Graduate unemployment rate lowest in 39 years as skills shortages boost prospects

• Graduate unemployment rate fell to 5.1%
• Salaries increase 2.9%
• 7,895 more graduates in professional roles

The unemployment rate for graduates six months after leaving university fell to 5.1% this year - the lowest since the 1979 survey when it was 4.9%

Prospects' What do graduates do? 2018 launches today (18 October), analysis shows a robust graduate labour market.

Employment increased from 74.2% to 76.6% (184,295) as 4,540 more graduates found jobs compared to last year. The proportion of employed graduates in professional-level roles also increased, from 71.4% to 73.9%.

Skills shortages across many industries appear to have helped job prospects with increases in those entering professional jobs across all degree subjects. More graduates qualified in high demand subjects, such as IT, engineering, accountancy and marketing, went into their vocationally linked roles as a result.

Changes to the balance of occupations could also be indicative of skills shortages with maths graduates working in IT and engineering over the more typical business services roles. There were also more physics graduates working in IT, and the marketing industry proved much more popular this year among geography and English graduates.

The skills shortage also appears to have impacted salaries as the average starting salary for graduates increased from £21,776 to £22,399 this year. All regions saw a rise, with the Midlands, East of England and Northern Ireland seeing the largest percentage increases.

Charlie Ball, head of higher education intelligence at Prospects, said: 'Skills shortages have been a feature of the graduate labour market since the recovery from the last recession. There are signs that this may have helped to fuel a modest rise in salaries as well as job prospects.'

While there were more graduates on permanent, full-time contracts after six months (61.8%) and fixed-term contracts of at least 12 months held steady, there were increasing numbers on zero hours contracts - up to 4% of those employed, from 3.6% last year.

Retail employs the highest number of graduates in non-graduate roles. While 12.8% of graduates went to work in retail, around two-thirds of them were in jobs below professional level.

Charlie added: 'There are longstanding and persistent concerns about skills mismatch and underutilisation of many graduates who aren't getting the opportunity to use their talent effectively. As employers have persistent difficulty recruiting the graduates they require, we need to do more to bring capable graduates who cannot find suitable work together with the employers that are looking for them.

'As a linked issue, although zero hours contracts do not represent a large proportion of the graduate labour market, they are growing in importance and that growth should be monitored.'

Naomi Oosman-Watts, AGCAS (Association of Graduate Careers Advisory Services) data insights director, said: 'The higher education sector has been working to address these changes in the labour market for a number of years. University careers services are using labour market and graduate outcomes data in increasingly sophisticated ways to develop creative, evidence-driven initiatives that support graduates’ transition into the labour market at the right level.

'The advice, guidance and support offered by university careers services helps students to start planning their careers at an earlier stage resulting in better decision making and increased access to opportunities.'

What do graduates do?

What do graduates do? has been published annually since 1997 by Prospects in collaboration with AGCAS for the Higher Education Careers Services Unit (HECSU). Analysis is of data from the Destinations of Leavers from Higher Education (DLHE) survey produced by the Higher Education Statistics Agency. The What do graduates do? 2018 report gives a comprehensive picture of the destinations of 254,495 (77.3%) of last year's UK domiciled first-degree graduates in January 2018 - six months after they had left university.

Media enquiries, interviews and a copy of the report

• Clare Tregaskis : Prospects : 07792 429227 : c.tregaskis@prospects.ac.uk