Putting on the charcoal grey suit and white shirt felt like a small victory
for Daniel. With his mother’s help – sartorial and financial – the
21-year-old graduate made the purchase at John Lewis last October.
His mum insisted on spending a bit more for quality. She expected he would be
wearing the suit for interviews and, of course, when he started work.
The suit got a much needed airing last Thursday when Daniel had a job
interview – his second since graduating last summer.
He is just one of the thousands of young people who graduated last year only
to find the recession corroding their job prospects. Fears of a lost
generation are now becoming a reality as the number of unemployed
college-leavers rises and the once bountiful graduate job market dries up.
These bright young things were once held up as a shining example of New
Labour’s achievements, but now they are rapidly becoming its worst
nightmare. The chancellor, Alistair Darling, tried to plaster over the
problem in last week’s budget.
Everything would be okay, he reassured graduates, as he promised “a job or
training” to anyone under 25 who has been unemployed for 12 months or more.
The government, he stressed, was determined not to return to the days when a
generation of young people found themselves “abandoned to a future on the
scrapheap”.
It may already be too late. According to the Office for National Statistics,
70,000 graduates under the age of 24 did not find jobs last year. This
equates to 11% of the graduate population between the ages of 18-24, and is
an increase from 43,000 the previous year.
This summer’s crop, however, face an even tougher market. Not only must they
cope with huge student debts and a dwindling pool of opportunities, they
also have to fight last year’s graduates for jobs.
This has led to unprecedented competition. The cut-price retailer Aldi
received 22,000 CVs for 130 graduate places this year, and accountants Price
Waterhouse Coopers (PWC) saw a 35% jump in graduate applications with 12,000
vying for 1,000 jobs.
“It is the worst year to be graduating since the early 1990s,” said Paul
Farrer, chairman of the Graduate Recruitment Company. “Student loans have
saddled 350,000 young people with an average debt of £20,000. They entered
university confident that there would be a variety of career opportunities
at their feet when they finished. Not this year.”
The gloomy job market has even started to infect the universities. Dan Ridler,
a 22-year-old masters student at the London School of Economics, describes
the funereal atmosphere on campus. “You just don’t talk about jobs and if
they are mentioned everyone goes silent. Nobody is looking forward to going
into the market.
“It was so different a few years ago when everyone was talking about which
graduate scheme they were going to take. Now it’s, ‘How are we going to get
a job?’ But at least everyone is in the same boat.”
Ridler, whose masters in international relations has cost £13,000 in tuition
fees alone, is planning to go to the Middle East to teach English when the
course ends. This was not part of his original career strategy. “I have
changed my life plans to see the recession through,” he said, and he is not
alone.
The international charity Voluntary Services Overseas has received more than
double the number of applications from people aged 21 to 23 this year
compared with 2007.
Applications from undergraduates to do postgraduate courses are also on the
rise. At Birkbeck College, University of London, enquiries are up 52%
against this time last year and University College London has seen a 21%
rise in postgraduate applications.
Others are turning to the public sector. Teach First, a charity that
encourages graduates to try teaching, saw a 60% increase on 2007 in the
number of graduates going into teaching last year.
Not all graduates have opted for an escape route. Lara Fadlallah always wanted
to work in the City. The ambitious 24-year-old finished a masters in finance
at the Cass Business School last June.
She achieved a merit and expected to sail into a job at an investment bank,
but they were not interested. After that she focused on management
consultancy and financial PR – but the responses there were negative too.
Fadlallah has applied for about 120 posts since last September, though only
three progressed to an interview. “Just a year earlier all my friends got
jobs after graduating,” she said. “We thought we were following in their
footsteps and then the recession came.”
Sonja Stockton, head of student recruitment at PWC, said: “This is a
generation of students whose career choices, all things being equal, might
have been different.”
The investment banks are guarded about their graduate intake but some,
including Goldman Sachs, UBS and Morgan Stanley, have conceded their numbers
are “reduced”.
Research into the graduate market, conducted by High Fliers, found that
entry-level vacancies in investment banking were down 44% this year,
suggesting that numbers are much depleted.
With fewer lucrative opportunities on offer at the banks, students are
bombarding the less sexy insurance and accountancy firms with applications.
They are even eyeing up the City regulator, the Financial Services Authority
(FSA), which had 120% more applicants this year.
The graduate cull is not confined to the Square Mile. One management
consultant, who works with large British companies, said that graduate
programmes were being scrapped across all sectors.
“Graduates are the most vulnerable group in a downturn because they have to be
heavily invested in. It’s very hard to make an argument for bringing in
graduates at the expense of a more experienced person.
“Of course, this is a short-term gain because when the economy improves these
companies will find that they are missing a layer of mid-level managers who
will have to be replenished at greater cost from outside the organisation.”
