While some sections of society – homeowners with mortgages, the employees of state-rescued banks – have endured this economic downturn with relatively little pain, the impact on others has been heavy indeed. Recent university graduates have found themselves firmly in the latter category. New research from the Higher Education Policy Institute shows that unemployment among graduates is up from 11.1 per cent in December 2008 to 14 per cent in December 2009 (passing the previous peak of 13.5 per cent seen in 1983).
None of this comes as a surprise. Britain might technically be out of recession, but the economy is barely expanding. Companies are still not hiring at a normal rate. Graduate vacancies are forecast to fall by 7 per cent this year, according to a survey by the Association of Graduate Recruiters. And thanks to the backlog of graduates who were not absorbed by the employment market in 2008 and 2009, there are, on average, now 69 graduates competing for each job.
And the crisis is likely to get worse. Some 39,000 graduates join the public sector in a normal year. But this recruitment will inevitably fall as the Government cuts public spending. The Higher Education Careers Service estimates that the graduate unemployment rate could eventually shoot past 20 per cent.
The economic and social consequences of this trend should not be underestimated. We are in danger here of creating a wasted and jaded generation. What is especially depressing is that new graduates followed the advice they had been given by their elders and the political classes. They studied and acquired skills. But it seems the reward for many is to bang their head against the closed door of the job market.
And this generation is in a worse situation than graduates in previous economic downturns because they are saddled with hefty student debts. They were encouraged to take on these loans as a smart investment in their future. They were confidently informed that graduates earn considerably more, on average, than non-graduates over a lifetime. Such arguments today would surely be met with a bitter laugh from many jobless university leavers.
This is part of a bigger picture of the asymmetric impact of this recession across the generations. It is not just graduates but school-leavers who are suffering disproportionately in this economic slump. Of the 2.5 million unemployed in Britain, almost 40 per cent are aged 16 to 25. Numerous studies have shown the long-term psychological damage a prolonged spell of unemployment in early life can do. This is the bitter harvest that we are going to find ourselves reaping.
There are no easy political solutions to graduate and youth unemployment. One ameliorative measure in recent years has been to encourage young people to remain in education until the job market improves. But the higher education budget is being cut, making this impossible. The universities minister, David Willetts, has asked colleges to give students greater information about likely job prospects before they embark on a course. But this is no use to a student who has just graduated.
Mr Willetts has also remarked that "the long-term prospects for graduates in the labour market remain good". This strikes the wrong tone. There is a time for ministers to accentuate the positive. But to do so with graduate employment levels so high lacks credibility. The Government does not have a special lever which it can pull to ease the youth unemployment crisis. But it must, at least, face up to the seriousness of the problem. And ministers must acknowledge too that it is the young who stand to suffer most if their risky plan to return Britain to growth through rapid fiscal tightening fails.