CFE has produced a report exploring the demand for recent graduates from Small and Medium-sized Enterprises (SMEs). Recent graduates have been described as ‘Generation Crunch’ as they are entering the most challenging job market in living memory - the recession has led to a sharp drop in the number of graduate vacancies and increased competition with more experienced workers.
Ultimately, the fate of Generation Crunch will be determined by the demand for their services from employers. While there is a relatively clear picture of this demand from the public sector and larger businesses, much less is known about the demand from SMEs. This matters, as there are an estimated 4.8 million SMEs in the UK, employing 23.1 million people and together they account for 99% of all enterprises.
CFE’s report: Generation Crunch: the demand for recent graduates from SMEs is based on a survey of over 500 SMEs in the East Midlands region. The research identified that many SMEs are unsure what a graduate qualification actually is - 29% incorrectly identified A-Levels as a graduate qualification and just 59% correctly identified Foundation Degrees as being so. This confusion over the graduate ‘brand’ could limit the impact of initiatives aimed at stimulating the demand for Generation Crunch, and could lead to some graduates being overlooked by SME recruiters.
Even when furnished with the correct definition of a graduate level qualification, it is clear that the recruitment of Generation Crunch of graduates is a minority pursuit - just 11% of SMEs had taken on a recent graduate in the past 12 months and only 12% indicated they would do so in the next 12 months.
SMEs that do recruit have a very positive story to tell - two thirds had seen a positive return on the financial investment made and most reported high levels of retention. Most SMEs that do not recruit report that lack of demand, rather than an inadequate or unsuitable supply of graduates, was their primary reason for not recruiting.
On the launch of the research, James Kewin, Joint Managing Director of CFE said:
‘Our research suggests that the current trend for increasing the employability skills of graduates will, in isolation, have only a marginal impact. The same is true of initiatives aimed at promoting, subsidising or improving access to graduate recruits; while they may lead to a short term reduction in graduate unemployment they do not address the fundamental barrier - lack of business need - that prevents most SMEs from recruiting.
It is essential that government interventions aimed at stimulating the demand for Generation Crunch graduates are grounded in the day to day reality of running a business, particularly an SME. While the left hand of government is attempting to stimulate the adoption of high value added business strategies and graduate recruitment, the right hand can often be adding to the burden of regulation and oversight that SMEs have to contend with.
In this context, success in encouraging businesses to recruit the brightest and the best of Generation Crunch may be determined as much by government doing less, as it will by asking SMEs to do more.’