Labour market insights: February 2017

The government's recent Green Paper on their proposed new industrial strategy deals with the need to rebalance the economy away from London and financial services and to support industries in the regions

This approach is driven by the tensions that helped give rise to the vote to leave the European Union. And in May, a series of new regional mayors will be confirmed in office, increasing regional devolution and shining greater light on regional prosperity and labour markets.

At the forefront of much regional economic development will be skilled workers - graduates, for the most part - who will be expected to do much of the work of staffing, setting up and developing the network of strengthened regional industries that seem to be the aspiration of the Green Paper.

If these ambitions are carried out, this could mark a significant change in the recruitment landscape. Industries may see incentives to expand outside the capital - or even to relocate. Industrial clusters similar to those in Oxford, Cambridge or Derby may become more commonplace and require recruitment strategies to deal with them. And businesses may have to consider where to locate in order to access the best talent for them - with fewer assumptions that siting in London will mean able graduates will naturally gravitate to the city.

Of course, most graduates don't work in London. 22% of 2015 graduates started their career in the city but the majority had originally hailed from the capital. In all, only 35% of new graduates who started work in London in 2015 were neither from London nor had studied there. Graduates were more likely to move to Manchester, Leeds, Bristol, Nottingham or Newcastle without having a prior connection to their new workplace - something to consider when planning recruitment. And graduates in general are much less mobile than commonly imagined.

The same is true for many postgraduates. Proportionally, more taught Masters graduates (29.3%) and MBA graduates (33.8%) start their career in London, but most don't go to the capital. Manchester, Edinburgh, Birmingham, Glasgow and Oxford are the most common city for Masters graduates to start work on completing their degree.

At Prospects, we analyse graduate migration every year, breaking graduates into four groups:

• Loyals - Who were domiciled and then studied in the same region and now work there as well. 45% of 2014/15 graduates were loyals, and so did not move far from their original homes to either work or study.
• Stayers - Moved to another region to study and stayed there to work. This is not a large group, and comprised 12% of 2014/15 graduates - although many graduates with well-paid jobs are in this group. They’re more common in the university cities of the North and Midlands, and also the South West.
• Returners - Moved to another region to study and then returned home to work. 24% of 2014/15 graduates were returners, although they make up a larger proportion of the graduate population in the South. This group are the most likely to struggle to get good quality employment.
• Incomers - Work in a region they were neither domiciled nor studied in and made up 19% of 2014/15 graduates. 43% of all incomers work in London, and London is the only part of the country where incomers are the largest part of the graduate workforce.

If the government's ambitions are realised, we may see these patterns - which don't change a lot year-on-year over the whole country - change. And they do matter. Last year 57% of graduates went to work in the region they studied in and 69% of graduates went to work in the region in which they grew up. This means that potential pools of graduate recruits are usually significantly smaller than employers realise as many graduates won't seriously consider moving. It means that employers who want to maximise the number of good graduates they attract might have to think carefully about where they recruit - and even to start to consider that they may get more good applicants if the job is somewhere outside London. And this is even before the government's industrial plans are enacted and regional devolution begins in earnest.

Find out more

• Building our industrial strategy green paper
• Discover how you can advertise with Prospects