Graduates face toughest job prospects for a generation

With the economic downturn posing a real threat to graduate employment, the government is drawing up a rescue package designed to help this summer's crop of graduates find work or obtain new skills.

According to the latest labour market survey unemployment is currently growing fastest among 18-24-year-olds, who accounted for 40% of the 137,000 rise in unemployment for the three months to last October.  And with all the evidence suggesting that prolonged unemployment ‘permanently damages' young people, the government has decided to take action.

New proposals from the office of universities secretary John Denham specifically targeting this age group include a ‘National Internship Scheme', designed to "give them an opportunity to gain real experience of using their skills at work, and give them the best chance of showing employers what they can do."

Though broadly welcomed in principle, the proposed scheme of government-backed graduate internships at leading firms has been criticised as "light on detail" even by some of the its early backers (who are understood to include Barclays and Microsoft among others).  Pay is also expected to be light - little more than the current student grant level of £2,835, in fact.  A spokesperson for the department confirmed that the scheme was still at a "very early stage," and that initial approaches were still being made to employers.

Whatever the scheme's impact, commentators agree that things are likely get tougher for graduates (and even tougher for young non-graduates).  Royal Holloway's Professor Peter Dolton notes that there is now a much higher proportion of social science and arts graduates, "which is why a third or more of graduates don't get graduate jobs."   He suggests that the effects of recession will hit graduates in non-vocational subjects and from less prestigious universities hardest and warns that, if things were bad for the class of 2008, they'll be even worse for the classes of 2009 and 2010.

Meanwhile Paul Gregg, a professor of economics at Bristol, predicts that not only will the numbers of unemployed graduates rise, but it will also take them longer to connect with the labour market - probably on lower pay than in the past.

Another economics professor - Francis Green of Kent - says students shouldn't abandon the idea of going to university because the prospects for young non-graduates will be even tougher.