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Grim news for graduates with just one in 10 SMEs recruiting

A survey of 500 small and medium-sized enterprises has revealed that just 11% had taken on a recent graduate in the past 12 months and only 12% indicated they would do so in the next 12 months.

The report by the Centre for Enterprise (CFE) finds that “Generation Crunch” graduates are entering the most challenging job market in living memory with the recession leading to a sharp drop in the number of graduate vacancies and creating increased competition with more experienced workers.

The CFE said that fate of graduates will be determined by the demand for their services from employers. While there is a relatively clear picture of this demand from the public sector and larger businesses, much less is known about the demand from SMEs. This matters, as there are an estimated 4.8 million SMEs in the UK, employing 23.1 million people and together they account for 99% of all enterprises.

CFE’s report Generation Crunch: the demand for recent graduates from SMEs is based on a survey of over 500 SMEs in the East Midlands region. The research identified that many SMEs are unsure what a graduate qualification actually is – 29% incorrectly identified A levels as a graduate qualification and just 59% correctly identified foundation degrees as being so. The CFE said this confusion over the graduate ‘brand’ could limit the impact of initiatives aimed at stimulating the demand for Generation Crunch, and could lead to some graduates being overlooked by SME recruiters.

SMEs that do recruit have a very positive story to tell - two thirds had seen a positive return on the financial investment made and most reported high levels of retention. Most SMEs that do not recruit report that lack of demand, rather than an inadequate or unsuitable supply of graduates, was their primary reason for not recruiting.

James Kewin, Joint Managing Director of CFE said:

“Our research suggests that the current trend for increasing the employability skills of graduates will, in isolation, have only a marginal impact,” said CFE managing director James Kewin. “The same is true of initiatives aimed at promoting, subsidising or improving access to graduate recruits; while they may lead to a short term reduction in graduate unemployment they do not address the fundamental barrier – lack of business need – that prevents most SMEs from recruiting.”

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