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Graduate job market shrinks for first time in four years

Brexit, the apprenticeship levy and more diverse recruitment processes were cited as significant factors

The graduate jobs market has shrunk, with the number of vacancies dropping 8% over the last year, according to the Association of Graduate Recruiters' (AGR) annual survey.

The contraction follows four years of sustained growth. This year the 208 firms responding to the survey had 19,732 graduate positions to fill, compared with 21,427 in 2015. By contrast, the 2015 survey showed a 13.2% increase in graduate scheme vacancies compared with 2014.

Vacancies in construction, retail and engineering have decreased the most. Engineering vacancies for graduates were down 14% from 2,106 in 2015 to 1,820. Retail vacancies fell 16% from 1,975 in 2015 to 1,666 in 2016, and construction vacancies declined 11% from 1,266 in 2015 to 1,121 in 2016.

The apprenticeship levy, which from April 2017 will impose a levy of 0.5% on company payrolls to raise £3 billion a year to fund three million apprenticeships, was found to be a significant factor. More than one in 10 employers said they were repackaging some graduate roles as higher apprenticeships because of the levy, reported the AGR.

But it warned that, while the number of apprenticeships has increased by 13% this year with a total of 10,095 opportunities available, the combined number of vacancies for graduate jobs and apprenticeships has decreased 3% year-on-year overall.

Stephen Isherwood, chief executive of the AGR, added that Brexit is another significant factor: “The uncertainty of Brexit is the single biggest challenge facing recruiters in the year ahead. Competition for skills and the looming apprenticeship levy are also significant concerns.”

He added: “The labour market for young people is shrinking for the first time since the financial crisis, but the composition of the market is also changing as employers invest more in school leaver programmes and apprenticeships.”

Alex Arundale, group HR director at Advanced Computer Software, added that the survey reflects an increased recognition among employers of the need to recruit a more diverse range of young people.

“Although we’re disappointed to see the number of graduate vacancies dropping in some sectors we’re not completely surprised. University is simply not an option for all students, regardless of how talented they are. As a result savvy employers are adapting their recruitment practices to attract and retain the most skilled, motivated individuals with high potential – this no longer aligns exclusively to the graduate pool,” she told HR magazine.

“In addition, with the new apprenticeship levy coming into force shortly companies are having to consider different approaches to meet these legislative requirements. This is certainly the case for us.”

She added: “At Advanced we are passionate about finding the best talent, regardless of their background… For example, although 96% of our most recent recruits in our new West Midlands HQ are millennials only 45% are graduates straight from university”.