Some of the UK’s biggest employers have cancelled or delayed recruitment schemes and internships, amid concerns that the coronavirus pandemic could hit the job prospects of young people the hardest.
Lloyds Banking Group, HSBC and the accountants PwC and BDO are among the large companies that have been forced to make changes to their recruitment plans because of the crisis.
Many of the largest graduate employers are services firms whose employees must work from home under the government’s lockdown guidelines, making welcoming new trainees difficult. At the same time, many big employers have already reported a steep fall in work as the lockdown recession bites, meaning training new workers has fallen down the list of priorities.
“Youth employment prospects are crumbling,” said Gerwyn Davies, senior labour market adviser at the Chartered Institute of Personnel and Development. “We are already seeing evidence that recruitment has fallen sharply, which is not surprising given that the government’s focus is on preserving [existing] jobs.”
More than a quarter of companies said they anticipated hiring fewer graduates because of the pandemic, according to a survey last month by the Institute of Student Employers. Non-graduate recruitment was also expected to be negatively affected for 23% of employers.
Economists have found a persistent “scarring” effect on the careers of people who enter the labour market during a crisis, with wages still lower on average as long as five years after starting work.
Paul Johnson, the Institute for Fiscal Studies director, said: “Previous experience suggests that university graduates will start off in lower paying jobs than otherwise and will suffer ‘scarring’ effects such that they will be more likely to be unemployed several years after graduating. It will take several years before their earnings catch up with what they otherwise would have been.”
The effect on formal hiring schemes differs from company to company, with many opting to induct new recruits digitally.
Lloyds and Santander both cancelled their summer internship schemes, although all those already accepted will progress to the final stage of the banks’ 2021 graduate recruitment process. HSBC is understood to have delayed the start dates for all UK graduate recruits and interns, while the US investment bank Goldman Sachs has pushed back start dates for two rounds of internships.
BT, which in early February announced plans to hire about 300 graduates this year, has removed any grade criteria associated with graduate roles, amid widespread difficulties for university exams, as long as the applicant completes their studies. The company said it was confident it could drop the requirement for a 2:1 degree as it had a rigorous recruitment process.
BDO, the UK’s fifth-largest accounting firm, has paused the recruitment of new trainees and cancelled its summer internships. BDO has also furloughed first-year trainees and apprentices among 700 staff who will see 80% of their wages paid by the government.
Deloitte, EY, KPMG and PwC – the so-called big four accounting firms which are also major graduate recruiters – have not disclosed any changes to their graduate recruitment schemes, despite cutting pay for their partners by between 20% and 25%.
However, PwC has cancelled its summer internship for 400 undergraduates. Those students have been offered alternatives which could include automatic entry on to the firm’s graduate programme in 2021.
PwC’s new recruits will be trained online, and the summer work experience programme will be offered digitally to all 5,500 students who originally applied for the 600 places.
There are also concerns that the decline in hiring for roles that require less training will also hit young people harder, given their widespread employment in sectors such as restaurants, retail and support services. Smaller companies are also much less likely to hire inexperienced workers, given the short-term cost.
“It will affect all sectors and all skill levels,” Davies said. “This looks set to be a fairly grim summer for those who haven’t yet found jobs.”
In contrast to the government’s unprecedented job retention scheme, there is little in the way of extra support for jobless people of any age during the coronavirus outbreak, other than unemployment support paid out under universal credit.
Kalyeena Makortoff, Mark Sweney, Rebecca Smithers, Jillian Ambrose and Sarah Butler contributed to this report.
