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The bafflement in the voices of young graduates is like that of someone who is suddenly smacked in the face by a friend. Teachers, parents and most of all politicians told them a university education was the key to getting a good job. Careers advisers chivvied them to get work experience. So undergraduates dutifully studied for decent degrees, prettified their CVs with useful internships and bounced out of university last summer. The world, and the job market, was their oyster. And then: thud. They were floored by the sucker punch of recession.
A generation of young people - Generation Crunch, perhaps - is experiencing unemployment for the first time, a sinking, scarring sensation that completely escaped the generation above them. David Blanchflower, the influential economist and member of the Bank of England's monetary policy committee who predicted the recession, believes that 3 million people will be out of work by the end of this year. Of these, more than 1 million are likely to be under 25. The latest labour market survey shows unemployment growing fastest among 18- to 24-year-olds: of the 137,000 rise in unemployment in the three months to October, 55,000, or 40%, were aged 18 to 24. "That scared me and everyone else," says Blanchflower. "A spell of unemployment when you're young has a very different effect than when you're older." Economists such as Blanchflower talk of "permanent scars" against "temporary blemishes": the evidence is that prolonged unemployment permanently damages the young.
Facing a youth unemployment crisis, Gordon Brown has already this week promised £140m to increase the number public and private apprentices by 35,000. It may be harder, however, to help jobless graduates. If the victims of earlier recessions were the millions of skilled manual workers, will bright young graduates bear the brunt of the latest economic crisis?
Last summer Bea Carter, 21, finished her English literature degree and decided to stay in Manchester with her university friends to "live together, like young professionals". She thought it would be fun. "But I'm even struggling to get a job I don't want, let alone one that I do." She settled for a job at a branch of Marks & Spencer's Simply Food. "Working in a supermarket wasn't really what I expected to be doing at all, but since I can't even get admin or office work, I had to take it." A week before M&S announced it was axing 1,200 jobs, Carter's contract came up for renewal. Her managers let it expire. Shocked, she tried registering at temping agencies but was told she couldn't because she didn't have administrative experience. "I always thought my degree would help me in the long-term with a career, but it certainly hasn't helped me with the first step. A lot of agencies don't care if you have a degree, they just want to know that you can type a certain number of words a minute," she says. "Right now, job-hunting for me is about money, not about a career."
Graduates being forced to take non-graduate jobs is not a new trend. The expansion of higher education, driven by the government's target to put 50% of young people into it, has happened too quickly for the labour market. "There are more graduates than ever and there are more graduates now in less vocational subjects from 'less prestigious' universities than there used to be. We have a much higher proportion of social science and arts graduates which is why a third or more of graduates don't get graduate jobs," says Prof Peter Dolton of Royal Holloway, University of London, and the London School of Economics's Centre for the Economics of Education. He says this trend will be exacerbated by the economic downturn. "When you have rising graduate unemployment, the effects are felt worst by graduates of non-vocational subjects and graduates from less prestigious universities. That's going to get even worse in recession."
The crunch on graduates began in earnest in September, according to Mike Hill of Graduate Prospects, the graduate careers service. "In August we were thinking 'things are going well'. By September we were thinking 'oh ****'. Immediate vacancies disappeared," he says. "Graduate recruiters might say they are going to be recruiting but what they mean is very many fewer than last year. Students aren't going to be as cocky."
If things are bad for the class of 2008, they will get worse for the classes of 2009 and 2010, according to Dolton, as traditional big graduate recruiters pull out of the "milk round". According to Graduate Prospects, these recruiters are changing, so while M&S may be laying off workers, Aldi, Asda and Netto are "very actively recruiting". The few openings at conventional recruiters are now desperately competitive: KPMG's 2009 graduate jobs are nearly all taken, months ahead of schedule, as students scramble for the top jobs.
Carl Gilleard, chief executive of the Association of Graduate Recruiters, suggests that young graduates should keep busy. "It's going to be a shock to the class of 2009. But it's far better to consider a temporary job than to sit at home and feel sorry for yourself. Why not do bar work? It involves skills you need for lots of jobs - working with people and perhaps negotiating tricky situations."
This is greeted with hollow laughter by many graduates and undergraduates, who are struggling to pick up the most menial of jobs, let alone something to burnish their CVs. In recent months, Stephen Greatley, 18, a student from Liverpool, has applied for more than 40 holiday jobs to help fund his Oxford University degree and has not found any work. "There was a job advertised at the Royal Mail. The job description warned it was tedious, repetitive work; I applied and didn't hear anything back," he says.
Oliver Brand, 21, graduated from Birmingham University last summer with a high 2:1 in political science. Since then, he has applied for more than 35 jobs and 75 unpaid work placements in advertising and marketing. "I wasn't cocky at uni but I had high hopes for myself," he says. "I was head boy at school, I thought I had quite a lot going for me. I'd always expected a bit of rejection but after the 100th, I thought 'Oh God, what's going on here?'
