Government steps in to tackle terrible job prospects

UK Government Ministers are engaged in urgent talks with major white-collar employers in order to help bolster the employment prospects of the 350,000 students who will graduate from British universities this summer.

John Denham, the Skills Secretary, announced in an interview with the Telegraph on Saturday that the government is to intervene in an attempt to improve graduates’ prospects in the bleakest job hunt for a generation.

Under plans being drawn up by the Department of Innovation, Universities and Skills (DIUS), large businesses alongside public sector institutions, charities and voluntary groups are to be encouraged to offer short-term paid internships to new graduates. What is not clear yet is whether public money will be used to fund these positions.

It is understood that Microsoft and Barclays have already signed up to the provisionally-titled National Internship Scheme.

Ministers hope that these placements will lead to increased employment levels among graduates or, at the very least, increase the employability of those who do take up the scheme.

Mr Denham said: “At the end, they will be more employable, and some of them will get jobs. Employers won’t want to let good people go.”

In an interview on BBC's Newsnight, Shadow skills secretary David Willets argued that the proposal did not go far enough:

"A small number of businesses taking on graduate interns is welcome but this does not match the scale of the crisis facing young people trying to find jobs."

The minister added, however, that the size and scope of the scheme had yet to be announced.

There is a growing consensus among governing bodies, economists and the media that the job market will be as harsh this summer as it has been for decades – The Guardian has already labeled those in the class of 2009 “Generation Crunch.”

The situation for those competing in the graduate jobs market is exacerbated by the major blow dealt to the financial services sector. The collapse of the sub-prime mortgage market and the subsequent international credit crisis has added to toughened competition caused by year-on-year increases in the number of students attending universities.

According to the Telegraph, universities are reporting that many firms, in particular investment banks, are cancelling their recruitment drives across university campuses, while others are limiting themselves solely to the so-called elite institutions.

The government fears that many of the 350,000 graduates will add to the already rapidly growing levels of unemployment in the UK. The Bank of England economist David Blanchflower has predicted that of the 3 million people expected to be out of work by the end of the year, a third will be between 18 and 25. Of the 137,000 people who lost jobs between August and October last year, 55,000 were 18-24 year olds.

Blanchflower warned in The Guardian that “a spell of unemployment when you're young has a very different effect than when you're older.” The effect, he says, is more akin to a “permanent scar” than a “temporary blemish” that can have a long-term damaging effect on the young.

Studies show that long-term unemployment among young people can result in them finding it difficult to reconnect with stable career jobs. "It's important to get a foothold in the labour market," says Blanchflower. "If you don't get in, life becomes very hard."