Class of 2009 victims of 17-year high in graduate unemployment

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Unemployment among Britain's graduates is at its highest level for 17 years, according to figures released today. They show that more than one in 12 (just over 21,000 or 8.9 per cent) of those who left university in the summer of 2009 were still unemployed six months later. In addition, more than one in three of those who found work – 48,000 – are in stopgap rather than graduate jobs.

In all, 70,000 of the 224,495 graduates surveyed were either on the dole, or pulling pints or waiting tables.

The figures emerged as ministers are on the verge of announcing they will raise the £3,290-a-year cap on student tuition fees to as much as £9,000 a year. An announcement is likely within the next fortnight.

Worryingly, the rise in unemployment among graduates in the past two years has been cushioned only because recruitment to public-sector jobs remained steady. But with 490,000 jobs expected to disappear in the sector following the Comprehensive Spending Review, this safety blanket is likely to start fraying.

The new figures show more young people are also opting to stay in full-time education after graduating rather than looking for a job. This accounts for a further 15.4 per cent of graduates – up 1.3 percentage points from the previous year.

Today's figures, from the Higher Education Careers Service Unit, show that graduate unemployment has risen by one percentage point to 8.9 per cent this year – leaving the class of 2009 the worst off since 1993 in the search for jobs.

Aaron Porter, the president of the National Union of Students, said: "These latest figures show that students are graduating from university into the bleakest employment market for decades.

"This is yet further proof that the radical proposals in Lord Browne's review [of student finance] to remove government funding for the majority of subjects and simply transfer this cost to students is unfair and illogical."

The figures coincide with one of the country's biggest graduate recruiters reporting that applications to its graduate training programme for next year have doubled. Ernst and Young, the professional services firm, says 4,500 graduates are chasing 700 places.

Stephen Isherwood, head of graduate recruitment at the firm, said: "Over the last two months we've seen interest in our graduate recruitment programmes rocket."

However, today's unemployment figures are still markedly lower than they were in the wake of the recession of the early 1990s, when the figure reached 11.6 per cent

Graduate employment experts point out that the rise appears to be peaking. Unemployment the previous year rose by 2.4 percentage points to 7.9 per cent. However, they acknowledge that the unknown factor is the impact of public spending cuts.

Charlie Bell, the deputy research director at HECSU, said: "Prospects for graduates in the short term look brighter, with unemployment likely to have peaked, and next year we expect to see a decline. However, with the public-sector job cuts, the future in the medium-term looks less clear."

However, Sally Hunt, general secretary of the University and College Union, warned: "We fear it is perhaps a little optimistic to assume that graduate unemployment has peaked.

"We believe there are all sorts of benefits from a university education. However, the Government cannot make a case for increased contributions from graduates, students or their parents based on specious graduate pay premiums."

Ministers have said the average graduate earns £100,000 more over their career than those who have not been to university. However, bleak employment prospects threaten to torpedo their argument that, because of this, students would be prepared to pay higher tuition fees.

Ministers are now said to be ready to announce raising the cap to £8,000 or £9,000 a year. An earlier plan to limit the rise to £7,000 is being rejected because universities say that would barely cover the cuts in the teaching budget announced in the Comprehensive Spending Review.

The Universities minister David Willetts favours a two-tier approach to tuition fees – fixing a minimum fee of around £6,000 a year and a maximum approaching £9,000. However, those charging the higher fee may have to face a public benefit test similar to that imposed on charities – and show they were still attracting students from disadvantaged backgrounds.

A final decision on fees has yet to be made. Ministers will, though, put a package before Parliament for approval by Christmas. Mr Willetts has already said they have rejected Lord Browne's most radical option – that of lifting the £3,290 a year cap on fees altogether and letting universities charge what they like.

Today's graduate employment figures show the biggest drop in recruitment was among IT graduates, with 16.3 per cent unemployed. In addition, media studies graduates' unemployment rate increased by 2.6 percentage points to 14.6 per cent.

