Graduate unemployment ‘could hit 25%’ after public spending cuts

Government plans to cut public sector spending by up to 25% could cause graduate unemployment to rise to more than 20% – an unprecedented level, a charity has warned.

In January last year, UK graduate unemployment was about 7.9%, or around 22,000 graduates, according to the Higher Education Careers Services Unit (HECSU).

With a higher proportion of public sector staff qualified to degree level than private sector staff, the government’s recently announced cuts could have a disproportionate effect on graduates, the HECSU warned.

Charlie Ball, deputy research director at the HECSU, said: “There are around 39,000 ‘non-frontline’ public sector jobs taken by UK-domiciled graduates annually. I don’t expect them all to be lost, but they don’t need to be to have a significant impact.

“Even if only a fifth of them were to go and not be replaced, that would more than double graduate unemployment for the cohort affected. That would put graduate unemployment over 20% and pushing towards 25%.”

The highest unemployment rate ever recorded in the UK for graduates six months after graduating was 13.5% at the start of 1983, according to the HECSU.

Yesterday, The Office for Budget Responsibility, the government’s independent spending watchdog, forecast that about 600,000 jobs will be lost in the public sector by 2016. The Chartered Institute for Personnel and Development has forecast that around 725,000 jobs will be cut in the public sector over the next five years.

Wales and North East England, which are heavily reliant on the public sector for employment, will be hit hardest by the state job cuts, the HECSU said.

Ball said: “While [the public sector] accounts for about a quarter of jobs graduates in the North East and Wales go into, the loss of a significant proportion of the local graduate labour market could have dire effects on these regional economies, and some of those worst affected could be those with the weaker local economies.

“This suggests that job cuts could drive educated young people away from regions that need to retain them and into the capital, in search of work.”

Private sector to pick up the slack?

Despite fears of a drop-off in graduate recruitment in the public sector, some private sector employers, such as Deloitte, have maintained their schemes during the recession and are now looking to increase their intake. 
The professional services firm has today (1 July) opened its application process for 2011, and plans to increase it’s intake from 1,000 this year to 1,100 the following year.
Sarah Shillingford, graduate recruitment partner at Deloitte, said: “My advice for students is, do not wait until the world tells you the graduate market is picking up – in fact, things aren’t as bad as they have been made out to be. Not applying for graduate positions because the jungle drums aren’t telling you to could lead to missed opportunities.”

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