies to open their businesses. Finally, new graduates have an innate advantage over others, as Generation Z is great at multitasking, and efficiency and effectiveness are their core values.
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