Life on the dole 'is better for students than temping work'

"Under-employed" graduates suffer even worse levels of mental health and motivation than those who are unemployed, his research shows.

Although the low-paid jobs were meant to be temporary, they could end up dragging graduates down and preventing them pursuing their ambitions, said study leader Professor Tony Cassidy.

Professor Cassidy, from the University of Ulster, studied 248 recent graduates whose Daily Mail Reporter psychological and physical health was monitored over 18 to 24 months.

Nine months after graduation just over half were in jobs, a fifth were unemployed, and the rest were on post-graduate education courses.

"Of the employed group almost 70 per cent were not in jobs they wanted to be in; they were stop-gap jobs that did not utilise their skills," said Professor Cassidy.

Although the unemployed group had increased levels of depression and anxiety, loss of optimism, unhealthy behaviours such as drinking to excess, and lack of achievement, the under-employed group had the same problems to an even worse degree.

"They are moving out of the normal range of levels of psychological well-being into the area of clinical depression," said Professor Cassidy, who presented his results at the British Psychological Society's annual meeting in Dublin.

He said on balance being out of work might be better for career-minded graduates than taking a menial job.

"I think graduates need to think about how they're going to get into their career,' he said.

"If that means taking time out from work they are probably better off doing that than taking a stop-gap job that might prevent them getting where they want to be."

Professor Cassidy urged universities to do more to help students plan their futures.

He warned that investment in higher education, including moves to widen access, was "being wasted", because many graduates were ending up in jobs far below their skill level.

State school pupils are taking a smaller share of places at Cambridge University than in any year since 2003 – just 55 per cent.

The university spends £3million annually on efforts to meet a Government-backed target to raise the proportion of state sector entrants to between 60 to 63 per cent by 2011.