Yes its pretty horrible for 2008, 2009, and probably 2010 grads. The Govt. were BTW proposing some kind of scheme where graduates are taken on, but at greatly reduced wages (basically to gain experience), in a 'better than nothing' way.

I agree that the government has to do something about graduate employment, but offering a low-paid internship is ignoring the fact that students will often leave university with 'hard' debt (not just student loans) like credit cards, overdrafts etc that need to be paid back sooner rather than later. Graduates need proper jobs, although skill-based training is better than nothing, putting off starting a career will benefit no-one (including the government's tax and national insurance revenue).
In light of this, doing a PhD, or any PG qualification does seem like an effective career step, but only if there's a career at the end of it, which lets face it is becoming less and less likely. And for those of us in our final year its pretty scary out there. Seems like the plan of marrying a footballer and never having to think or work again is becoming more appealing (although scruffiness may prevent that). Oh, and this week I joined a Facebook group called "F*ck the PhD, I'm joining a girlband" - with the headline of
"Cheryl Tweedy/Cole of Girls Aloud fame reported as saying that she was given diamond-encrusted GHD's as a freebie...the only perk i ever got in academia was a signed copy of Ed Harris' article on rape in classical Athens. hmmm...tricky career decision..."

Wise words for us all...