The lost generation: Out of work, out of luck - graduates finding it tough

Life could get very hard for this generation of young adults, find Susie Mesure and Andy McCorkell

They have been dubbed the lost generation. Graduates in Britain are facing the worst prospects for decades, with jobs, homes and even a family little more than an impossible dream for the country's most highly educated twentysomethings.

Unemployed, broke and disillusioned: this is the unflattering snapshot of youth today, according to an Independent on Sunday special report into what life is like for many of the 350,000-plus graduates who leave university every year. With the number of students soaring annually, competition for jobs is intensifying. More than twice as many graduates now chase every available job compared with the early 1980s, and the prognosis is that it'll get worse. Sally Hunt, the University and College Union general secretary, said: "Graduates are facing an increasingly competitive job market and leaving university with record levels of debt."

Employers are cutting the number of entry-level jobs on offer, forcing those desperate to gain work experience to work for free. Unpaid internships can now last for more than 12 months, an analysis of company job adverts has shown. Culprits include Iain Duncan Smith's Centre for Social Justice, which is offering an 11-month unpaid internship, the British Youth Council, and the PR agency, Kealyfox.

Ben Lyons, from Intern Aware, which campaigns for fair access to work placements, said: "Employers are turning what were entry-level positions into internships. It's becoming very common for people to do year-long placements."

Even when graduates find work, many are forced to settle for low-paid jobs, prompting one in six to admit they would have reconsidered going to university if they had known how difficult life would be once they graduated, a recent graduate recruitment study revealed. A separate report by the Institute for Employment Studies, which interviewed more than 3,500 arts graduates, found even those in work had to hold down different jobs at the same time, as there were no full-time roles, and even then nearly half of all those in so-called "portfolio careers" earned under £15,000.

Aaron Porter, president of the National Union of Students, warned that the current crop of students risked becoming a "lost generation". He added: "The graduate experience is certainly the toughest it's ever been. And it's not just a few difficult years ahead; it looks like a difficult life for this generation. They are integral to our country's recovery and if we're not careful, they could be lost. It would be easy for some of our greatest young talent to end up on the scrapheap."

The bleak outlook comes as Britain's higher education system faces a shake-up. David Willetts, the universities minister, has given a clear indication that a report due this autumn will offer a dispassionate look at its strengths and weakness. In a recent speech, he asked: "Why should they [students] pay greater contributions when the current crop of students is telling us they're often not receiving enough direct academic feedback, and they're not receiving sufficient preparation to enter the job market?

"It's not just that students don't want to pay higher fees: the Treasury can't afford them. So the arrangements we have now are clearly unable to respond to the current economic climate," he added.

Shiv Malik, co-author of a forthcoming book Jilted Generation with Ed Howker, said: "We are effectively paying the price for the older generation taking all the wealth and not really thinking about the future. People end up postponing adulthood: getting married later, buying houses later, and not being able to have families until they are much older."

He blamed the "short-termism" of Britain's politicians and businesses, adding: "Both public and private investment in Britain has been too low for too long, with obvious consequences in a recession. And cutbacks mean no new hires. We can only hope things will improve, but with economists predicting a 'double-dip', the prospects for Britain's young people may yet get much worse."

Additional reporting by Lyndsey Fineran and James Burton