Institute of Student Employers (ISE) Student recruitment survey 2023: Trends, benchmarks and insights

The report sets out the findings of the Student Recruitment Survey 2023 which asks employers across a range of different sectors about their graduate, school and college leaver, intern and placement hires over the past 12 months. The survey, comprising 77 questions, ran during July and August 2023 and received 169 responses from student employers. Just over a fifth of respondents were large organisations with 10,000-plus employees, 61 per cent employed between 1,000 and 10,000 people, 15 per cent employed 250 to 1,000 and 3 per cent had 50 to 250 employees. The report covers application and hiring levels, selection, diversity, starting salaries and future predictions.

The full report can be found at: ISE Recruitment Survey 2023 - Institute of Student Employers

At-a-glance:

• Overall, the student labour market is continuing to grow, following the substantial drop in the size of the market during the pandemic. Student hiring increased by 16 per cent in 2022/23 compared to the previous year. Employers from all sectors report a growing need for a range of skills such as digital and accounting (p8)
• School and college leaver vacancies this year increased by 20 per cent. This is forecast to grow more slowly next year (+4 per cent). Graduate market vacancies increased this year by 6 per cent and are projected to grow by a similar rate next year (p8)
• Respondents reported increased difficulty in recruiting graduates and school and college leavers. More than half of employers reported difficulty recruiting to at least one of their graduate roles and 61 per cent had issues recruiting to at least one of their school and college leavers roles. This was up 11 percentage points in graduates and 31 percentage points in school and college leavers from last year’s figures (p8)
• Employers report particular difficulties in filling roles in IT and digital, engineering and accountancy, finance and banking. This continues a familiar pattern of recruiting difficulties in highly numerical and technical roles (p8)
• Graduate applications per vacancy increased through 2023, up by 38 per cent, with an average of 86 applications per vacancy (p8)
• The typical (median) salary reported was £32,000 for graduates (3 per cent increase from last year), £22,000 for school and college leavers (5 per cent up), £23,306 for interns (6 per cent increase) and £23,000 for placement students (7 per cent rise) (p10)
• Only 18 per cent of employers do not set any minimum requirements for candidates. More than 80 per cent of employers have no intention of moving away from a degree as a fundamental criterion for their graduate hires in the foreseeable future. However, employers requiring a 2:1 degree classification have dropped from 48 per cent last year to 44 per cent this year (p11)
• Employers are turning to AI to improve hiring efficiencies. Nearly a third of employers are now using AI in recruitment, up from 9 per cent last year. Employers use AI to manage large volumes (p48)
• Around three-quarters of employers had targets to increase diversity characteristics in graduate recruitment. However, 31 per cent of these had not yet collected or accessed the data on diversity hires. There appears to be a concerted effort to promote ethnic and gender diversity, especially in internships and graduate roles (p62)

Implications for governance:

Graduate recruitment over the last year has been set against a backdrop of economic uncertainties, political challenges, and escalating living costs. While the UK is currently avoiding recession, sluggish growth is having an impact on the labour market with employment stable and the number of vacancies dropping. High inflation saw workers’ salaries grow by more than 7 per cent but when adjusted for inflation this drops back down to 0.6% in real wage growth.

Despite this, the graduate labour market appears to be relatively buoyant and has bounced back to surpass pre-pandemic levels.

The ISE assessment that the data demonstrates the market’s “resilience and potential” will provide some reassurance to governing boards in relation to the new B3 conditions on student outcomes, which are now part of the regulatory framework. The Office for Students (OfS) confirmed this week the criteria it will use to select higher education providers for assessment of student outcomes for the second cycle of B3 assessments to commence in 2024.

Graduates are still very much in demand, according to the ISE survey findings. The picture around school leaver recruitment is more mixed. While the number of companies citing this route alongside graduate hires has dropped from 68 per cent to 54 per cent, it appears that those that do recruit school leavers have increased their numbers. The picture is further muddied by a drop in apprenticeship starts (despite a rise in degree apprenticeships).

The report concludes that the considerable effort by the government to establish apprenticeships and other school leaver programmes as the “new normal” has yet to make a significant impact.

Survey responses to questions about diversity in hiring will be of interest to governors, particularly those at institutions that recruit large numbers of widening participation students. Employers are doing better at recruiting those from low socio-economic backgrounds onto graduate programmes.

However, while about three-quarters of employers said they had diversity targets, about a third of those did little to collect or analyse data on their success in this area. On some measures, graduate employment intakes are more diverse than the student population, but not on all. Female graduates and students with disabilities are still less successful in the job market than the demographic data suggests they should be.

In a landscape where the average number of applications per vacancy has risen from 70 in 2022 to 86 this year, enhancing employability will be a significant concern for universities, careers teams and students themselves.

Governors will note that employers from all sectors report a growing need for a range of skills, particularly digital and accounting skills. As digital transformation continues, many traditional sectors are incorporating IT and digital roles, seeking graduates for work related to data analytics, cloud services, e-commerce, etc. Similarly, with a growing emphasis on data-driven decision-making, analytics, and business intelligence, organisations across various sectors are integrating accountancy and finance-related roles to derive insights and ensure profitability.

Universities that aim to ensure that students are equipped with these skills, either as part of their course or through career development, will be helping to give them an edge in the labour market.

Students also need to be aware of, and be able to describe and illustrate, the range of skills and attributes they have developed on their course. Half of surveyed employers predicted that recruitment will focus more on evaluating candidates based on their skills, rather than education or past work experience.

Internships and placements have become increasingly important in recent years as a means of preparing students for future, high-quality employment. Although the number of employers reporting that they recruited former interns and former placement students into graduate jobs dropped this year, it still stands at around 40 to 50 per cent.

It appears that placements were harder to secure this year, with an average of 91 applications for every hire: a 29 per cent increase from last year. As more universities include placements in their course design it may mean undergraduates need more input and help from academics/careers offices to arrange them.

Governors will also note the big regional differences in graduate employment, internship and placement numbers. This year nearly half of graduates were recruited to work in London (48 per cent), with the next highest proportions being 8 per cent in the southeast, 7 per cent in Scotland and 6 per cent in the West Midlands and the northwest and the rest of the world.

This contextual information could be relevant to universities as they create detailed pictures of their graduate outcomes to comply with the B3 conditions on graduate-level employment.  

Wages are also higher in London, but then so too is the cost of living. Starting salaries across the board show an increase from £31,000 last year to £32,000 in 2022/23. However, adjusting the prices to 2023 levels using the Consumer Price Index shows that the salary of graduates is actually decreasing. Some commentators have pointed to a growing gap between what graduates in the US are paid, for instance, and the wages on offer to those with the same qualification levels here.

According to the “future” section of the ISE report, the prevailing economic uncertainty is leading employers to anticipate a slowdown in growth heading into the 2023-2024 season. Governors will want to be assured that student employability strategies at their universities are as effective as they can be to help graduates thrive despite any downturns ahead.