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Research suggests that, for too many jobs, the cost of university outweighs the economic benefits, and that the prevailing rhetoric on the need to get more and more young people into university needs to change.

Successive governments’ preoccupation over the last 30 or more years with getting more and more young people through university is no longer justified given the employment outcomes for many graduates and the associated costs involved, a new report has shown.

The report, Alternative pathways into the labour market, by the CIPD, the professional body for HR and people development, finds that, for a wide range of occupations which have seen significant increases in graduate rates over the last 35 years, alternative vocational routes into employment are both possible and less costly, with a smaller proportion of this lower cost falling on the learner. 

The report is published at a time when the average student is now leaving university with £44,000 of debt and, even by the Government’s own estimates, 45% of the value of student loans will not be repaid. The report calls into question the continued focus on the ‘graduate premium’, with previous CIPD research showing that more than half of graduates were working in non-graduate jobs after they left university. Furthermore, Brexit makes it even more important that the UK’s investment in education and skills delivers value for learners, employers and the economy.

The CIPD’s research considers 29 occupations, which together account for nearly 30% of employment in the UK and over 30% of the work performed by graduates currently. It shows that for many of these jobs, while the numbers of graduates have increased sharply over the period from 1979 to 2014, in many instances the level of skill required to do the job has not appreciably changed. 

The report also suggests that, for too long, employers have been recruiting graduates into many roles that don’t utilise this level of qualification. Employers need to open up recruitment to more non-graduates, while also working to develop more of the roles that do require graduate skills. 

The report, Alternative pathways into the labour market, finds:

  • 35% of new bank and post office clerks are now graduates, compared with 1979 when just 3.5% of bank and post office clerks held degrees
  • 42.9% of police officers at the rank of sergeant and below entering the police force now hold degrees, compared with 1979 when less than 2% of police officers of similar rank were graduates
  • 41% of new recruits in property, housing and estate management are graduates, compared with 3.6% in 1979
  • 36.9% of newly employed teaching assistants enter those jobs with a degree – as late as 1999, only 5.6% of the occupation as a whole did so

In response to the issues raised in the report, the CIPD is calling for Government to:

  • Improve the quality of careers advice and guidance to young people while they are in school so they can make better informed choices about career pathways
  • Ensure that apprenticeship policy moves away from trying to simply increase numbers towards improving the quality and progression routes of apprenticeships, in order to create a meaningful alternative route to university for young people and employers
  • Ensure the forthcoming industrial strategy has a clear focus on creating more high skilled jobs and progression routes at work. This requires an emphasis on raising the quality of leadership and people management, job design, and training and development through partnerships between government, employers and unions at a national, sectoral and local level.

Peter Cheese, CIPD Chief Executive, said: “This report shows clearly how the huge increase in the supply of graduates over the last 35 years has resulted in more and more occupations and professions being colonised by people with degrees, regardless of whether they actually need them to do the job.

“Governments of all colours have long had a ‘conveyor belt’ approach to university education, with a rhetoric that has encouraged more and more students to pursue graduate qualifications. However, with this research showing that for many graduates, the costs of university education outweighs its personal economic benefits, we need a much stronger focus on creating more high-quality alternative pathways into the workplace, such as higher level apprenticeships, so we really do achieve parity of esteem between the two routes.

“It goes without saying that the UK needs a world class higher education system, but this report really does provide a reality check on the assumption that continually increasing the numbers of people going to university truly adds the right value for learners of all ages, employers and the economy. 

“Graduates are increasingly finding themselves in roles which don’t meet their career expectations, while they also find themselves saddled with high levels of debt. This ‘graduatisation’ of the labour market also has negative consequences for non-graduates, who find themselves being overlooked for jobs just because they have not got a degree, even if a degree is not needed to do the job. Finally, this situation is also bad for employers and the economy as this type of qualification and skills mismatch is associated with lower levels of employee engagement and loyalty, and will undermine attempts to boost productivity.”

Peter Cheese added: “In the current Brexit context, it is imperative that we take stock of the UK’s education and skills policy so that our current and future workforces can deliver the economic growth we need.

