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Public sector cuts could cause record graduate unemployment warns HECSU

Public sector cuts could cause record graduate unemployment warns HECSU
Public sector budget cuts of around 25% could hike graduate unemployment to unprecedented levels, leading to a graduate unemployment rate of over 20% reports the Higher Education Careers Services Unit (HECSU) today (1 July 2010).

Charlie Ball, deputy research director at HECSU, forecast last years graduate unemployment to be in the region of 7.5%. It was reported at 7.9% in January 2009, which is around 22,000 graduates. With a higher proportion of the public sector qualified to degree level than the private sector, the recently announced cuts could have a disproportionate effect on graduates.

Ball explains: There are around 39,000 non-frontline public sector jobs taken by UK-domiciled graduates annually. I dont expect them all to be lost, but they dont need to be to have a significant impact. Even if only a fifth of them were to go and not be replaced, then that would more than double graduate unemployment for the cohort affected in one fell swoop. That would put graduate unemployment over 20% and pushing towards 25%.

The highest unemployment rate, for graduates six months after graduating, ever recorded in the UK, was 13.5% at the start of 1983. Were expecting over 10% unemployment next year anyway, and it would not take much of a shock to the graduate jobs market to make the next few years some of the toughest ever experienced. In fact, the loss of around 13,000 of these jobs a third of the total would probably be more than enough to make the following year a record graduate unemployment rate.

If we are to believe the CIPDs forecast, that 725,000 jobs will be lost in the public sector over the next five years then even if a third of those lost are graduate positions then about 240,000 graduates could lose their jobs in the UK over the next four years. That is equivalent to an entire years university graduating cohort.

Ball adds that the regions will face the toughest challenge: The public sector employs a disproportionate number of graduates outside London, around 86%. So while these roles account for only 17%, or about one in six, of the jobs graduates enter in London, theyre a quarter of those that 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 effected 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.

Graduate Prospects reported a 50% year-on-year increase in advertising from recruiters in the first quarter of 2010, demonstrating that companies are taking on more graduates as the economy improves. However, chief executive Mike Hill warns that public sector cuts could put the early signs of recovery into reverse:

2009 was really bad news for us all, but since Christmas the market has been recovering. Graduates tend to come out of recession quicker and are in the best position to take advantage of new opportunities, but the public sector cuts will have a severe effect. Ultimately they could destroy any signs of recovery, putting it into reverse.

Ball concludes: We dont know exactly where the cuts are going to fall, how deep they will be or when they will take place. However, even if I am very wrong indeed, the impact of the proposed cuts could be sufficient to have a profound effect on the labour market for new graduates, and particularly on those outside London. It is possible that the next four years could be the toughest for new graduates ever as a result. These are going to be extremely challenging times for students, and the careers services that support them. We are all going to have to do more much more.


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