With a General Election scheduled for May 2015 I was asked to participate in a debate about what a potential change in government could do to the graduate marketplace, particularly within financial services. As a way of tackling this large subject, I thought it would be worth comparing the market in 2001 (peak of Labour government) with current state of affairs and then point out any emerging trends that current employers should be aware of.
From the late 90s – early naughties, external political and economic developments have meant positive and negative influences on graduates. You may remember Tony Blair’s (May 2001) pre-election pledge to invest in ‘education, education, education.’ Labour went on to win that election and cemented their goal of having ‘50% of young adults progressing to higher education by 2010′. Blair said: ‘Our top priority was, is and always will be education, education, education. We believe that this will prepare Britain for the knowledge economy.’ What is interesting to note is how the political and economic decisions of 2001 are affecting graduates in 2015 and beyond.
Since 2001, the number of graduates finishing under-graduate and/or postgraduate courses has risen by 56%, there are more degrees on offer at a wider variety of institutions. We have experienced a boom in education in Britain and many graduate employers have noticed this as application numbers per vacancy have risen correspondingly.
The graduate job market in the City has suffered due to economic changes in the last five years. According to data from the AGR, there was a decline in vacancies in 2009/2010 in investment banking by 14.5%. During this time, most City graduate recruiters will tell you that they tightened or reduced hiring numbers and as a result expected fresh graduates to come into the workplace appreciative of the opportunity and that they should be “chomping at the bit”.
Despite the economic crisis and muddied reputation, the City has remained an attractive place for graduates to work. One of the downsides, for applicants specifically, to the decline in vacancies has been the increasing expectation of City recruiters on students. It is not enough to be an Economics student from LSE; you need to be an Economics student that has a CV with internships, self-study, voluntary work, be heading up the Investment Society and so the list continues.
Most of the investment banks have introduced pre-internship programmes – these are taster internships aimed at students in their first year of an under-graduate degree. JP Morgan state on their pre-internship site that for those graduating in 2017 or 2018, ‘past participants have gone on to secure internships and then full-time positions in London. These pre-internship programmes which will normally include spring programmes or weekly programmes can also reach as far down as A-Level students. This offering is to help build a talent pipeline that starts several years prior to students graduating from university.
This puts an enormous amount of pressure on first year students to start making career choices that they are not realistically ready to make. It also creates a huge barrier for students with an alternative degree background, e.g history, to enter certain areas of the City if they decide later on that this is a route they wish to take.
On a more positive note, the AGR Graduate Survey 2014 found that ‘banking and financial services’ predict an increase of 54.1% in graduate vacancies. While expectations are increasing on graduates to enter the workforce with more rounded employability skills, the labour market generally is improving and the national average graduate salary has increased to £27,000 and the City average has increased to £29,250.
On to future trends what’s next and how should financial employers prepare themselves? A change in government in 2015 is unlikely to change tuition fees, what we might see is an increasing pressure on universities to be accountability to the corporations that are starting to fund degree programmes. In addition, we have a new generation of graduates about to hit the job market. Many of us have spent the last ten years adjusting to managing Gen Y in the workplace, but now we need to prepare ourselves for Gen Z. Those born in the early – mid 1990s; also being described as the ‘digital natives’ or ‘multi-generation’ (multi-family, multi-cultural, multi-media) and typified by debt, desire for security, distrust of politicians/CEOS and they will be the generation that will work the longest.
As a City graduate employer, you need to be thinking about your proposition to this group. You shouldn’t assume what works for your current workforce will continue to be appealing for future generations. What can you do to support this generation? A more fundamental question is your leadership team aware of such potential trends? What benefits can you offer that might appeal to ‘plurals’ – mortgage funds, pensions from the outset and technology that supports flexible working practices; a career pathway that excites and engages for the long-term and a structure that allows people to pursue professional interests outside of work.
It might feel premature for employers to be thinking about Gen Z, but with increasing vacancies, increasing personal debt and expectations of graduates from a skills perspective, I think the very best students will differentiate between employers that want to genuinely ‘engage’ them very quickly. In my mind, employers should at the very least be trying to meet this group in the middle.
Katherine Travell, CEO, Futureboard