“To tackle this problem, policy makers need to improve the quality of careers, advice and guidance so young people have better information about other non-graduate routes into the labour market, for example, through apprenticeships. At the same time, much more needs to be done to reform the apprenticeship system which currently generates high numbers of Level 2 apprenticeships, equivalent to just 5 GCSE passes, with relatively few at Level 3 and above. Unless we have many more advanced and higher level apprenticeships, the apprenticeship route will continue to be seen as the poor relation to university. 

“Employers also need to broaden their recruitment practices and ensure they are not using a degree as a means of screening job applicants for jobs where there is no justification in terms of the skills needed to do the job. 

“Finally, government needs to ensure that its new industrial strategy has a focus on creating more high skilled jobs, which requires working in partnership with employers, representative bodies and unions at a national, sectoral and local level to improve the quality of leadership and people management, job design, and training and development across the economy.”

CIPD logoOverall jobs growth set to continue while pay growth edges up but shows little sign of taking off

Against the backdrop of low unemployment and rising recruitment pressures, UK employers are increasingly turning to young talent to fill their skills gaps, signalling the end of a broadly ‘bleak’ decade for young jobseekers and giving a boost to the thousands of young people who are entering the jobs market for the first time this summer.

This is according to the latest Labour Market Outlook from the CIPD, the professional body for HR and people development, which shows that the proportion of employers that say they plan to hire more apprentices and school-leavers has increased sharply in response to recruitment difficulties since spring 2014. Up-skilling for all employees remains the most prevalent employer response to recruitment difficulties, cited by half of employers (50%) but a third (33%) of employers currently reporting hard-to-fill vacancies plan to hire more apprentices, a marked increase compared with just 22% in the spring 2014 report. Around a quarter (26%) predict recruiting more graduates and twelve per cent plan to hire more school leavers, up by a third compared with the spring 2014 report (9%).

The findings help explain the latest ONS data which shows that the employment rate for 16-24 year olds that aren’t in full-time education has risen to a level last seen in 2008 (74.3%).

Gerwyn Davies, Labour Market Analyst at the CIPD, comments: “After a long, dark decade, the prospects for young people are finally looking brighter. The tightening labour market is undoubtedly encouraging more employers to turn to a wider range of younger recruits. However, it is also due to a recognition among a growing number of employers that they need to develop talent to limit the potential for future labour shortages and pay pressures. The increase in the number of high-quality apprenticeships and the ongoing recruitment pressures faced by employers should mean that the pathway to sustainable employment will be within the reach of more young people.

“However, employers need to support this recruitment drive by ensuring that they have the people management practices in place to support the effective utilisation of skills, which is critical to job retention and productivity. The UK has the second highest level of over-qualification in the OECD and unless more employers get better at putting their people’s skills to good use, efforts to boost their and the UK’s productivity will be critically undermined. Looking further ahead, the introduction of the ‘National Living Wage’ may boost the attractiveness of employing workers aged below 25 further, which could see young people reverse recent trends by becoming the new winners in a new era for the jobs market.”

Pay becomes polarised

While prospects for young people have improved, the CIPD’s report highlights an increasingly polarised picture for wages. It shows a continuation of the clear gap that exists between workers that have comfortably exceeded the current inflation rate in their pay packets, those who have received modest increases or none at all, and the majority of workers who exist in the middle.

Davies comments: “At one end of the spectrum, workers in occupations where there are skills or labour shortages and thriving sectors such as finance and construction seem likely to get pay increases well above current inflation. However, at the other end of the scale, many workers in areas such as manufacturing and public sector, are seeing only a very modest increase in living standards. In-between, the bulk of workers will continue to see moderate growth in their pay packets but with inflation expected to stay low, they should still feel the benefit of any increases.”

The Labour Market Outlook finds that the level of median pay awards anticipated by employers for the next 12 months has edged up from 1.8% to 2%. Looking back over the last year the median basic pay award is also 2%. The CIPD data and analysis suggests that the increase in average earnings in recent months highlighted in official statistics may be inflated by a number of factors. These include a disproportionately large increase in the number of people in full-time employment, a relatively large above inflation increase in the National Minimum Wage and perhaps most significantly, workers in thriving industries or key roles which are in demand where workers can earn a premium.

