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Graduate employment is a concern for most students and planning a successful career is rarely easy. Now it seems it will be even harder for those graduating this year.
Martin Birchall, chief executive of High Flyers Research, described 2009 as “one of the worst years of the last two decades to be graduating from university”. Despite the graduate job market appearing to stay strong until last August, it now emerges that after the summer of 2008 graduate employment was at its lowest for 5 years.
Recruitment targets for graduate entry level jobs are down 17% overall and 47% in the financial sector.
The recession is the main cause of this slump; it started in the financial services and the City, usually one of the main sources of graduate jobs. The sectors which are most affected are banking, accountancy, engineering and retail.
Over the last 30 years graduate employment rates have generally grown. However, problems similar to those experienced this year have occurred in the past. Two such instances were in 1991/92 and 2002/03. So what happened in those cases?
During the last recession in 1991 graduate vacancies fell by 32%. A similar, but less dramatic, fall came in 2002/03 following the dot.com crisis. In such cases employers made dramatic cuts in graduate recruitment; however, by doing this they put their reputations in jeopardy and missed out on recruiting talented employees.
In 1991 Marks and Spencer dismissed 250 of the 300 graduates it hired. It is keen not to repeat this mistake and plans to invest in graduates, ensuring it has a supply of future talent.
A similar sentiment has been expressed by the graduate recruitment manager at Lloyds TSB, Jonathan Mayes. He says they will hire graduates as they are “taking the long-term view and believe in graduate recruitment because we are building our future leaders. It is a long-term investment”.
Mike Hill, chief executive of Graduate Prospects, supports this statement, saying that there are more graduate jobs than 10 years ago and many employers are running traditional graduate recruitment schemes. While many companies have been affected badly, the proportion of graduates who go into blue chip organisations is usually only 10%. The rest look to other areas of the economy.
Another consequence of the recession in 1991/92 was the rise in students continuing on to postgraduate study. More than 30% opted for this, hoping the market would have improved by the time they finished. However, recent reports indicate that this time students are not as keen on this option.
The situation is still worrying for Lancaster students. Even before the credit crunch many universities, including Lancaster, had a high amount of graduates in “non degree level” jobs six months after leaving university.
But it is not only the recession which has had an effect. The government’s target is for 50% of school leavers to go on to further education. By encouraging more teenagers to go to university the amount of graduates has risen from 206,000 to 300,000 in the last 10 years. The problem now is that there are more graduates and even fewer jobs for them to chase. This has meant that the advantage of having a degree has declined financially, with extra lifetime earnings of graduates falling from an estimated £400,000 in 2004 to £100,000 currently.
Nevertheless, the government maintain that it is worth pursuing this target because an educated workforce is the best way for the country to move out of the recession. Skills Secretary John Denham calls our generation “the children of the baby-boomers” and asks “what do we do with them?”
This has led to the development of the proposed National Internship Scheme, in which four companies, including Microsoft and Barclays, are taking part. The three month internship is paid, but at a lower rate than a typical starting salary.
Denham claims the internships will improve graduates’ skills and in some cases lead to full time work with the company, who won’t want to let the best interns go.
However, critics have questioned how many graduates the scheme will realistically be able to help. The small number of businesses taking on a few hundred graduates may not match the scale of the problem. Barclays has said it is not planning to increase its number of internships, which is currently around 200 graduates per year.
Some students have said that it sounds better than being unemployed, but also identify another problem – those who have not participated in these internships will be at a further disadvantage. Also, many graduates will have already completed internships and could be disheartened by this option.
While this situation has occurred before, it still won’t be easy. Advice from NUS and other careers services is to accept that there will be more competition, be prepared to take on unpaid work experience and look to smaller businesses as well as large companies.