"I've even found bar work hard to come by now. They want people who can guarantee to work there for a year and I've been honest and said I hope to get a full-time job." As well as seeking work experience, he's joined local job agencies near his home in Somerset. The rewards for all this endeavour? Two weeks' work experience with a London marketing company and occasional cash-in-hand labouring for a neighbour.
It is "completely demoralising," he says. "My mates have found it exactly the same. We're all pretty down. We meet up regularly. All we are doing is trying to find a job every day."
As Blanchflower warns, this demoralising effect could turn into long-term "scarring" if this new generation of unemployed people are out of work for more than a year. There was a sizeable group among the young unemployed in the 1981 recession who were still out of work in their 40s. Studies show that young long-term unemployed people find it difficult to reconnect with stable career jobs. "It's important to get a foothold in the labour market," says Blanchflower. "If you don't get in, life becomes very hard."
Young graduates are hit by a "double whammy" according to David Willetts, the Conservative higher education spokesman: companies freeze recruitment and then there is the last in, first out principle. Recent graduates lucky enough to get work have found themselves turfed out as the recession bites.
Dirren Patel, 25, got a degree in business management from the University of Leicester and quickly picked up work for a City firm specialising in IT mergers and acquisitions. Since being made redundant in September, he has found it "impossible" to find similar work in the City. Living at home with his parents near Woking, Surrey, Patel has been able to take the long view: he is now looking for a graduate job that will start in September. He has 20 months' experience working in the City and he is competing against new graduates with none. He knows 30-year-olds who are applying for entry-level graduate jobs. He says new graduates have very little chance: "2:1s are not worth anything anymore because everyone's got them."
Blanchflower believes more education and training is vital for the young unemployed. But Richard Reeves, director of thinktank Demos, says the government's instinct seems to be to encourage well-qualified (and often heavily indebted) graduates to take on more study (and more debt). Reeves says a government minister recently told him unemployed graduates will probably end up doing master's degrees. "'Let them do master's degrees' is the modern equivalent of 'let them eat cake'," says Reeves. "You just worsen the problem. Doing an MA should not be an economic policy, it should be a broader social policy."
Reeves is not surprised graduates feel angry and betrayed when they have no job to show for years of study after obeying the urgings of the government. "The sell has always been 'go to higher education and you'll get a better job'. The sell should be higher education is a way to expand your horizons, discover more about the world and yourself and help you get a better life, as well as a job," he says. "This vocational assumption is being destruction-tested by the recession."
Have young people funnelled into the higher education factory been misled? "There is a growing debate about the 'return' of a university degree," says Willetts. "The conventional model has been supply for graduates and the number of graduates has risen in happy tandem. But if that falls out of sync then students will ask themselves whether it's all worthwhile."
According to Dolton, the government's target of getting 50% of adults into higher education was based on influential research looking at adult earnings over an entire career. Much of this studied generations born in 1958, and found each year in education over the age of 16 added 15% to earnings. But this, argues Dolton, was an exception: a uniquely privileged generation who enjoyed an elite education and a smooth labour market. To suggest modern degrees would add a similar value - called "rate of return to education" in academic circles - is "errant nonsense" he says. The government assumed further education would boost earnings by 8-15%. "Parents and kids have been sold a lie in the sense that the rate of return to education is not that," says Dolton.
What should be done? Skills minister John Denham is drawing up an action plan to tackle unemployment among 18- to 24-year-olds, which aims to help thousands of graduates. The government needs to act quickly, says Blanchflower. "We don't want these spells of unemployment to get long. A spell of unemployment is bad when young and the longer it is, the worse it is. We want to do everything to prevent it becoming long-term unemployment."
Reeves warns it may prove harder to assist graduates. Keynesian-style public works - generating jobs through public sector infrastructure projects - are ill-suited to most graduates because skills sets do not match. "Would you want someone with a degree in media studies to lag your loft? I wouldn't," says Reeves. If the government wants to create new graduate jobs, it could invest in cultural and creative industries, suggests Reeves, which should be seen as part of the country's infrastructure and as something which would reap profits and economic growth in the future.
If things are tough for young graduates, however, they will only get tougher for less skilled young people. "So far, it looks as if it's the unskilled who are suffering the most. In the short and long term being unskilled is much worse than being skilled," says Reeves. Paul Gregg, a professor of economics at Bristol University, predicts that the number of unemployed graduates will rise "and the length of time it takes them to connect with the labour market will lengthen but they will get in, although with lower wages than in the past."
In other words, graduates will lower their sights and end up taking the jobs of less skilled workers. "Graduates are very mobile. They are more likely to move around to find work," says Ian Brinkley, associate director of the Work Foundation. "For a while at least it's going to look a lot less attractive to go to university. But a degree will still help you get a job if not a well-paid job - and that takes that job away from someone else."
Additional reporting by Huma Qureshi
- Higher education
- Graduate careers
- Schools
- Graduation
- Students
- Economic policy
- Borrowing & debt
- Recession
- Credit crunch
- Social exclusion
- Work & careers
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