With youth unemployment at its highest since the 1980s, new data published by the Office for National Statistics (ONS) shows that the graduate unemployment level is equal to that facing those who leave school after their GCSEs.
In 2011, 25% of 21-year-olds who had completed university degrees were unable to find a job, compared with 26% of 16-year-olds with no qualifications other than GCSEs. The unemployment rate for 18-year-olds with A-levels was lower, at 20%.
Older graduates had less trouble finding work; just 5% of 24-year-olds with degrees were unemployed in 2011. 7% of 24-year-olds with only A-levels were unemployed, rising to 13% for those who left school after their GCSEs.
Charlie Ball is deputy director of research at the Higher Education Careers Services Unit. He said that, although the ONS figures are accurate, the picture they paint is misleading because the number of people leaving education after their A-levels was lower than the number of people graduated from university last year.
Ball explained that “although the number of young people out of work is historically high, the graduate unemployment rate in this recession has not reached the levels it did in the 1980s or 1990s.”
Indeed outlook for graduates may be better than the headline figures suggest; investment firm Skandia has undertaken research which shows that a graduate entering the job market today will earn an average of £1.6 million over 45 years of work, compared with £1 million for an 18-year-old working for 48 years. An individual with GCSEs only can expect to earn £783,964 over a 49.5-year career.
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The latest Markit Household Finance Index survey shows that consumers are more optimistic about the economy now than at any time since April 2010. The index also shows that household finances are at their highest level since December 2010.
These trends have been attributed to falling inflation and a greater willingness amongst employers to increase wages, but consumer confidence will need to continue improving in order to drive any significant economic recovery.
The Bank of England (BoE) has already predicted that consumer spending will grow in 2012, and, along with increased mortgage lending and rising house prices, the Markit survey adds weight to the BoE’s assessment.
Markit economist Tim Moore said: “These positive developments meant that debt levels stabilised and households’ appetite for major purchases moved back to levels not seen since the VAT (sales tax) rise in January 2011,” but he also warned that “wider job market uncertainty is constraining spending even among those seeing their own situation stabilise.”
Meanwhile, a survey carried out by the Charted Institute of Personnel and Development (CIPD) showed that, in the last quarter, employers were more ready to increase employees’ pay than they have been since April 2009. Nevertheless, many continue to approach the matter with caution.
CIPD rewards advisor Charles Cotton said: “While the predicted increases in pay settlements reflects a cautious optimism among members in the private sector that the worst may now be over, uncertainty about how fast the economy will improve is acting to moderate pay forecasts.”
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The latest figures from the Office for National Statistics (ONS) show that in the 3 months to December 2011, unemployment increased by 48,000 to 2.67 million (a rate of 8.4%). Although this isn’t exactly an improvement – this is the highest unemployment rate for 16 years – it was the smallest leap in nearly a year, which suggests the outlook may not be as bad as some have predicted.
Around 60% of the recent increase in unemployment was accounted for by women, reflecting the impact of public sector cuts, whilst the number of part-time workers who were seeking full-time employment reached the highest level on record, having risen by 70,000 in the last quarter.
Youth unemployment also reached record levels, with over 22% of 16- to 24-year-olds out of work (including full-time students who are looking for a job).
There was also an increase in the number of people claiming Jobseeker’s Allowance – this figure rose by 6,900 in January, taking the total to 1.6 million.
There are perhaps some grounds for optimism, however; the number of job vacancies increased in the 3 months to January 2012, with the total standing at 476,000, but the “weakness in the wider economy” means unemployment will rise “much further,” according to economist Vicky Redwood.
Work and pensions minister Lord Freud referred to “signs of stability” but added “we are by no means out of the woods yet,” whilst shadow chancellor Ed Balls said the government was complacent and compared the situation to the 1980s.
Brendan Barber, general secretary at the TUC, said: “With one in three jobseekers looking for work for over a year, and around six unemployed people for every job, the government’s mantra that there are plenty of jobs out there just doesn’t ring true.”
The deadline for filing self-assessment tax returns online is 31st January (extended until midnight on 2nd February this year due to strike action by the public sector union PCS).
If you have any self-employed income, or you have a high income from savings, and you didn’t submit your tax return for the financial year ending in April 2011 in time, you will be fined £100 by HMRC unless you have a reasonable excuse such as bereavement or theft of documents.
Figures show that 1.1 million taxpayers are facing the £100 penalty for missing the deadline. If they don’t pay after 3 months, the fine will increase by £10 a day up to a maximum of £1,600.
This is actually the lowest number of late tax returns since online filing was introduced introduced (last year it was 1.4 million, and the year before it was 1.6 million).
A record 9.45 million forms were submitted on time. Roughly 1.8 million were filed by post by 31st October, and another 7.65 million were filed online before the deadline.
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The Association of Graduate Recruiters (AGR) has surveyed over 200 blue chip companies, and found that the average starting salary for graduates is likely to rise to £26,000 this year – a 4% increase on 2011. However, a 1.2% drop in the number of graduate vacancies is also predicted.
The salary increase represents the biggest rise since pre-recession levels – the average graduate starting salary has stayed fixed at £25,000 since 2009.
In 2010-11, investment banks offered the highest starting salaries, averaging £38,250. This year, however, a 41.7% reduction in the number of graduate vacancies is expected in this sector.