In the year to June 2015, almost a quarter of employers gave an increase of at least 3% while almost a fifth froze pay. Just 16% of employers raised wages in response to recruitment challenges. Looking ahead, a fifth of employers, mainly drawn from the private sector, say that their organisations will award a pay increase of 3% or more in the 12 months to June 2016. Meanwhile, fourteen per cent plan to freeze pay.

Employer confidence continues

The Labour Market Outlook also suggests that employment confidence looks to remain strong over the next three months. This quarter’s net employment balance – which measures the difference between the proportion of employers who expect to increase and those that intend to decrease staff levels – has increased to +29, up from the +24 reported in Spring 2015.

CIPD logoNew CIPD report highlights the importance of creating a clear business case and understanding how young people want to be developed through L&D initiatives

With three million 16-24 year olds now part of the UK labour market, the development of young people within the workforce now needs to be a key area of focus for employers, so they can retain great talent and improve business performance. This is according to a new report from the CIPD, the professional body for HR and people development, which highlights that recruiting young people is just half of the equation and that once in work, more attention must be given to developing individuals and building the skills they need for future success.

The report, Developing the Next Generation, is being launched today at the CIPD’s Managing Talent Conference and Workshop, and explores this issue through a series of case studies from organisations including Fujitsu, ActionAid, CapGemini, Reed Smith and Barclays. It considers how organisations can identify the most effective learning and development (L&D) programmes for young people and the importance of outlining a clear business case for investing in their development.
The research found that a key step, but recurring challenge for organisations trying to develop young people, is establishing a clear business case. The case study organisations discussed how their development programmes for young workers have impacted significantly on the wider business, helping to drive engagement, increase efficiency and foster greater productivity. Fujitsu said that focusing on developing young people has positively impacted the wider business, both culturally and at the bottom line. By attracting a diverse range of young talent, they are starting to alter the demographic of the organisation, and are seeing improved gender diversity. By going a step further and developing young workers, retention is higher, recruitment costs have gone down and they are successfully creating a pipeline of future leaders.

Nick White, Graduate Programme Manager at Fujitsu, comments: “We can see real value in the programmes and investing time, effort and money into making the programmes work. It’s about making sure we have future leaders, and that is actually happening. Thirty per cent of those on our Future Leaders Programme started as graduates in the organisation.”

Ruth Stuart, Research Adviser for L&D at the CIPD, says: “With over 300,000 young people entering the workforce every year, organisations need to establish effective development opportunities from the moment they’re employed, so they can retain them and build on the unique skills they bring. To be successful though, organisations must be clear on what they are trying to achieve. It’s pointless to introduce a scheme without first considering its impact on the wider business and ensuring it fits with future resourcing needs. By providing an appealing alternative to university through their recruitment and development programmes, for example, Barclays and Capgemini have been able to tap into and retain young talent, plug significant skills gaps and achieve substantial organisational benefits. This shows just how crucial a clear business case is in achieving a quality outcome.”

The report goes on to discuss how, once the business case is clear, L&D and HR professionals must understand the strengths, skills and learning preferences of young people. Those the CIPD interviewed flagged a preference for bite-sized learning, gaining knowledge from experience and receiving constructive feedback on actions. But although they admitted to being ‘tech-savvy’, when asked about which learning methods they disliked, the answer was unanimously ‘online training’. Organisations therefore need to be careful not to generalise or stereotype young people, as this could lead to false assumptions and ineffective development initiatives.
On skills, the case study research highlighted that young people bring enthusiasm and drive, innovative thinking and technological understanding to the workforce. However, analysis of the literature shows that young people need to develop deeper skills in self-awareness, acceptance of criticism and emotional intelligence. In response, the CIPD recommends that employers should focus on providing a strong support network, clear objectives, regular feedback and opportunities for upward communication.

Stuart continues: “Young people have enormous potential to contribute to a business’s success if their strengths and skills are recognised and enhanced. Organisations need to carefully select the right kind of programmes to ensure they have the chance to make an impact at an early stage. L&D and HR professionals need to collaborate and communicate to pinpoint the learning preferences of new generations and line managers also have a crucial role to play in developing and implementing initiatives. In the longer term, we should be looking to instil a sense of self-awareness and confidence at an earlier age to deal with certain skills gaps, and the responsibility here lies with policy-makers and educational leaders, as well as employers. But for now, the key is to understand young people and develop blended programmes using different methods that suit their learning preferences, whilst still staying in line with the overall business objectives.”