Graduates are encouraged to get as much work experience as they can and many
employers have created more spaces on their internship programmes. Fadlallah
has done three work placements in the past year, including one at Morgan
Stanley lasting five months. Without her parents’ financial support this
would not have been possible. Others are not so fortunate.
Anna Parkin graduated with a degree in pharmacology from Bristol University
last June. She moved to London with her sister in September and had to take
her first job offer or face moving home to live with her parents in the Lake
District.
Her job, as a temporary merchandiser at Marks & Spencer, bears no relation
to her degree. “I estimate how many peppers and bags of salad go to M&S
stores around the country. I don’t regret spending three years doing my
degree because without it I would be in an even worse position,” she said.
Her pragmatism occasionally gives way to disillusionment. “I rev myself up,
apply for loads of jobs and never hear back from them – it’s so deflating.
But the worst thing is knowing how hard you worked for your degree and
there’s nothing at the end of it.”
None of these graduates is relying on Darling’s promise of training and jobs
to save them. Fadlallah pointed out that the government scheme is not set to
start until next January – at which time she could have been out of work for
19 months. She also questions how easy it will be for companies to create
these jobs.
Ridler, who would like to work in politics, is much more sceptical. “I don’t
think a lack of training is the problem. There are more people with
A-levels, degrees, qualifications and vocational training than ever before.
It is not a supply-side problem – there are simply not enough jobs. And
the scary thing is that the class of 2008, who are still looking for work,
are about to be joined by the class of 2009.”
The danger for the government is if this lost generation finds a voice. They
were brought up in an age of prosperity and opportunity. Yet when their
moment arrived to enjoy it, the world had changed. It is only a matter of
time before their disenchantment turns to anger. Additional reporting: Ben
Marlow
Focus on efficiency
A GENERATION after the privatisations of BT and British Gas boosted the
coffers of Margaret Thatcher’s government, the Treasury is nearing the
bottom of the barrel when it comes to hunting for potential privatisations,
writes James Ashton.
The Royal Mint, Dartford Crossing, and QEII Conference Centre in Westminster
are already being prepared for sale, while the canal-side property of
British Waterways will be reorganised.
Beyond that, a ragtag bunch of assets is being examined to see if they can be
commercialised. These include the Port of Dover, the National School of
Government, which trains civil servants, and NHS Professionals, the in-house
staffing agency for supply nurses.
The most eye-catching, and perhaps controversial, is the Security Services
Group, part of the Ministry of Defence. It guards the Crown Jewels, Downing
Street, most government departments and military bases around the world and
was kept in state ownership 12 years ago when the Conservatives scrapped a
sale to the private-equity group Apax.
Fines for account errors
FINANCE DIRECTORS have reacted angrily to new legislation that could land them
with personal fines of up to £5,000 if their company’s tax returns are not
up to scratch, writes James Ashton.
The late addition to the forthcoming finance bill will demand that every
company with turnover of more than £22.8m or a workforce greater than 250
must appoint a senior accounting officer – usually the finance director – to
monitor its accounting systems and report to HM Revenue & Customs if
they are failing.
To company advisers, it smacks of the government trying to introduce by the
back door elements of America’s onerous Sarbanes-Oxley system of financial
regulation, which leaves directors open to 20-year jail terms if accounts
are found to be false. “It is a silly bit of bureaucratic nonsense,” said
the finance director of one leading company. “Companies have a moral
willingness to do all this already.
My fear is we are going to go down the road of a system that is overly
rules-driven, as in the US.”
Frank Haskew, head of tax at the Institute of Chartered Accountants in England
and Wales, said: “It looks like a hammer to crack a nut.”
Airlines hit by duty rise
FRANTIC lobbying by airlines failed to stop Alistair Darling pushing through
large increases in air passenger duty (APD), writes Dominic O’Connell. The
rises, which were trailed in last year’s prebudget statement, will mean
those flying furthest and in the most comfort will pay the most. At the top
end, the duty on a one-way flight to Australia in business class will double
to £170 from November 2010.
The extra charges could not come at a worse time for the UK’s airlines, which
are struggling to break even after a slump in passenger numbers. “We are
disappointed that the government has not revised its planned increases in
the light of the economic downturn,” said British Airways.
The government had planned to change the APD system completely, moving instead
to a per-plane charge that would have meant heavier aircraft (and, for the
first time, cargo planes) paying an environmental tax. BA and others
successfully fought the plan, only to see APD go up instead.
The new scheme sees flights divided into four bands by distance. Band A will
attract the lowest rate of duty – in economy flying one-way, £10 now, £11
from November next year and £12 from November 2010, double that for business
and premium-economy) – and Band D the highest. A Band D flight (more than
6,000 miles) will go up from £40 to £85 in economy, and £80 to £170 in
business.
