The retro budget and what it must mean for graduate jobs

By Societarian

One commentator during the great depression wrote:

An ‘unemployed’ existence is a worse negation of life than death. Because to live means to have something definite to do – a mission to fulfil.

This sentiment came to mind when I read last month about the practice being pursued by some law firms to retain their graduate employees by offering them the option of taking a year out to pursue some voluntary work or go back to university to gain higher qualifications. In order to not loose out on the graduates whom they have recruited they are offering them the option of a retainer of between 10 and 12K in order to go back to university to take on further qualifications or to take a year out to pursue some sort of voluntary work. These companies have been subsequently inundated with offers by charities desperately seeking these graduates. This is a great example of how we should be thinking during these challenging times.

Graduate unemployment is a serious concern waiting on the horizon for the government. According to a recent survey by the Association of Graduate Recruiters (AGR), Graduate unemployment is set to rise this year by 16 percent. Currently there is a 5.4 percent decrease in graduate vacancies and the AGR survey predicts that only half of employers will recruit the same numbers of graduates in 2009. So far the government has pressured companies to provide three month internships but could they do more and follow the example that the private sector has thought up?

One idea would be to offer financial support to those companies who wish to employ graduates but are faced with reducing their graduate intake due to the current financial climate. Some graduates will choose rather to compete within the job market but what this policy would offer is a safety net to protect those who wish to work for their company/organization in the long-term but are prepared to either take time out in the short term or work at a reduced pay level for the company, for a charity or return to education. The latter is an option that many are already turning to as Postgraduate applications are up this year, but this will not be to everyone’s liking, or finances. What this scheme offers is both the ability for students and those faced with unemployment to be able to stay within employment or attached to it by some means. Many graduates I speak to would prefer to remain in the workplace with the incentive of a job at the end rather than interning without out pay and no guarantee of employment at the end of it for a company/organization. What’s more is that most graduate employers would rather retain their intake of graduate employees so that they do not miss out on the fresh talent available to their company.

The long-term benefits of such a policy are apparent. For starters companies and organizations would be best placed with a well skilled work force ready for the upturn, society would avoid the scars of long-term unemployment, and those who otherwise would fear being consigned to fight it out in an already over competitive market and would have the choice to either retrain or volunteer their services. Instead of being made to do the latter in unpaid internships which some have pointed out are not applicable to everyone within this country.

In the wider economy this is a preventative measure towards countering unemployment, especially long-term unemployment which costs the most in public expenditure further down the line. Moreover, it also helps prevent a more drastic fall in the level of effective demand, or the level of purchases of goods and services, less people on unemployment benefit means that there is a lesser reduction in the size of the marginal propensity to consume. The latter is necessary if we want this recession to be a shorter rather than longer one. This is classic Keynesian economics by the socialization of investment, whereby the government is encouraging investment in both the public or private sectors who will see a reduction in their wages but not in their staff.

Keynes believed it was better to employ people do something than to have them not doing anything at all, even if it was the Treasury filling old bottles with bank notes and dumping them in disused mine shafts to create work. Basically, it makes more sense to pay in the short term for people to remain in work than to pay more in the long-term socially as well as economically for them to go into unemployment. In the words of John Maynard Keynes, “Maximum employment is the stated aim of government”, here is an idea that would keep it that way.