Developing the Next Generation has been published as part of the CIPD’s Learning to Work programme, which promotes the role of employers in reducing youth unemployment and champions the business case for investing in the future workforce. For more information visit: www.cipd.co.uk/learningtowork

CIPD logoThis year delivered growth but 2015 must be a year of productivity to sustain growth and improve earnings, says CIPD.

The UK labour market will continue to expand at a strong rate in 2015 but it’s unlikely that we’ll see any real increase in wage growth until 2016, according to Mark Beatson, chief economist for the CIPD, the professional body for HR and people development. While improvements in the labour market are good news for jobseekers and good news for businesses, Beatson warns that the UK’s steady growth remains vulnerable to developments in Europe and that the UK’s ‘productivity puzzle’ is an urgent issue for policy makers and businesses to address in order to sustain growth.

In his annual analysis of the UK labour market for the year ahead, published today, Beatson predicts:

• Employment may grow by as much as half a million in 2015, slightly more than the OBR forecast. This is due to the extra number of migrant workers seeking work, older workers looking to stay in work to strengthen their pension pots and more people leaving benefits and going into jobs under the Welfare to Work programme
• Economic growth of around 2.4% is expected in 2015, slightly lower than in 2014
• The Eurozone as a whole is still expected to grow by just 1.1% in 2015
• Interest rates are expected to rise but any increases are likely to be small
• Wage growth is likely to remain in the 1-2% range for most or all of 2015, although low inflation means average earnings may increase slightly in real terms. However, no significant increase in wage growth can be expected until 2016, and even then, it is not guaranteed
• Productivity needs to form the core of economic policy and employers need to raise their productivity – including developing their workforce – before skills shortages mount.

Beatson comments: “By historic standards 2014 has been a year of reasonable growth, but there are still some very significant challenges that the government needs to address around productivity. We said at the start of 2014 that productivity needed to be at the top of the agenda for Government and the same is true for this year. As a country we are still producing less value today than before the recession, and the years preceding that. We need a massive step-change as without growth in productivity, we are unlikely to see real earnings grow for some time”.

Beatson warns that while hiring intentions remain positive, at some stage labour shortages will start to become more acute and that taking advantage of relatively cheap labour now could have an impact on business competition, particularly in international markets. In both cases, he suggests that employers can manage these risks by investing in productivity. This might include investments in capital equipment such as technology and machinery as well as investing in intangible assets, including people.

He continues: “Upskilling the existing workforce is an insurance policy against future skills shortages, but these efforts will only be maximised through broader changes such as improved management practices and job design. We need to see a similar focus from policy makers. Higher productivity is necessary if living standards are to improve and economic policy in the next Parliament should focus on achieving it through creating an environment that supports productivity growth at a sector and local level.

The UK’s productivity challenges are deep-rooted and require systemic change. We need government, employee representatives and business to come together and pinpoint where workplace practices are working, where they need to be challenged and how we can build a workplace of the future that really works and drives the productivity we need.”

The CIPD has recently published research which pinpoints the role of effective management in the workplace and how this contributes to business productivity and organisational resilience. ‘Megatrends: are UK organisations getting better at managing their people?’ View research here.

The predictions report is available to download here.

 

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One in three employees (33%) report that their career progression to date has failed to meet their expectations, according to the latest CIPD/Halogen Employee Outlook survey. The survey of over 2,500 employees published by the CIPD, the professional body for HR and people development, in partnership with Halogen Software, also found that more than a quarter (28%) of employees are either dissatisfied or very dissatisfied with the level of career training and development offered by their current employer.

Despite these findings, the survey reveals that levels of job satisfaction* have increased over the last 12 months, rising by four percentage points to +44. However, the survey suggests that although employees might be satisfied in their current job role, there is a clear link between satisfaction with the level of career training and development and job-seeking intentions. Only 12% of those satisfied with the level of career training and development are looking for a new job with another organisation, compared to almost a quarter (23%) of employees overall.

