The Covid-19 pandemic has resulted in a giant Pause button being pressed on the UK economy. While there is a lot of uncertainty about what this means for the economy and our future, Emsi has been working with a range of partners from universities and colleges, to LEPs, government and sector bodies to make sense of what’s happening and its implications. In this article, I wanted to summarise some of those ideas in terms of the expected economic impacts as well as some of the implications and indeed opportunities for the Higher Education sector.
What can we expect, economically speaking?
There will be a recession and it will be deep, but it won’t have been caused by structural economic problems, so it’s possible that the economy will bounce back, though the longer the unlocking process goes on, the harder this will get. Here are 10 thoughts as to what this might look like:
- The economic recession and recovery will look different by region because local economies are not homogenous across the UK. For example, using Emsi data (2020), if we compare two similar sized regions in terms of population, the South West and the East Midlands, we can see the Hotel industry (SIC 551) employs nearly three times the number of people in the South West (c.46,400) than it does in the East Midlands (c.15800) and the proportion of graduate jobs (SOC1-3) in this industry is higher in the South West (c.21%) that in the East Midlands (c.15%). That equates to there being over four times as many actual graduate jobs in the South West (9,626) than in the East Midlands (2,366) in the Hotel sector.
- In both regions, job postings for graduate roles in that industry have dropped around 70% since January but because the industry is more significant in the South West with a higher degree of exposure, the impact will be far greater as will the ripple effects from that impact. This example is a useful reminder that hiring trends need to be interpreted in the context of the structural economic data.
- The time and nature of the recovery will largely be determined by the length of the lockdown and the restrictions in place. The longer and stricter the lockdown, the more likely the recovery will be slower than if it had been lifted faster. This assumes of course that a faster lifting of the lockdown doesn’t cause a second wave of the virus that overwhelms the NHS.
- The assumption can be made because lockdown is being actively managed by the Government; it is being informed by test, track and trace; stricter lockdowns can be localised; and the NHS has more capacity and knowledge than it did the first time around.
- A faster lifting of the lockdown (without an overwhelming second wave) is more likely to lead to a V-shaped recovery, whereas a more cautious approach is more likely to lead to a slower, U-shaped recovery. The worst case is the L-shaped economic scenario where we either do not exit lockdown, or we do so too fast and are overwhelmed by a second wave. Another possibility is a W-shaped recovery, with fits and starts as lockdowns are lifted and reimplemented.
- Some industry sectors will experience structural problems, such as hospitality and leisure, and travel and tourism, as they are hugely impacted by social distancing, lockdown and international travel regulations, e.g. quarantine requirements here and abroad.
- The occupations most impacted by the economic effects of the virus are low-skilled, but we can anticipate wider impacts on graduate occupations once the furlough scheme ends and businesses either fold or downsize.
- Many businesses may be able to mitigate the impact of the virus and lockdown on revenues by reducing their physical footprint and consolidating the success of employees working productively from home. While this could have negative impacts on landlords, the construction sector and the exchequer, if the alternative is business going under, then this remains attractive.
- Between the crisis itself, the lessons of the crisis for social policy (including public health) and economic policy (including supply chain questions), and then the effects globally, and not forgetting the effects of Brexit, the next decade is likely to see sustained change. This means adaptability is likely to become more important for sometime to come. As such, reskilling and lifelong learning are going to play an important role in supporting people in occupations hardest hit by the recession to avoid long-term unemployment.
- The Government sees apprenticeships as critical to moving young people from education into the labour market successfully. As the economy changes, apprenticeships are more likely to change with it, matching education to labour market requirements, but apprenticeships depend on employer demand to be a successful lever for the Government, and this hinges on economic recovery. As things stand, employers are not looking to take more people on, and that’s a fundamental stumbling block for apprenticeships, whatever the Government may wish to happen.
What are the realities and opportunities that face the Higher Education sector?
With those thoughts on the economy in mind, how can universities look to the future, both in terms of mitigating risk and taking advantage of opportunities that might arise? Here are some further thoughts:
- Students on professionally oriented programmes on a trajectory into those sectors likely to be hardest hit, like Events Management or Hospitality and Tourism, need to be able to talk about skills and knowledge which are relevant now: online conferencing, pivoting from international to domestic tourism. Universities need to track changes in skills demand so their programmes are fit for purpose from an employability perspective.
- Students need strong transferable skills so they have more opportunities to move between sectors and roles as they enter an uncertain labour market. Universities need to identify which transferable skills are most relevant to students for their likely or preferred career outcomes and ensure those are developed in their programmes.
- While we don’t have details from the Government yet, there could be a significant opportunity for degree apprenticeships. These will be most successful where the provision matches the make-up of the local economy and supplies apprentices with skills that businesses need. As things stand, employers are not looking to take more people on, and that’s a fundamental stumbling block for apprenticeships, whatever the Government may wish to happen.
- Universities sit on thousands of often self-contained short courses in the form of modules, which can be readily transformed into non-award bearing short courses that can help lifelong learners adapt to new ways of working or to be better placed to find new work. These can be delivered online, as all universities have now become accustomed to, via socially-distanced on-site teaching. Supporting alumni in the hardest hit industries may be a good place to start.
- Not only to survive, but also to thrive in the new environment, businesses need to innovate. Universities, as centres of innovation, research and knowledge exchange, can work with local industries and partners to help develop new business models and practices. This research needs to make it beyond journals and into the relevant sector communities.
- While the FE sector may be better placed to lead on the reskilling of low-skilled occupations hit by the coming recession, HE can support this in civic partnership through data, such as labour market insights, and resources, like additional teaching space to increase local capacity for socially-distanced learning. However, there may be increasing tensions between FE and HE around provision at Levels 4 and 5 as FE increases its presence at sub-degree level. HE needs to be able to compete effectively with a sector that has long experience of communicating skills and career outcomes.
All this suggests a fairly turbulent outlook for the economy as well as multiple challenges for universities. This comes against a backdrop of funding models already being contested. The prospects for funding and competition are potentially threatening and universities can expect to be asked increasingly by students as well as by government to show they’re supplying the skills which make their graduates ready for careers in a fast-changing economy. If universities do not understand the labour markets they supply and how they are changing then they will be exposed.
Through the crisis, we’ve been inundated with requests for data from university careers teams seeking to guide graduating students into an uncertain labour market. This embracing of data is an example of how universities have it in their power to take ownership of the challenges ahead, understanding and engaging with their local and regional economies, as well as national and international themes. There is clearly a great opportunity for institutions to fulfil their civic roles as anchor institutions, playing a pivotal role in the country’s recovery.
To access the full range of skills, economic and labour market data insights, contact Richard Hewitt, Director for HE, Emsi UK by clicking on the button below