Why are working class applicants less likely to be hired? Spotlight on the accounting sector

By Dr Claire Tyler, Professor Lindsey Macmillan, and Dr Catherine Dilnot

Yesterday we released our Nuffield-funded ‘Inequalities in Access to Professional Occupations’ report, and an accompanying blog post showing that working class students are well represented in application pools for professional graduate roles but are 32% less likely to receive job offers than applicants from professional backgrounds.

In today’s blog post, we focus in on analysis from the accounting and professional services sector to ask why we see these differences in offer rates for working class applicants. This sector is broadly representative of the full sample of employers we work with but were able to share more detailed data on applicants. Among applicants to the accountancy sector, 7.0% of applicants from professional/managerial backgrounds receive job offers compared to 4.8% of applicants from working class backgrounds (31% less likely). But which specific characteristics explain the socio-economic background (SEB) gap?

Figure 1 decomposes the SEB gap into three elements – unfavourable, favourable and unexplained parts. Unfavourable characteristics (in orange) reduce the chances of working class applicants obtaining a job offer, whereas favourable ones (in green) increase these chances.

Figure 1: Decomposition of the working class disadvantage in graduate offers in the accounting sector

 

Education does not equalise opportunities

Starting first with the unfavourable characteristics, we know from existing research that working class applicants are likely to have lower prior attainment and attend lower ranked universities than their more privileged peers.

Working class applicants in our sample achieved one grade lower at A-level than their peers from professional backgrounds (124 v 132 UCAS tariff points). Each grade lower reduces the chances of being an offered a job by around 10% (0.6ppt penalty, mean offer rate 6.3%) even when applicants are comparable on a range of other characteristics. This accounts for one third (34%) of the difference in offer rates by socio-economic background.

Working class applicants are also more likely to attend lower ranked universities than their peers from professional backgrounds. This accounts for a quarter (27%) of the gap in offers. Degree class also makes a small contribution (2.8%) due to small differences in university attainment which are magnified by the importance of educational attainment for these careers. This indicates that the university attended accounts for a significant part of the SEB gap over and above attainment prior to university.

But yet even if a working class applicant gets the same prior attainment, attends a similar university courses, and performs similarly well as someone from a professional background, the working class applicant is still less likely to get an offer. Education therefore is not equalising opportunities for young people to enter professional careers.

Applications matter

‘Application readiness’ is an important driving factor of the SEB gap as working class applicants apply later on average to graduate schemes than their peers from professional backgrounds. This accounts for 11% of the difference in offer rates. By the start of an undergraduate’s final year of study (early October), the accountancy firms in our sample have already received 30% of applications and made 50% of job offers for graduate schemes starting the following September.

But in contrast, applicants from working class backgrounds made favourable application decisions relating to their choice of employer and line of service. These applicants were more likely to apply to the ‘least competitive’ accountancy firm and service line (although all are very competitive) which improved their chances of obtaining a job offer. For example, applying to audit rather than consulting roles can double an applicant’s chance of obtaining a job offer.

Double disadvantage

Working class applicants are also more likely to be of Asian or Black ethnicity than their peers from professional backgrounds. Barriers for these ethnic minorities, which are not explained by the other characteristics in our data, account for 12% and 3% of the SEB gap respectively. This highlights the importance of intersectional analysis to identify further barriers in the recruitment process for ethnic minorities from working class backgrounds.

Together these elements explain almost two-thirds (62%) of the SEB gap in entry-level access to the accountancy profession.

What’s left?

Over one third (38%) of the SEB gap in entry level access to the accountancy profession remains unexplained by the detailed data, including a range of factors which are not significant drivers of the SEB gap here and therefore do not account for this unexplained gap. These include subject choice, use of networks, postgraduate qualifications, UK region of origin and UK region of office applied to. So this SEB gap remains even when taking all these factors into account. Other potential unexplained barriers may include performance on online tests (only those uncorrelated with educational attainment as those correlated will already be captured by our analysis), quality and duration of work experience, quality of networks used, commercial awareness, cultural capital and private schooling.

The firms in our sample have proactive social mobility strategies, are strong performers in the Social Mobility Employer Index, and are open and generous with their data for research purposes, yet still barriers for working class applicants remain. We suggest these barriers may be even larger for employers who are at the beginning of their social mobility journey.

Recommendations

Employers from all industries should review the extent to which they are rewarding potential in their recruitment processes and whether prior educational attainment criteria (or tests correlated with these) may be a barrier for high potential working class applicants entering their organisation.

Policy makers should improve the chances of high potential young people from all backgrounds being able to achieve the highest levels of academic success which are required for entry to competitive professional careers.

Greater information, advice and guidance should be provided to working class applicants relating to timelines and requirements of graduate scheme applications to improve their ‘application readiness’. This should include improving readiness for internship applications due to their high conversion rates to graduate roles. Guidance about which sectors, employers and roles are most or least competitive may also be useful for working class students to partly offset their educational disadvantage.