Is a degree worth anything in the jobs market these days? Richard Pearson outlines the employment prospects for students The economy is booming, but many of this year's 200,000 graduate job seekers will struggle to find what they regard as a good job.
Competition, technology and rising consumer power are changing the way we work and the skills and jobs needed. While the dot-com economy booms for now, it is still not an obvious job-creation machine. Many jobs are being lost in their old-economy equivalents, retailing and financial services.
Despite the strength of the economy, graduate vacancies among major recruiters fell by more than 25 per cent last year, partly because of earlier recessionary fears, partly because of struggles in retailing and areas of manufacturing.
Parts of the IT industry went on hold with the approaching millennium. Vacancy levels are forecast to recover this year and the number of jobs for managers and professionals continues to grow, but the growth will be insufficient for the number of graduate job seekers.
A degree now costs Pounds 6,000 or more a year, and employment prospects are a key factor influencing a student's choice of course.
Graduates enter many types of jobs and career streams. Competition for fast-track management training schemes and City jobs is intense.
Despite the small number of jobs, many employers complain they cannot get the good graduates they want, and a few of them are offering starting salaries in excess of Pounds 25,000 a year.
In areas such as accountancy, engineering and teaching, the numbers sought are larger and prospects better. Starting salaries are nearer the average Pounds 17,500 offered by the major recruiters, although some jobs in law and accountancy are being offered at Pounds 10,000-Pounds 12,000 a year.
These groups of traditional graduate jobs provide opportunities for only half of those entering employment. As many as one in five enters the new graduate jobs in administrative, junior management and technician roles. Formerly filled by non-graduates, these usually offer limited initial career prospects. Graduates are often recruited alongside non-graduates and internal candidates, with the number of vacancies fluctuating with the economic cycle and appearing throughout the year and in many parts of an organisation.
So where do the others go? Many are taking two or more years to settle into stable employment. One in three initially enters temporary or fixed-term jobs, and 8 per cent are unemployed six months after graduation. Self-employment is a growth area, where the rewards may be uncertain but lifestyle can be important. This is a traditional route for arts and design graduates and now for entrepreneurial IT graduates.
Up to one in three graduates is competing with non-graduates in the wider labour market, often starting on salaries nearer Pounds 10,000. In some cases their graduate skills enable them to add value to the job, but in others a degree is of little or no advantage.
Only a small number of jobs require a specific degree subject. Nevertheless, the ease of transition into employment varies markedly between those from different disciplines. Humanities, languages and biological sciences graduates have the highest initial unemployment, the lowest proportions entering graduate jobs and lower initial earnings. Computer scientists, engineers, teachers and medics have the best employment profiles.
Growing numbers study near home, and their job choices depend on their mobility. But most graduates find satisfactory employment within two or three years.
So is a degree worth it? Yes, in that it brings lower unemployment and higher earnings than for non-graduates, but it no longer guarantees a good job.
It is important that graduates have realistic expectations in this new market and develop their employability. They need good assets, including knowledge, skills and the right personal qualities. They also need to develop their career management skills, knowing their strengths and weaknesses and being adaptable in their job search.
Finally, they need good presentation skills to sell themselves, their experience and qualifications through CVs, tests and interviews. They also need accessible up-to-date careers information.
In the coming years many more graduates will have to seek jobs in the wider recruitment market. The graduate labour market will not typify what is on offer for all, being focused on a small number of recruiters with structured schemes for a small minority of graduates. Competition for these jobs will remain intense. Many graduates will need to lower their horizons in terms of the jobs they seek and can enter. To talk of a typical graduate, graduate job, graduate recruitment scheme, graduate starting salary or graduate career will be misleading. Richard Pearson is director of the Institute for Employment Studies.
The IES Annual Graduate Review 2000: a Diverse and Fragmented Market is published today.