I've talked to a number of senior business people over the past few weeks and many of them are thinking about this issue themselves. Not least because quite a few have children precisely in the 'about to graduate' category. My own take on it is that almost all those businesses that would have normally taken on 1-2 or even 10-20 graduates are simply putting the decision on hold. This is not good news for graduates nor for our much vaunted ambitions to be a knowledge economy.
So what to do about it? As ever, the price mechanism has a role to play. One idea I have been discussing with others is that of giving every business in the country a 'graduate voucher'. It would work as follows:
- every business in the country that is up to date with their tax returns receives a graduate voucher, which they must start using between now and the end of 2009.
- if they choose to use the voucher, they have to employ a graduate (third level or plc) who is not already in employment or has graduated in the past year and been unemployed since.
- the company can then use the voucher to offset, say, 50% of the graduate's salary, up to a limit of, say, €24,000.
- the offset would take the form of a straightforward tax rebate: in other words, the employer would submit their normal monthly PAYE tax return, deducting 50% of the graduate salary for that month (€1,000 at maximum level).
- the voucher is valid for one year from the date of employment of the graduate.
- it would be a policy decision whether to extent it for, say, another year - after that, recovery should have set in and thus the scheme is no longer required.
There will be a net cost to the Exchequer, even allowing for the savings in no longer having to pay social welfare to unemployed graduates. But the net gain to the economy in terms of engaging graduates in the workforce and not letting their skills atrophy should outweigh such costs.
I'd certainly be prepared as an employer to use the graduate voucher myself: and so would many others I've spoken to.
Clarification: just to clarify, I've assumed a maximum fulltime annual salary for a graduate of €24,000 of which €12,000 would be rebated via the voucher scheme.