The biggest boost to recruitment was in retail services – up 3.8 percentage points to 14.4 per cent of the graduate employment market.

Also on the rise were recruitment to social and healthcare jobs – up 0.5 percentage points to 5.2 per cent and 0.2 points to 14.8 per cent respectively. However, they are both public-sector jobs. Graduates salaries, though, have continued to rise – albeit modestly.

This year's graduates can expect a salary of £19,695 on average – £18 more than those in the previous year.

Chris Brady: Was getting a degree the right choice?

I've been unemployed since I finished my MA six weeks ago, which I did partly because the job situation wasn't great, but also because I thought it would help me when it comes to getting jobs.

I've been applying for things to tide me over, but I was told I didn't have the qualifications and experience even for minimum-wage office work. I've got an MA in international relations. I'm not stupid. I can think. It's frustrating because I wanted to join the police but had to write that off because the cuts are huge. No police forces are recruiting.

I feel like I'm going backwards. I've had to move back with my dad. I'm on the dole, and it's frustrating because I've invested so much time and money in my education to avoid relying on the state.

It makes you wonder if getting a degree was the correct decision when you end up in the same place as people who haven't made the same investments. I'm still grateful, however, to have something to fall back on.

The situation's not surprising and it kind of makes you feel better that there are other people in the same position. The Government is cutting 500,000 public sector jobs and it's cutting benefits. They don't go hand in hand. I've got a positive outlook, I'm sure I can get something off the back of my ability, but these last six weeks have been really frustrating."

Claire Salmon: I was lucky – I got a job after five months

I was unemployed for five months after I graduated this year and have only just got a job with IBM. It was really tough because I did a placement there as part of my marketing degree and I was fast-tracked through their graduate assessment centre, but there was no guarantee of a job.

I missed out on a lot of graduate jobs because I was so focused on IBM. I had a couple of interviews that didn't go anywhere, and there was a perfect job that I didn't even get an interview for, even though I filled every criteria. If IBM hadn't come through I would still be jobless. It was frustrating and quite scary because I came out of uni and moved back home faced with no money. I didn't know what to do – whether to get a local job in a bar or something. I didn't know if I'd get a job tomorrow or what. If you think that you're perfect for a job and keep getting knocked back after you worked so hard (I got a first), it's almost as if your degree counts for nothing.

You don't realise how bad it is until you graduate. You think you'll be fine. You think, "It's tough, but if you want it that badly, you'll get it" – but it is tough. I think the Government should do something if they want to start rebuilding the country. Graduates are the ones to fill the roles to kick-start the economy, and they are making them unemployed. I'm one of the lucky ones – about 80 per cent of my friends are still unemployed and they're just floating around.

You've got to stay positive – something will come up; but I can see it's hard to keep that frame of mind.

Sarah Carlile: Public-sector cuts will just make it harder

I've been unemployed since I graduated with a degree in human resource management in June. I'm looking for something in the field, and have done a lot of temping but I can't find any permanent work. I'm really frustrated and hold out hope that I might find the one temping job that will turn into something permanent. All of the jobs I've been through have been temporary, and I've been through four. I've been to quite a few interviews and have been turned down in all of them. That's a bit deflating. There's quite a bit of temping work around but I've not been able to start my career properly. I'm not surprised at the news, just because of the country's situation. There are lots of graduates around compared with the number of jobs.

Maybe the Government could provide funding for companies, perhaps to start a scheme to take on graduates. I think the public sector job cuts will make things harder because there will be more competition in the private sector. I think I'll be in this situation for a while but if I get a job, it will be the start of my career. If I haven't got a job by June, I'll probably go travelling. I can temp until then and pay for it. I'd love to go travelling, but if I find the right job I'll stay.

I'm the kind of person who thinks everything happens for a reason, so I'm positive. There are jobs out there – I haven't found one yet."