19th January 2018

Has the Government forgotten about graduates?

Youth unemployment has finally reached the 1 million mark. We are awaiting the Government’s imminent NEET strategy to tell us how it plans to tackle this escalating problem. One thing I don’t expect to see in that strategy however is much more in the way of support for young graduates. Graduates no longer seem to be the priority they once were.

When the Future Jobs Fund (which guaranteed all young people work for six months) closed, the Minister for Employment emphasised the importance of Apprenticeships in tackling youth unemployment. But Apprenticeships are not creating jobs for young people. Research from IPPR showed that out of the 126,000 new apprenticeships created last year, just 37,000 went to 16-24 year olds. In total, 40% of all apprenticeships went to over-25s. Because government funding is not ring-fenced, employers can use the money however they want – including training existing staff rather than hiring new workers.

Even if there were thousands of new Apprenticeships available for the young unemployed, it would not benefit young graduates. The highest achievable level is a Higher Apprenticeship, which is equivalent to NVQ Level 4 or Foundation degree. We’ve seen more and more public money going to make an Apprenticeship a credible alternative to a degree but what about those young people who already hold a degree?

The Government’s Work Experience programme has been designed to address the common problem that without any work experience, young people find it hard to get a job. We have yet to see any figures on take up of this programme and I am keen to see which young people are doing these placements. Work experience is typically shorter in duration (up to 12 weeks) than traditional graduate internship programmes and evaluation of the previous government’s work experience programme shows that it largely attracted young people with low or no qualifications. Under the previous government, there were other work experience options for more highly skilled candidates, such as the Future Jobs Fund and graduate internships, but there is currently nothing similar for graduates.

The Graduate Talent Pool for graduate internships is still live on the BIS but the site is unregulated many of the placements offered are unpaid. Failing to pay interns for work of over 12 weeks in length breaches the minimum wage laws. As reported in the Guardian, this is a fact of which the Government is well aware having been advised by its own lawyers that most interns are workers and should be paid. In effect, rather than helping young graduates the Government is supporting companies to exploit their unpaid labour.

We are also seeing evidence that cuts in public spending are directly impacting on graduates’ employment chances. Whilst there was no major decline in the numbers of 2009/10 graduates working as nurses, doctors, and primary and secondary school teachers, the clerical and secretarial posts in local government and the public administration and defence sector have been affected. With more redundancies still expected in the public sector it seems likely that the spending cuts will make life harder still for graduates, particularly those located outside of London and the South East.

The Government must of course prioritise its spending where it is most needed in times of austerity. More highly-skilled young people are faring better with higher employment rates than the lower qualified. But graduate unemployment makes us all worse off. As taxpayers we lose our investment in education and miss out on higher rate tax and national insurance contributions, whilst spending more on social security and remedial services. As parents we are supporting adult children for longer, which reduces saving and spending at a household level. All this is a threat to the growth and development potential of the economy.

Most graduates are also skilled, motivated and capable of offering new ideas or insights which are the drivers of economic development. Foregoing this potential is an economic waste. If growing the economy were a football match, graduate unemployment would be like putting young players through a gold standard training programme, only to never give them a chance to play in the first team.

In its forthcoming NEET strategy, the Government must be seen to respond to the summer riots with more support for the most disadvantaged, probably funded upfront by the private sector. But I hope that we also see some consideration of the needs of graduates from the Government. Not only because morally we should help all young people who are struggling but also because economically we can’t really afford not to.

Rowan Foster, Research Manager