As data was only gathered from blue chip companies – the likes of Accenture, M&S and UBS – the AGR report isn’t an accurate reflection of the overall situation for graduates. Data collected by the Higher Education Careers Services Unit (HECSU) indicates that full-time salaries for new graduates are between £17,720 and £23,335.
Some employers are set to buck the trend of falling recruitment rates; companies in the IT and telecommunications sectors anticipate the biggest increase in the number of graduate vacancies this year, with the figure expected to increase by 32.5%. Similar increases are also predicted in the construction sector, the public sector, and amongst consultancy firms.
Although cost-cutting and restructuring is resulting in redundancies in many areas, industry leaders maintain that graduates are still regarded as an important source of fresh talent.
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The Resolution Foundation, an independent think tank committed to improving the lives of people on low and modest incomes, has published the findings of a new study entitled The Essential Guide to Squeezed Britain.
The study analyses the situation of 10 million adults, not heavily reliant on means-tested benefits, and their 5.2 million children.
The report says that millions of families aren’t likely to see their incomes return to pre-recession levels until 2020 at the earliest, whilst the wealthy will see their earnings continue to rise (by between 4% and 10% by 2020).
Researchers used the Office for Budget Responsibility’s latest forecasts to show that if sluggish growth continues for another 8 years, the average annual disposable income of these low-to-middle earning families would be £20,200 in 2020 (a £1,700 drop from 2007).
In order for the ‘squeezed middle’ to see their incomes return to pre-recession levels by 2020, the economy would need to grow at rates not seen for nearly a decade.
Matthew Whittaker, author of the report, described a “growing inequality of earnings” and warned “it may not be just those on low and middle incomes finding themselves left behind in the next decade, but rather the majority of society.”
Liam Byrne, Labour’s welfare spokesman, will debate the implications of the report with Lib Dem MP David Laws on Monday at the Resolution Foundation offices in London.
According to a new report published by the Chartered Institute of Personnel and Development (CIPD), the answer is yes – unemployment will rise to 2.85 million next year, with the number of people in work falling by 120,000.
The CIPD predicts the number of people out of work will hit its highest level since 1994, and the figure will continue rising until it peaks at 2.9 million in the first half of 2013.
If the forecasts for next year are accurate, this will be the first time unemployment has reached 2.85 million and still been increasing since 1991.
It is expected that unemployment will remain above 2.5 million until 2015 as a result of feeble economic growth.
The report doesn’t forecast any change to the figures for long-term and youth unemployment, and cited Government efforts to get these 2 groups into work.
The report also predicted that productivity would continue to stutter and that caps on pay would remain ‘severe’.
Dr John Philpott, chief economic adviser at the CIPD, said
“The combination of worsening job shortages for people without work, mounting job insecurity and a further fall in real earnings for those in work may test the resilience and resolve of the UK workforce far more than it did in the recession of 2008-9.”
He even speculated that this could “foster a tetchy passive-aggressive mood in many workplaces that could prove very hard to manage.”
Shadow work and pensions minister Ian Austin said “it is crystal clear that this government is failing to get people off benefits and into work.”
However, a spokeswoman for the DWP said “the increase in those claiming Jobseeker’s Allowance has slowed and our welfare reforms are having a positive impact with overall benefit claimant numbers falling by around 40,000 in the last 18 months.”
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At the end of October, there were 2.64 million people eligible to work but without a job, an increase of 128,000 on the previous quarter and a level not reached since 1994. The rate of unemployment is 8.3% – the highest since 1996.
Women and young people have been hit hardest. There are now 1.03 million people aged 16-24 who are unemployed – an increase of 54,000 and the highest level since youth employment statistics were first recorded in 1992. The number of women out of work rose by 45,000 to 1.1 million – the highest level for 23 years.
Public sector cuts seem to be the overriding factor in the recent increase in unemployment, and fierce criticism has been levelled at the Government. Labour leader Ed Miliband has warned that current Government policy could result in a ‘lost generation’ for whom finding work becomes impossible, whilst union leaders argue that the latest unemployment figures expose the failure of the Government’s cost-cutting strategy.
So how much worse is the situation going to get?
Whilst unemployment is still increasing, the rate at which it is doing so is slowing down, according to some economists. Based on the data from November, there is a sense that things might not be as bad as initially feared, although we are probably still heading for another recession.
On 1st October, new European rules came into effect giving the UK’s estimated 1.4 million agency workers extra rights relating to pay and benefits.
Now, once temporary employees have been in a role for 12 weeks, they will be granted similar rights to permanent staff, although they won’t have the same protection from dismissal.
Whilst agency workers were already paid the same minimum wage, and had the same basic holiday rights, as permanent staff, they will also now be allowed to use some of the same facilities enjoyed by permanent employees (such as crèches, canteens and transport services). Additionally, temps must now be made aware of internal vacancies and given the chance to apply for them.
After 12 weeks, agency workers now get the same pay, overtime, shift allowance, holiday pay, bonus and maternity rights as permanent staff. Employers don’t have to provide occupational sick pay, redundancy pay, or health insurance, however.
The changes, which were rolled out following lengthy negotiations between unions and the government, may cost British businesses as much as £2 billion a year, it has been suggested. Some have warned that the job market may become less flexible and that recruitment may be stifled by the new rules, whilst there are also fears that employers may lay-off agency staff after 11 weeks to avoid giving them additional rights.
Nevertheless, in this challenging economic climate, people doing temporary work through agencies will no doubt be grateful for the extra pay and benefits they now stand to receive.