UK Unemployment and Gig Economy

Key Labour Market Changes

Over the previous 50 years, the UK labour market has experienced changes which have a significant impact on graduate employment opportunities. The following are the key changes.

Net Immigration

In 2016, the all-time high number of immigrants was reached at 300,000 people. This has a knock effect on the referendum for Brexit. This will result in a resolution to stop low-skilled immigration (National Institute of Economic and Social Research, 2018).

Decreased Unemployment

In 2018, since the past 50 years, the UK has had the lowest rate of unemployment of 4%. Usually, this rate has been oscillating in the range of 12% to 14%. It is without a doubt that employment is a major concern in the UK and owing thanks to the zero hour contracts and ‘gig economy,’ the unemployment rate has declined dramatically (National Institute of Economic and Social Research, 2018).

Wages

In real terms, wages for employee are not rising in the UK economy. Over the previous 10 years, prices have shot up, but salaries are rising at a relatively slower rate. Some people are growing poor at a rate faster than others (National Institute of Economic and Social Research, 2018).

Trade Union Membership

Since the 1980s, trade union membership has been declining. This decline is evident from the absolute number of members exclusively in the trade union and those who are both employed and within the union. This trend in the labour market is as it is due to the Thatcher industrial relations reforms which was also accompanied with a dramatic decline in striking activities. Over the previous 40 years, trade unions have lost more than 3 million members, thus, less than a quarter of the working population are exclusive union members. This has a significant influence on the prevalence of the zero hour contracts and the ‘gig economy’ (National Institute of Economic and Social Research, 2018).

Public Sector Pay

In real term, the 2008 recession has dropped by nearly an average of 10% to 15%. Public sector jobs are endowed with shorter hours of work, longer holidays, better pensions, and less chance of redundancy. Lately, the public-sector pension schemes are getting based on the defined benefit, final salary scheme. Private sectors may typically earn higher salaries earlier in their career, but they receive generally fewer pensions (National Institute of Economic and Social Research, 2018). The 2008 recession was followed by rise in wages in the public sector in the UK by a range between 0 and 1 percent. This is due to the need to maintain a rein in on public spending. Although, as the wages in the private sector keep growing, a sizeable gap is increasingly evident between private and public sector wages. Recently, the NHS staff were given a three-year agreement of payment which increases their pay by 6%. This will trigger knock-on effects on other public sectors on matters concerning how to afford the pay rises, and the possibility of increasing inevitable taxes to back up the payment (National Institute of Economic and Social Research, 2018).

Graduate employment market

According to a news report published by The Independent, in 2018, the graduate employment market was projected to strengthen with an 11% increase in vacancies (Musaddique, 2018). This is concurrent with the double-digit figure rise of 13% of the graduate vacancies in 2015. In 2016, the vacancies present for students who graduates decline to 8%, representing a 1% growth from the previous year (Musaddique, 2018). Graduate vacancies in the public sector are expected to have an increase of 22 %. Firms in the utilities and the IT sector expect an increase of 13% and 18% respectively. Apprenticeship vocations are expected were expected to increase by 32% in 2018 as well. In 2018, the percentage of candidates rejected by employers dropped by 4% of the offers which were reneged in 2017 in comparison to 7% in 2016 (Musaddique, 2018). The period of Brexit has had heavy influence on the recruitment season in UK which was characterized with nervousness about the economy. Although, recently, the economy is retaining its status quo. Talent acquisition departments in major organizations such as Fujitsu are targeting a more junior workforce, one which has an extremely agile workforce graduating from universities. Therefore, with the targeting of a younger workforce, along with the renewed confidence after Brexit, students ought to be assured of the employment market (Musaddique, 2018).

There exists a distinction between female and male graduates in the UK. By September, 2017, higher employment rates were evident among male graduates (86%) than female graduates (79%). The male graduates were more likely to have upper- or high-skilled jobs than female graduates. Female graduates had lower employment rates because they were most likely out of the labour force with a goal of taking care of their homes and families. 11% of female graduate students were not employed because of taking care of homes and families while 2% of male graduate students cited this reason as well (Office For National Statistics, 2017). With a focus on level of skill at work, the percentage of male and female graduate students occupying both low-skilled and high-skilled jobs was found to be nearly equal. Although, the female students are more likely to have lower-middle skilled jobs and less likely to have upper-middle-skill jobs. By September 2017, 33% of female graduate students worked part time jobs compared to the 8% of male students doing so (Office For National Statistics, 2017). In regional analysis terms of the people living in the UK on the year between 2016 and 2017, London had the highest concentration of graduates (at 50%) and 33% comprised a population of students from the North East. Graduates of Scottish origin are excluded from the regional analysis because Scotland’s education system results in students graduating by 20 years of age (Office For National Statistics, 2017). This would create a bias because, comparable to the UK, Scotland has more graduate students. However, London too, has the highest population of unemployed graduate students. This could be due to the reasons of younger graduates not having enough time to search for work in London, or being less probable of having a career path that is well-defined leading them to be unemployed. Higher concentration of graduates in London also relates to high competition for graduate employment opportunities in the region (Office For National Statistics, 2017).

