There's a lot of speculation about what's going to happen to graduates this summer with the recession ongoing and employment prospects looking gloomy. I hate futurology. It's all speculative, and you hold yourself a hostage to fortune.
So let's sit down, and enjoy a massive dose of crystal ball gazing.
I've done some digging in old HESA data about the last recession, and used it to try to work out what we might see in the graduate employment market in the near future. So, all figures come from old First Destination Survey data, hewn bodily out of green books. We do it old school at HECSU - none of this stuff is accessible through Google.
The latest destination data we have are for graduates from 2006/7 at the start of 2008, when the economy was just entering decline. The run on Northern Rock had taken place and it was 6 weeks from being taken into public ownership, but we were about 6 months from seeing the first quarter of GDP contraction.
At that point, we had about 11,800 EU-domiciled first degree graduates actively looking for work, at a response rate of 78% from a population of 278,930 EU graduates.
We now scale up from that response rate.
We have to make 2 assumptions which are probably not correct but which are not likely to make a very large difference to the final outcome – firstly that the proportion of respondents who were seeking work and the proportional of non-respondents seeking work are the same, and secondly all the EU graduates stayed in the UK. Anyhow, doing that gives us 15,165 job-seeking graduates, six months after graduation in 2007, at a rather low unemployment rate for graduates of 5.4%.
Things were different then.
Now, let's jump back nearly 20 years.
The last UK recession lasted 5 quarters from 1990 to 1992. The first year of downturn saw graduate unemployment 6 months after graduating go from 5.1 per cent to 7 per cent. The last recession saw graduate unemployment peak a year before unemployment in the whole economy did (that peaked in 1993, actually after the recession ended), so we need to look specifically at those figures and not figures for the whole economy.
Considering where we were in 2007, I’d expect unemployment rates for 2008 graduates at the start of this year to be confirmed at about 7.5 per cent when the DLHE figures come out in July – the worst figure since the 90s. That’s approximately 21000 known active graduate jobseekers at the start of 2009.
The subsequent year, unemployment went up to 10.3 per cent – that is the year equating to this one.
With about 285,000 EU graduates, that would come to 29,355 graduates looking for work six months after graduating – at the start of next year, 2010. Bearing in mind that this figure is measured six months after graduation, I think we could well see at least 30,000 first degree graduate job seekers this summer and probably edging closer to 40,000.
This is close to double the number of unemployed graduates we are used to seeing every summer.
That does not start to consider foundation degree, and postgraduate job seekers.
In the last recession, graduate unemployment 6 months after graduating peaked in 1992 at 11.6 per cent. With a first degree population of approximately 290,000, that would give us 33,640 unemployed first degree graduates six months after graduating at the start of 2011.
If the recession follows a similar pattern to the last, then the 2011 cohort could graduate into an employment market as tough as this summer’s (unemployment rate six months after graduation of 10.5 per cent last time), and it may not be until 2013’s cohort that the graduate employment market will get back to ‘normal’.
Now, as advertised, this is all speculation, but built on data and some judicious extrapolation.
Careers staff - it's going to be a busy few years. We all need to get ready and get smart.