The CIPD recommends that employers who are concerned about retaining their talent should make sure they understand and manage their employees’ career expectations. This means ensuring that both employers and employees are clear about how an existing job fits into wider career development. The survey explores a number of factors surrounding levels of career satisfaction amongst employees, and reveals that:

More than a third (37%) of employees think it is unlikely or very unlikely that they will be able to fulfill their career aspirations in their current organisation, compared to one in three (30%) who think it is likely or very likely that they will.
Only 6% of employees who believe they are likely or very likely to meet their career aspirations in their current organisation are looking for a new job, compared with almost half of those (48%) who think it is unlikely or very unlikely that their career ambition would be fulfilled by their current employer.
Just under half (48%) of employees report that their career progression to date has met or exceeded their expectations. When asked about the factors that contributed to their career meeting their expectations, the most commonly cited factor was their own hard work and talent (76%).
The most commonly cited contributing factors by employees who have failed to meet their career expectations are poor quality careers advice and guidance in school (30%) and being unable to show strengths and potential due to being in the wrong job or career (31%).
Jessica Cooper, Research Adviser at the CIPD, comments: “For the first time this survey asked questions on employees’ careers, revealing that a third feel their career progression has failed to meet their expectations. The survey also shows that likelihood of career progression and availability of career training and development opportunities have a big impact on employees’ job seeking intentions. Although job satisfaction levels are on the up, the data indicates that employers can be doing more to understand employee’s career expectations and help employees understand how they can realise these aspirations.
“Employers should be encouraged to think flexibly, ensuring they understand employee’s career expectations and how best these can be fulfilled by their organisation, whilst recognising and supporting where this might not be possible. This involves thinking less rigidly about job roles and instead developing a better understanding of the skills of their workforce and deploying them in more effective ways that meet people’s career expectations but also serve the business well. One way to do this is to make sure performance reviews are developmental rather than focused on looking back over the previous year. Employers can also ensure that, where possible, staff are given the opportunity to make lateral moves to broaden their skills and experience, and ensure that employees recognise that career development does not always have to involve progressing into more senior roles.”
Donna Ronayne, VP of Marketing and Business Development at Halogen Software, said: “Investing in career development is just good business sense. We see firsthand how it helps organisations retain key employees and provide a pipeline of great talent for corporate growth. To do this well organisations should give managers the tools and training they need to ensure feedback and performance conversations are future-oriented and focused on developing and evolving the skills of employees. It also means ensuring managers engage employees in regular discussions — at minimum once per year — about career development and progression.
“Of course career development plans should support the strategic goals of the organisation, but it’s worth noting that employee career progression is about helping employees develop the knowledge, skills and experience they’ll need for their next job. This advice may sound odd but the reason this investment matters is because hopefully, their next job will be with your organisation. By recruiting and filling roles from within, organisations can increase employee retention, and maintain valuable corporate knowledge, intellectual property and memory.”
The CIPD/Halogen Employee Outlook survey also tracks overall employee engagement via the Employee Outlook Engagement Index, which comprises a set of measures which are important to understanding the level of engagement an employee feels towards their organisation. The index consists of 16 items, weighted and aggregated to give an overall score and is tracked regularly. The proportion of engaged employees has grown to reach 38% from 35% in spring 2014, now matching the levels of engagement a year ago.
* Net satisfaction scores refer to the proportion of people agreeing with a statement versus those disagreeing. Scores can range from -100 to +100.

Source: CIPD Press Office

CIPD logoCIPD Report: Commenting on the Labour Market Statistics for February to April 2014 released today by the Office for National Statistics (ONS), Gerwyn Davies, the CIPD’s Labour Market Adviser, said:

“A quarterly increase of almost 200,000 full-time jobs shows that employers are becoming more optimistic about the future.  Young people seem to be the biggest beneficiaries of this increase, which may be fuelled in part by the growth in formal training schemes and the appetite shown by an increasing number of employers to invest in their future talent pipeline.

“Meanwhile, the latest statistics also show that the number of public sector jobs fell only very slightly by 11,000, which aligns with our survey of employers. We are now seeing the education and health sectors making some new hires and replacing leavers. But we should not assume this is the end of public sector job cuts. The medium term outlook for the public finances suggests further job losses are likely in the next few years.”

