Hamish McRae: Can our graduates compete globally?

So there are, as the headline on our front page yesterday highlighted, 69 graduates for every job vacancy. Yet today KPMG's Report on Jobs records another strong rise in new permanent jobs and a still solid growth in temporary ones. Meanwhile, employer organisations are reporting that they are held back by skill shortages. What's up?

Lots of things – but mostly that we are not preparing young people adequately for the world of work. The transition from education to full-time work is perhaps the harshest shift we make in our lives and one that I fear is becoming ever harder. There is, of course, a huge element of luck involved in hitting the job market for the first time, and some generations are much luckier than others. If you get your first job in the early part of a boom there will be a good chance that even if you lose a job you will be well-placed to get another. You are, after all, likely to be established enough with the hard and soft skills that the market demands, as well as having the contacts to exploit these skills. But hit it in a recession and, through no fault of your own, you are in trouble.

Yet while this is not a good year to be seeking employment, it is not a dreadful one. There is great uncertainty out there, and public sector recruitment in particular will be restrained for some time, but, according to KPMG, the recruitment agencies report that they are placing more people in jobs as each month passes. The monthly rise is not quite as strong now as it was earlier in the year, but people responding to the survey are still reporting higher confidence among employers and stronger demand for staff.

But they want qualified staff, giving rise to the catch-22 problem so many new graduates face: the demand is for people with experience, so how do you get that experience if you can't get a job in the first place? That is an old problem which has inevitably received huge attention, though attempts to solve it have been sporadic and disorganised. Things are happening, with the development of the intern system, with job placements and, more formally, with government-sponsored training programmes. Whatever you think about the effectiveness of these efforts, we are at least aware there is a problem.

But this has been exacerbated by another, newer concern. The gap between what would-be employers expect and what schools and universities feel it is their responsibility to provide has been growing. Put crudely, the workplace has become more demanding and competitive, while much of the education system has become less so.

There are at least three reasons why the job market has become more competitive. First, it has gone global. Young Britons are not just competing against each other; they are competing against young people from all over the world.

This is happening explicitly here, for there are some 215 million jobs in the European Union. If a French investment banker or a Polish plumber can do the job better than his or her British counterpart, then they will get the job. But it is also happening implicitly. A British software company is competing against one in Bangalore; a British manufacturer against one in Shanghai. And so, at one remove, are the employees of that company. The job goes offshore, even if you don't see it happening.

There is a second reason why the job market is more competitive. It is that employers need a more complex mix of skills. I was talking this weekend with someone who runs a British-based bank. They have more Britons working abroad than they do in the UK, and most young Britons joining them want to go overseas. That applies now to many nominally UK-based companies. But to go out to, say, Singapore, at the drop of a hat requires a breadth of human skills – particularly soft skills – that not many people have. You need people who can do the job but you also need people who can work in a different society and cope with professional and personal pressures.

The third reason why the job market has become more demanding is that the risks have risen. It is not just that it has become harder to get rid of people, though there may be something of that. It is more that the risk to a company or partnership's reputation from having a duff employee is huge. At its most extreme, one bad foreign exchange trader can bust a bank. More prosaically, a badly handled legal case or weak company audit can severely weaken a whole organisation's business. You cannot take the risk of employing staff who might be second-rate, so you bid up the price for the best.

Into this ever more competitive job market come people who have no idea of what is about to hit them. I don't want to go into the whole business of the dumbing-down of A-levels and all that, nor even the grade-inflation in universities, except to observe that it is a rough old world if people with 2:2s can't get jobs. Nor should we foster a culture where young people are constantly cramming to pass exams, to the exclusion of everything else. But we are surely being cruel to young people if we pretend that they don't need to do well at school or university – that excellence does not matter.

The good news, from a British perspective, is that our best young people are wonderful, and are being well-prepared for the world. The bad news is that we are not doing well further down the scale, and what is worse, we make a string of excuses for that. As they said in all my school reports: could try harder.

h.mcrae@independent.co.uk

For further reading

'Higher Education: On Life, Landing a Job, and Everything Else They Didn't Teach You in College' by Kenneth Jedding (Rodale Press, 2010)