Retain more Manchester graduates to ‘close productivity gap’

Encouraging more graduates to stay and work in Manchester after completing university could offset the predicted loss of international students and help boost the city’s productivity rate, according to a new report. 

Large cities in the UK generally underperform in productivity terms in comparison with London in a way that is not typical in other countries, according to researchers at the London School of Economics. 

A new report from the university’s Centre for Economic Performance focuses on Manchester, which, prior to the pandemic, had a productivity rate 35 per cent lower than London’s.

Reducing this gap to 20 per cent would require a “significant expansion of workers with degree and sub-degree qualifications”, according to the report, which goes on to outline where this growth – equivalent to about 180,000 people – could come from. 

While local students who grow up in Greater Manchester account for almost 10,000 new graduates in the city each year, this cohort “is simply too small relative to the size of the workforce to generate the scale of change required”, the report states – even if more local students were supported to obtain a degree. 

“While improving local education attainment is important, closing the graduate gap will also depend on other pathways,” it says. 

At the same time, researchers predict that while the number of international students coming to Manchester may remain steady given the appeal of the city’s universities and institutions’ dependence on international fees, the number who remain in Manchester after graduation may be set to fall in the coming years. 

“Proposed changes, including shortening the length of the graduate visa and increasing the qualifying period for permanent residence, are likely to reduce the numbers who remain in the UK and, by extension, in [Greater Manchester] post qualification,” the report says. 

It goes on to suggest that improving retention rates for all graduates offers a way to offset this trend. 

Greater Manchester retains 67 per cent of graduates, in comparison with London’s 79 per cent. 

But co-author Henry Overman warned that the region would need to look beyond skills policies in order to improve retention and boost productivity. 

“Skills policy is key to improving living standards not only for those workers, but for the city – and country – as a whole,” he said. “But attracting and retaining the skilled workers [Greater Manchester] needs depends on improvements to jobs, housing and transport that go beyond skills policy alone.”

The report warns that “without progress on these fundamentals, neither the internal migration nor the education pathways are likely to deliver graduate workforce rebalancing at the scale required”.

It adds that while the city’s universities contribute about 11,417 retained graduates each year, “the sustainability of this pathway cannot be taken for granted” given the financial challenges facing British universities. 

Across the UK, universities have set ambitious student recruitment targets that the Office for Students has previously warned may not be realised. 

“For [Greater Manchester], this matters because the financial sustainability of its universities underpins their ability to invest in the capacity, facilities, and student experience needed to attract and retain talent at the scale the analysis suggests is needed,” the report says.