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Economic crisis is a broad term used to refer to a number of financial situations. Recently, the term has been associated with recessions, banking panics, currency crisis, stock market crashes and other forms of financial bubbles. Economic crisis has had a number of negative impacts on the countries experiencing it. The causes and consequences of economic crisis include the following: fraud, unemployment, retrenchment, early retirement, contagion, regulatory failures, recessionary effects, uncertainty and herd behavior, leverage, asset-liability mismatch, and a number of strategic complementarities in most financial markets (”Ending Child Poverty”). This paper explores the current impacts of economic crisis on fresh graduates concerning their employment, standards of living and other forms of financial sustainability. The top challenges facing fresh graduates include facing competition as the job or market opportunities are few because the high number of the graduates is seeking the job opportunities. The factors which have a great impact on graduates’ decision are such as effects of economy downturn or economic crisis, lack of experience in their fields of study, having too high and great expectations, and, lastly, the lack of decision-making on whether to continue with further education or join the job market (Kolb 31).
The current situation and overall impacts of economic crisis on the job market
when the economy of any country enters recession, the labor market conditions deteriorate at a fast rate and this eventually makes the average rate of unemployment rise. When economic downturn took place in the United States, the rate of unemployment rose up reaching 6.5% and the rate of job losses rose in the months that followed. In the European Union countries, economic downturn is causing a rise in unemployment too. A sharp drop in the housing industry in Spain and Ireland in 2008 led to a big number of job loss and this saw the rate of unemployment rising (Bon 10). The rate of unemployment in Spain was almost 14% towards the end of 2008. The rate of unemployment has also risen up in Germany and Japan.
Research has shown that those affected most jobwise on the occurrence of an economic downturn are the immigrants, the youth or fresh graduates, older workers and the low-skilled. This effect goes on to have a more impact on those from poor background since their parents will not have enough money to see them through school. Those on temporary contracts are more affected as compared to their counterparts on permanent contract. Job losses are also spreading to other areas not directly associated with economic crisis, for example, the automobile sector (Preston 23).
Effects of Economic Downturn on Job Opportunities for Fresh Graduates
On the dawn of an economic downturn, the unemployed and the less skilled find it difficult to get jobs. Most affected are the fresh graduates who have just completed their courses. The fresh graduates are joining a job market that has already been flooded with other graduates all with or without experience. This difficult situation of getting a job forces the fresh graduates to look for any job opportunity irrespective of their field of profession. Jobs that for a long time have been given low opinion by university graduates are more sought during economic down turn since majority in the high valued jobs have either been suspended or retrenched to wait until the economic situation stabilizes. This has seen many graduates seeking low paying jobs that are not enough to sustain their life. In many times, such graduates continue relying on their parents and guardians to survive since their salaries are not enough to meet their living costs. Those who do not get jobs at all continue living with their parents as they search for job opportunities day after day. This makes it hard for their parents to sustain them since they may be having other siblings in schools or the parents may have been retrenched following the economic or financial crisis (Preston 43).
Another impact of economic downturn on the job market is that the fresh graduates are unable to set up their own businesses even when they have the capital. For instance, a collapse of a building industry will make it difficult for fresh graduates to start building related businesses since they will have no market for their hardware materials. A collapse in the building industry will also affect plumbers, masons, electricians, quantity surveyors and the other professionals in the building industry. This means that these professionals cannot start their own consultancy firms. Again, economic downturn causes a rise in prices and fresh graduates willing to start their own business may not be in a position to raise the required capital (Wang 52).
The Impacts of Economic Downturn on the Future Life of Fresh Graduates
Continued economic downturn will raise the rate of unemployment among the fresh graduates. Fresh graduates do not have the experience and are not prepared enough to compete for the few job opportunities with the experienced ones who have been retrenched due to economic downturn (“Global Crisis and its Effect on the Future of the Mechanical Engineer”). Those who are lucky to get jobs may get low paying jobs and this will have impact on their future life. They will not be able to meet the high cost of living due to price increase of goods and services. They will be unable to invest and majority may even continue relying on their parents or guardians even in their marriage life. Those who accept jobs below their academic qualifications or jobs different from their fields of study end up being frustrated and this affects both their work performance and future private life (Wu 48).
Those who do not get jobs at all may turn into a criminal and drug trafficker due to frustration. Studies show that those involved in drug trafficking are people qualified in different fields of study. This has a negative impact on their future since they can be jailed, shot dead during robbery incidences or become drug addicts. This whole scenario affects their social and family life (Nabi & Shivakumar 63).
Continued economic downturn will also have an impact on the future life of students who seek loans to fund their college or university education. Their ability to service the loans is greatly determined by their earning potential. When such students fail to get employment, the interest charged on their loans keeps on rising year after year out. When they start servicing their loans monthly deductions are too high and the graduates are left with less funds that can sustain their life, investment and even support of their families due to high cost of living arising from economic downturn. This will force them to seek other loans for sustainability and investment. This means that they may spend the rest of their lives servicing loans or opt for long working hours to substantiate their pay with over time (Wu 72).
Lack of unemployment of low paying jobs will affect the future of the graduate’s family. This affects the timeframe taken by the graduates to settle down after school. Some end up getting married late since the low pay cannot sustain them at their early stages of life after college or university. They may be unable to take their children to better schools and this means that the children will not get the proper professional skills to compete for the few employment opportunities available. Continued economic downturn and high rate of unemployment will generate mixed reactions from the private sector. Employers in the private sector may reduce the salary of new entrants that will affect the sustainability and survival of the fresh graduates. Again, the private sector employers may raise the qualifications and standards of every advertised post. They may have a desire to look for multiple-skilled and multi-talented applicants and this affects fresh graduates since in their case it is impossible to demonstrate all the plurality of capabilities or talents expected by the employer. This may lock majority of the fresh graduates out of the job markets.
Economic crisis leads to mass layoffs, dismissals, closure of production plants and industries, and freezing of majority of hiring processes and this causes an increase in the rate of unemployment. This makes it difficult for young and inexperienced job seekers to get jobs and instead they opt for any type of work. Others are forced to take up jobs outside their profession in the hope that they will enjoy their future and advance their professions with time. This situation may change for the worse in future if economic downturn continues. Most of the fresh graduates will spend five to ten years before they can stabilize and start any investiment initiative. There is a need for governments to come up with emergency employment programs for fresh graduates during such economic climates. Internship programs need to be initiated to equip fresh graduates with experience in their fields of profession and loaning institutions providing loans to students should charge low interest rates on student loans. It should also be noted that a large number of fresh graduates have been conned huge sums of money as they bribe in order to get access to job opportunities.