One in eight recent UK graduates hit by unemployment

Almost one in eight recent graduates was unemployed in the third quarter of 2020, according to official data showing the toll the pandemic has taken on new entrants to the UK labour market.

The Office for National Statistics said 12 per cent of recent graduates were unemployed in the third quarter of 2020, almost double the average rate for this group over the past three years, before adjustment for seasonal effects. This compared with an unemployment rate of 4.6 per cent for the wider graduate workforce of 14m and 5.1 per cent for the working age population overall.

The figures show the divide that is opening up between people who were already established in jobs before Covid-19 hit — many of whom have been shielded from unemployment by the government’s furlough scheme — and those struggling to begin their careers while hiring remains depressed and large swaths of the economy closed.

The data will reinforce calls for the government to do more to boost hiring rather than relying on the extension of the furlough scheme — announced by the chancellor in last week’s Budget — to limit the rise in unemployment. Existing plans to increase subsidies for hiring apprentices, expand traineeships for disadvantaged young people and create work placements through the Kickstart scheme are unlikely to match the scale of need.

“Much of the current hiring is for more senior roles as companies seek experienced leaders to guide them through the crisis . . . The government must do more to encourage businesses to create entry-level opportunities,” Andrew Hunter, co-founder of the job search engine Adzuna, said after last week’s Budget, adding: “Competition for entry-level roles will become even fiercer when the class of 2021 graduates this summer.”

However, recent graduates are still faring better than young people with lower level qualifications: the overall unemployment rate for 16 to 24-year-olds now stands close to 14 per cent.

This pattern holds for all ages. The ONS said that as well as having a lower unemployment rate, graduates of all ages appeared to have been better able than non-graduates to switch occupations in the first few months of the crisis last spring, although they had become less likely than the wider workforce to switch occupations as the pandemic wore on.

The proportion of graduates who were overqualified for their job had also fallen sharply over the past year, the ONS said — a surprising finding since skills mismatches would usually increase in a recession when workers are forced to take any job available.

The ONS said this could reflect the closure of sectors such as hospitality and recreation, which have a higher proportion of overqualified graduates. More positively, it could also reflect the success of remote working, with graduates better able to find a job that matched their qualifications.