Davies continues: “However, despite this positive picture, recruitment difficulties are yet to feed through to employers, which may partly explain why the pay trajectory appears to be moving in the opposite direction.  The government’s welfare reforms, the availability of EU migrants and the latent supply from the under-employed are just some of the reasons why employers are still yet to report difficulty filling vacancies.  However, the CIPD is urging employers in all sectors to start planning ahead to mitigate the risk of more widespread difficulties in the longer term.

“The fall in the rate of earnings growth also reflects the unwinding of events a year ago when some employers delayed bonus payments and pay rises to take advantage of the reduction in the top tax rate. Businesses may be expecting to invest more but this has still to show up in higher productivity growth and, until this happens, there is little leeway for higher earnings growth.”

Source: CIPD published 11 June 2014

CIPD logoPace of UK employment growth continues to quicken, but greater investment in skills needed to drive productivity and pay growth

Commenting on the Labour Market Statistics for January to March 2014 released today by the Office for National Statistics (ONS), Gerwyn Davies, the CIPD’s Labour Market Adviser, said:

“The bumperquarterly increase of 283,000 in work shows that the UK jobs market continues to go from strength to strength.   However, the recovery is still yet to be felt in people’s pay packets.  Consistent with CIPD predictions, the average basic pay increase has fallen slightly to 1.3%, which remains well below the pre-recession average of 2.5%”.

Davies continues, “However, this relatively benign situation for employers in terms of wage growth may change if the labour market recovery continues to accelerate. Skills shortages, currently concentrated in particular sectors and occupations in the domestic labour market, could soon begin to spread to other parts of the labour market putting upward pressure on pay. Employers need to be developing existing workers, as well as hiring new ones, if they’re to mitigate this risk and ensure they have the skills to grow.”

“Amid predictions that more employers look set to increase business investment this year, now is the time for employers to prioritise training as part of this investment.  As well as ensuring that future business requirements are sustainably resourced, this also holds the key to boosting UK productivity levels – a pre-requisite for sustainable increases in the pay prospects of employees sustainably, many of whom are still yet to feel the benefits of the recovery.  A failure to act will cause come sectors of the labour market to overheat, while also placing a brake on UK productivity and international competitiveness.” 

Employment confidence has reached its highest level since 2008, according to the CIPD’s latest Labour Market Outlook (LMO) survey. As hiring needs increase, there’s never been a better time to introduce video interviewing into your recruitment process.

Before the recession started in 2008, the recruitment landscape was very different. With many years of prosperity, HR teams had big budgets to play with and when a job needed to be filled, a quick call into their recruitment agency to source suitable candidates often provided the solution. At the time, few people had grasped social media. Some people dabbled with LinkedIn, social climbers took to Facebook and only geeks tweeted (that was when Twitter was only two years old).

Fast track to 2013 and look at how these social networks have impacted our lives today. Not only in our personal lives, but in our business lives too. Matching candidates to jobs has always been an art, and still is, but with so many channels to showcase jobs to candidates, and candidates to jobs, the recruitment process has become more challenging. Extensive distribution channels through job boards and social media throws up a much broader range of candidates. Of course it’s good news that there is greater diversity of talent to be considered, compared to the rather blinkered approach to hiring staff 5+ years ago when employers would readily rely on a recruitment agency’s static database of candidates.

So how do the much leaner HR teams of 2013 handle recruitment when they have to process so many more candidates for each vacant job? Reviewing CVs can be painful when content is stuffed with keywords and superlatives that doesn’t relate to the actual candidate, but the process is useful for a quick snapshot of a candidate’s track record and qualifications.

Having sifted through the CVs, what next? Scheduling and conducting phone screens and first round interviews takes hours… That was so last decade.

As we head towards 2014, with employment on the increase at last, recruiters should consider what new tools are out there. Yes, social media certainly to help source good talent. But when it comes to filtering volumes of diverse candidates, cut out the phone screens and first round interviews, and instead use video interviewing as a screening tool. It’s a no brainer to quickly identify the most suitable candidates for your organisation.