The Institute for Fiscal Studies published an observation on 17th April which states that graduates will be worse off for ‘at least five, and perhaps ten, years,’ with more than usual entering lower paid non-graduate occupations after completing their degree.

This is due to the huge, unprecedented damage dealt to the economy by lockdown measures, introduced by the government to combat the spread of COVID-19.

The OBR (Office for Budget responsibility) has predicted a 35% decrease in the country’s GDP, with 2 million more unemployed as Britain’s economy reels from many weeks of inactivity. 

Graduates will be worse off for ‘at least five, and perhaps ten, years

The Chancellor of the Exchequer, Rishi Sunak, has admitted to being ‘deeply troubled’ by these figures but has stated that the government’s programme of ‘levelling up’ the country will continue notwithstanding an inevitable proliferation in government borrowing.   

The IFS report uses data from past recessions, citing the fact that the last recession resulted in the likelihood of young people entering paid work decreasing by seven percentage points. This was the case even five years on.

Earnings also took a hit, as those who did find a job during times of recession earned six percent less after one year and two percent less after five years than those beginning employment in ‘normal’ times. 

The 2020 labour market will take a huge hit as millions are already ‘furloughed, losing incomes, or losing their jobs entirely’. 

Graduates will find it difficult to find work for years to come if the economy does not experience an immediate bounce back. 

This would constitute a short term ‘V shaped’ recession – which sees an instantaneous rebound – rather than a slower to recover ‘U shaped’ or extremely long-term ‘L shaped’ recession.

In addition, the report states that students are already asking for tuition fee refunds after some already turbulent years with less teaching time than usual due to nationwide strikes by academics.

In 2018, 575,000 teaching hours were lost due to strikes nationwide. 

UCU strikes resulted in complaints of lost contact time and students nationwide were given £3m of compensation from their respective higher education institutions. 

These developments have indeed gone against the very purpose of the tuition fee system as its function is to ‘insure graduates against bad incomes. If they earn less they will pay less’. It is extremely likely that all graduates will be paid less in the coming years.