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Graduates face highest unemployment rate since austerity era

Unemployment among recent graduates has risen to levels last seen during the austerity era, with young people worst affected by job shortages due to the pandemic, according to official data.

The unemployment rate for recent graduates in England aged 21 to 30 reached 6.3% in 2020, after it had gradually fallen over nearly a decade since a peak of 6.5% in 2012, in the middle of the coalition government’s austerity drive.

“Between 2007 and 2020, employment rates have fluctuated slightly more for the young population compared with the working-age population. This might suggest that the employment of young people is disproportionately influenced by changing structural conditions in the economy,” stated the report on graduate labour market statistics published by the Department for Education.

Despite the rise in unemployment, pay rates held up for graduates who succeeded in finding a job, with graduates aged 21-64 being paid an average salary of £35,000, £9,500 more than their peers who did not go to university and an increase of £500 on 2019.

Salaries differed by industry and by gender, with men working in banking and finance making the most at £45,000, and women working in hotels and restaurants the least, at £26,500. Across all industries, men were paid more than women – including for graduates aged 30 and under, who are less likely to be affected by childcare responsibilities.

There were also disparities in employment rates among ethnic groups and people with disabilities. White graduates had the highest employment rate (86.8%) and proportion of high-skilled employment rate (67.0%), compared with 81.2% and 53.2% for black graduates. The rates for disabled graduates were 73.4% and 52%.

Increasing England student loan repayments ‘would save government £4bn a year’.

The figures showed an unemployment crisis facing young people who had not gone to university, with nearly one in four unemployed and not looking for work – almost double the rate for graduates.

Postgraduates have fared better than graduates during the pandemic, with a 1.8 percentage point gap in overall employment rates opening up compared with graduates. High-skilled employment rates were also 12.4 percentage points higher for postgraduates than graduates, while median earnings remained higher than for those with just an undergraduate degree at £42,000, the same level as in 2019.

Data on student loans in England also suggested that the pandemic employment market caused some graduates to be unable to make their scheduled repayments. According to figures for 2020-21 from the Student Loans Company, 201,900 fewer graduates made repayments through their salary than the previous year. Repayments in England are made only on income above £27,295.

The 2020-21 figures showed that the total amount of outstanding student loans for higher education rose to £160bn, including £4.1bn in interest, while repayments totalled £3bn. The average loan balance for 2021 graduates was £45,060.

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