Labour’s graduates aren’t getting jobs

After 12 years of school, four years of university and a degree in business management, Grant Bostock was last week sitting on a factory production line checking the solder on electronic circuit boards. If the solder was not complete, he dabbed an extra bit on.

“It isn’t exactly what I planned,” he said. “I want to do something that gives me opportunities, so that I can work towards something. I am qualified to do all sorts of things, but I am working in a factory.”

His hopes of a career that would use the knowledge he spent so much time and money acquiring have faded fast in recent months.

“A lot of firms have just pulled their graduate schemes,” said Bostock, who lives in Cheadle, Staffordshire. “It feels like hitting your head against a wall. If the jobs are out there, you can try your best; but if they aren’t, there isn’t anything you can do about it.

“I am still living at home, which isn’t exactly what I wanted either. I want to move on to the next step of my life, but I am stuck here.”

In some ways, however, he is lucky: he has an income even though his job is temporary.

Mike Leader, who graduated in English from Birmingham University last summer, is still unemployed despite heading to London in search of a job.

“I applied for a few jobs in August and September but I didn’t hear back from any of those,” said Leader. “Then I decided to go to the Jobcentre and apply for work there. I don’t think I’ve heard back from any job I’ve applied for there.”

He has even struggled to claim benefits amid the bureaucratic maze of Gordon Brown’s welfare system. “I’m living with someone who has managed to get a part-time job in a coffee shop so I was turned down,” he explained.

Despite his degree, Leader remains unemployed. And, yes, his girlfriend, the coffee-shop worker, is also overqualified for her job: she is a graduate, too.

They are among an army of graduates emerging from the education system who face the toughest employment prospects for years as the recession deepens. The government, having encouraged youngsters into higher education that has saddled many with large debts, is deeply worried. Graduate numbers are hitting a record high just as the number of jobs is shrinking.

As John Denham, the skills secretary, said in an interview published yesterday: “They [new graduates] will be a very big group: around 400,000. We can’t just leave people to fend for themselves.”

His solution is a scheme to create government-backed graduate internships, paying modest wages, at large firms. Barclays and Microsoft are among those that have agreed to take part, and Denham hopes to have what is being called the national internship scheme running by the summer.

Don’t get too excited. Pay will be little more than the current student grant of £2,835, and it is not clear yet how much, if any, government money would be committed. But Denham hopes that the experience and skills gained by interns will pay dividends.

“At the end they will be more employable, and some of them will get jobs,” he said. “Employers won’t want to let good people go.”

However, critics question how many graduates the scheme will be able to help. “Businesses taking on graduate interns is welcome, but this does not match the scale of the crisis facing young people trying to find jobs,” said David Willetts, the Conservative spokesman on skills.

“This is another one of Gordon Brown’s ill-thought-out initiatives that comes apart within 24 hours. It seems pretty clear there’s going to be no extra public money for it.”

Contemplating his unemployment prospects, Leader also welcomed the idea of internships, but he, too, pointed out one simple drawback. “The bar will be raised for everyone,” he said. “When you go for a job, you’ll be up against people who have had three months’ internship.”

So what are the prospects and what can be done? The looming crisis stems from two broad trends heading in opposite directions: more graduates and fewer jobs.

Since Labour came to power, it has encouraged more school leavers to apply for university, with Tony Blair originally setting a target of 50% of all school leavers going on to higher education. As a result the number of graduates emerging from the university system each year has risen by more than 70%, from 206,000 in 1997 to 358,000 in 2007 (the latest confirmed annual figure).

Even before the credit crunch struck, some graduates were finding it hard to obtain jobs commensurate with their qualifications. At institutions such as Plymouth, Thames Valley and Lancaster universities about 40% of graduates remained in “non-degree-level” jobs six months after leaving university, according to a study published last year.

The proportion of graduates still in non-graduate jobs five years after university has also risen: up from 22% for male students in 1992 to 33%.

While students at the top end have seen huge rewards from their investment in education, overall the financial benefits have declined. The extra lifetime earnings generated by having a degree were estimated in 2004 to be an average of £400,000; that has now fallen to £100,000, as even one vice-chancellor, Deian Hopkin of London South Bank University, admitted recently.

At the same time higher education fees and student debts have risen.

Coming the other way is the recession, which started in financial services and the City, the source of many graduate opportunities in recent years. Student boasts of fat starting salaries at City banks have been replaced with ruthless competition for a declining number of openings, even for high fliers.

Paul Kavanagh, 20, in his final year of an economics and management degree at Oxford, has experienced a sea-change in the recruitment process.

“Every other year the banks handed out jobs to people on my course, but not this year,” he said. Despite a predicted first-class degree, he has been turned down for seven investment banking posts. Boutique firms are taking on one graduate this year, compared with up to 10 previously, he said.

“All the deadlines are now gone and a lot of my friends are in the same position,” he said. “I’m really panicked about it. It’s just really bad timing.” He is applying to do a masters degree, though he fears the course fees will put him a further £20,000 in debt.

“Doing the masters is going to be a real financial struggle and there’s only bits of funding available,” he said. “Doing a paid internship is definitely something I would consider.”

ENTHUSIASM for Denham’s intern scheme was in good supply yesterday – but unfortunately details were not.

A spokeswoman for Microsoft said the company in principle “absolutely supports” the idea and had been “really enthusiastic” when the government approached it. Asked what the scheme involved, she said: “We have to sit down and go through the scheme in detail. We have to look at how it compares with what we already do.

“We have had 200 paid interns a year for a number of years and we very much anticipate doing the same this year. In some ways it’s business as usual.”

Barclays said it was interested in helping with the scheme, but described it as “detail-light”. It said that at present it was not planning to increase its number of internships.

In similar fashion BP, traditionally a big employer of new graduates, said it was already planning to run a summer internship scheme for about 100 university leavers this year. However, Emma Hardaker-Jones, head of graduate recruiting at BP, said the group would be interested in becoming involved in Denham’s scheme – if it helped increase the chance of finding talented science, maths and engineering graduates.

A spokeswoman for the skills department said Denham’s scheme was at a “very early stage” and the department was still making initial approaches to companies. No detail beyond what Denham had said was available. It could give no estimate for the number of internships that would be created.

As the government tries to flesh out the scheme, economic assessments remain gloomy.

“While the recession began in May, the rate of recession increased sharply in the autumn,” said the National Institute of Economic and Social Research in a report yesterday. The way it has hit new graduates is reflected in the latest labour market figures: of the 137,000 rise in people unemployed in the three months to October, 55,000 were in the 18-24 age group.

Whether or not Denham’s scheme succeeds, students are likely to think harder whether university is worth the cost and commitment it now entails.

However, Francis Green, professor of economics at Kent University, said students should reconsider what they hope to gain from the experience rather than abandoning the idea of university, not least because 18-year-olds face just as tough job prospect as graduates.

“It doesn’t mean it’s a bad thing to get three years of education and end up in a fairly ordinary job,” he said.

“First, they may do that job better than they might otherwise have done and get paid more than nongraduates.

“Secondly, they should have gained some pleasure and benefit – studying English literature, for example, should at least mean they enjoy reading books more for the rest of their life.”



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