How Market Changes Affect Graduate Employment Opportunities

Impact of Net Immigration

Immigrants from the EU and other nations enter the labour market in UK and this has an effect of making them more flexible. The migrants are more likely to take up employment opportunities which have lower wages and limited skilled personnel such as cleaners and plumbers respectively. However, with low skills, and low wages, the immigrants do not consider London to be attractive to them and this leaves a high population of graduate students populating regions like London due to their likelihood to receive higher wages for their higher skills (Economics Help, 2019).

Impact of Decreased Unemployment

The rates of employment in the UK labour market owe to the increasing tendencies of self-employment. Some graduates students are equipped with skills enough to lead them to engage in private ventures and sole proprietorships. Also, the low wages in the public sector contribute to self-employment tendencies where people are encourages to establish their own businesses. Technology, too, is changing in the labour market which bolsters internet business and opportunities to thrive, leading to self-employment (Economics Help, 2019).

Impact of Trade Union Membership

The decline in trade union members increases the flexibility of the labour market. This affects graduate employment opportunities by presenting them with fewer fixed work contracts and work that is more flexible, characterized with short-term, zero-hour and limited contracts (Economics Help, 2019). With the decreased membership, the trade unions become less effective and this causes the labour market to be moderately regulated in comparison to other nations in Europe. In addition to decline trade union membership, the labour market is growing flexible due to growth in service sectors, changing technology, favourable government policies, and free labour movement within the EU and the EU’s expansion to Eastern Europe (Economics Help, 2019).

Specific Organizations

The specific organizations that I would like to work for are: Deloitte and BBC.

The following is a description of the current market positions.

Deloitte

In the financial year that ended on May 2018, Deloitte has a 5.9% increase in its revenue, growing from £3,380m to £3,580m (Deloitte, 2018). This growth represents the eight year of consecutive revenue growth of the company. The company is working towards launching its internal center of excellence for automating robotic procedures and studio for artificial intelligence. The firm is continuously investing in its audit quality which results in a 2.7% increase in its audit market share. Deloitte has donated over 5.5 million euros to social enterprises and charities while maintaining support for more than 340,000 people for employment and education access via the strategy for social impact. The company has extended to launch legal services which focuses on ‘new law,’ and it has invested 40 million euros in learning and development practices (Deloitte, 2018).

British Broadcasting Company (BBC) UK

The manner in which BBC is funded requires that it fulfils a variety of responsibilities. These include the provision of value for the money through allocating more funds to the programs and services which satisfy the most pressing wants of the public, ensuring that cost-efficiency is observed when delivering output, maximizing funds acquired from other resources such as its operation for commercial trading to exploit the BBC content in a manner which meets its obligations and its charter (BBC, 2016). Factors such as sporting events and making investments in restructuring its programs affect the firm’s annual expenditure. The organization’s overall financial goal is to manage the expenditure and income to a break even while maintaining borrowing facilities and cash reserves for the purpose of timing differences and provision of financial contingency. In the fiscal reporting year of 2016-17, BBC acquired increased income from license fee at a rate of 1.2% which is 44 million euros. In addition to the license fee, BBC acquires income from commercially exploiting content funded by license fee and commercial subsidiary infrastructure (BBC, 2016).

Case Study of Graduates

Deloitte

A graduate student working at Deloitte will be part of nearly 286,000 professionals who deliver services in tax, auditing and assurance, risk advisory, financial advisory and other relative services in over 150 nations and territories. As a finance professional in the organization, one will work by advising customers at the moments of defining their business. The graduate employee will work close with different teams of specialists, across different lines of service and international boundaries to fix the complex problems involved with major transactions (Deloitte, 2018).

BBC UK

A graduate student of finance major in BBC will be part of the Audit committee which will benefit the functioning of the firm’s executive committee by ensuring that papers, discussions, and agendas maintained top quality while focusing on the most relevant matters of the needs of BBC. Being part of the committee, the graduate student will review the actions and findings from external and internal audit activities, as well as overseeing the management, review and approval of the Annual Reports and accounts (BBC, 2016).

Bibliography

BBC, 2016. BBC Annual Reports and Accounts 2016/17: BBC Royal Char ter 2016.