Cuts could lead to ''regional brain drain''

15 February 2011

Public sector cuts could reverse patterns of improved graduate retention in cities and regions outside of the south east, resulting in a 'brain drain' likely to impede economic recovery, according to a report from The Work Foundation.

The public sector has proportionally more young graduates than the private sector and with new graduate unemployment already at 20 per cent, public sector cuts are likely to increase graduate unemployment in the short-term, the report said. On a longer term basis, this will result in a 'flight' of young graduates from public sector dependent places in the north to places with stronger private sectors in the south east.

There has been a "spreading out" around the country of graduates aged between 20 and 29 over the past decade, The Work Foundation said, with Yorkshire and Humberside, the north east and the East Midlands seeing most of the increase and cities such as Leeds, Sheffield and Rotherham experiencing significant rises in numbers. This trend appeared to have been driven by greater public sector demand in the regions during the decade of public sector expansion from 1997.

Young graduates in the north and the midlands are now disproportionately employed in the public sector. This has serious implications for how the government chooses to handle public sector cuts, the report said.

Report author Jonathan Wright said: "The coalition must demonstrate its commitment to rebalancing the economy. High skilled graduates are vital for urban innovation and growth. With the scrapping of schemes such as the Future Jobs Fund, the coalition must now focus on developing strategies aimed at integrating the highly skilled into local private sector jobs.

"Earlier research has indicated that the growth potential of places in the south east far outweighs [that] in the north. The flight of young graduates due to public sector job losses in the regions would exacerbate this trend, disproportionately hindering economic recovery in the north and midlands. This must be recognised and taken into account as the coalition implements its cuts agenda over the next four years."