The state of student recruitment in 2023

At this stage in the economic cycle – with expected UK 2023 growth of only 0.3 per cent – here at the Institute of Student Employers (ISE) we’d expect employers to reduce graduate recruitment hiring.

But they’ve not.

ISE’s annual Student Recruitment Survey shows that graduate recruitment grew by 6 per cent in 2022-23. The current recruitment season looks pretty healthy too as employers expect to increase graduate hires by 5 per cent in 2023-24.

School and college leaver hiring proved even more resilient. In 2022-23 hiring increased by 20 per cent, although school and college leaver growth comes from a lower base – ISE members hire three times as many graduates.

Why the sustained demand?

Whilst employer demand for student talent fluctuates year-on-year by sector, overall demand for a pipeline of skilled employees continues to grow. Evidence suggests that by 2035 the economy will need 2.6m more people in work. UUK have estimated that the UK will need to produce 11 million more graduates by 2035.

This would be less of a challenge if the UK population is set to expand sufficiently. But we don’t only have an ageing population here in the UK, birth rates are shrinking.

Over the last ten years, births have declined by 17 per cent. In the UK, there are now 16 per cent fewer 20-29 year olds than 50-59 year olds. For employers, fewer students will leave school to start apprenticeships and fewer graduate to join a graduate programme.

Employers in some sectors already struggle to recruit enough students. Employers found particular difficulties when filling IT/digital, engineering, and finance roles. This continues a familiar pattern of recruiting difficulties in highly numerical and technical roles.

In this year’s Student Recruitment Survey we also found that employers found it harder to recruit graduates and school and college leavers than in 2020-21. Some 54 per cent of employers said they found it difficult to recruit at least one of their graduate roles (an increase of 11 per cent ); 61 per cent of employers found it difficult to recruit at least one of their school and college leavers roles (an increase of 31 per cent).

Policy, productivity and employer practices

The availability of skilled workers directly impacts employer productivity. Policy decisions on issues such as education funding, immigration, vocational pathways, and the lifelong learning entitlement can directly impact employer hiring practices, as the apprentice levy has done.

Employers have already changed how they recruit early career talent. This is why you rarely see a graduate recruiter job title any more – student recruiter or early talent recruiter titles are far more comment now.

Here at the ISE, we expect employers to continue to reshape how they recruit, train and retain people as the talent squeeze intensifies, particularly when the economic cycle moves into a stronger growth phase.

Definitions of early talent will broaden and focus less on a person’s age or education exit point. Employers will place a greater emphasis on internal mobility as they struggle to recruit externally. Employee retraining and redeployment programmes will form part of a shift back towards managed internal career pathways.

Over half of ISE members (54 per cent) believe they will move to skills-based recruitment practices in the future. Skills-based-hiring is where an employer places less emphasis on experience, more on transferable skills and potential. Will the Lifelong Learning Entitlement provide the flexibility and skills employers need for the employees of the future?

More employers drop minimum grade requirements

For the skills-based recruiter, academic qualification levels become less significant. In this year’s ISE survey, the number of employers who set minimum levels of academic achievement fell further.

A decade ago, 76 per cent of employers demanded applicants possess at least a 2:1, and 40 per cent asked for minimum A level grades. In 2023, the number of employers who set a 2.1 degree as a minimum application requirement has dropped to 44 per cent. For the first time this year, less than 1 in 10 employers (just 9 per cent) set minimum A level grade requirements.

A third (34 per cent) of all employers surveyed believe they will drop all qualification requirements in the next five years.

Technology does play a part in the shift away from grades. Online testing is now a core element in a student employers selection process. Around 54 per cent of employers use psychometric and aptitude assessments in the first stage of assessments. But live and in-person student recruitment activities still have their place: 51 per cent of employers told us they found in person attraction and marketing activities provide the highest levels of student engagement, and 47 per cent said they generated the most high-quality applications.

An easy life for students then?

A healthy jobs market doesn’t mean that students can take a relaxed approach to the jobs market. On average, employers received 86 applications per vacancy, up 23 per cent on last year. There have always been more graduates that graduate specific training programmes, even when the economy grew strongly in the mid noughties. This isn’t an argument for fewer graduates though, not all graduate level jobs are on large employer training programmes.

The skills profile that employers recruit to is shifting and student career pathways are less linear. ISE research conducted earlier this year found that over 80 per cent of employers are developing the self-awareness, adaptability, and personal career management attitudes and behaviours of student hires. The World Economic Forum identified self management in its Future of Jobs report as a skill that employers will require more of.

But much uncertainty exists about the future jobs market. 2023 has shown us how quickly AI can disrupt sectors and jobs. The number of employers now using AI in their recruitment processes has tripled to 28 per cent in the last year. There are no facts about the future, goes the aphorism.

The UK’s skills and demographic problems require long-term solutions that pre-date the pandemic. We face a structural a shortage of skilled employees, yet public debate struggles to articulate both the issues and potential solutions.