Skilled and highly-motivated Poles 'push British graduates to back of the jobs queue'

Employers prefer to hire Eastern European staff because they are more capable than supposedly well-qualified Britons, Richard Lambert said.

The low employability of British young people was "depressing", he added.

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His remarks in a speech to university vice-chancellors suggest that some of the hundreds of thousands of Eastern European workers who have come to Britain since their countries joined the European Union in 2004 are beginning to move out of the lowest paid work to challenge Britons for more demanding and better rewarded jobs

Mr Lambert, the director general of the employers' body, was also scathing about the Government's efforts to improve the competitiveness of young Britons on the jobs market and said the quality of British graduates was too low.

"If businesses can't find the skills or work attitudes that they need in the national workplace, they can perfectly well recruit them elsewhere," he said.

"They don't have to hire people from the UK system. And they don't have to locate their activities in the UK. That surely has been the big lesson since the EU enlargement."

He added: "Since then I've lost count of the number of times that employers have told me depressing stories about how the skills and employability of their central European - often Polish - recruits compare favourably with those of the domestic labour pool.

"Of course it does not make sense for a whole society to meet its skills needs by bringing in qualified immigrants.

"But it is perfectly rational, and it is certainly possible, for an individual company to behave in this way."

Dismissing the importance of sending half of all young people to university, Mr Lambert said business had "very little interest" in Government targets.

He said: "There is a sense, I am afraid, that more means less - that the rapid increase in the number of

students graduating from college or university has come at the expense of quality, in terms of knowledge, attitude and employability."

He warned that despite the expansion of higher education, there were shortages of youngsters able to read and count sufficiently well.

"The other message I have picked up is that employers' concerns are primarily focused at the level of basic and intermediate skills," Mr Lambert said.

"They are much more likely to feel their business is being held back by shortcomings in literacy and numeracy, or by the difficulty of attracting qualified technicians or apprentices, than they are by the quantity of graduates in the workforce.'"

David Willetts, Shadow Innovation, Universities and Skills Secretary, said: "We have been warning that not all universities have been paying enough attention to the quality of student teaching."

He added: "We must encourage businesses themselves to get more involved with universities. Schools need to do more in preparing students as well."