By Rebekah Kebede

NEW YORK (Reuters Life!) - For a young designer, having a collection at New York's Fashion Week is usually a sign that they've made it.

But for those launching a career during the nation's worst recession in 70 years, even a runway show at the celebrated semi-annual event is not a guarantee of employment.

Seven new graduates from Academy of Art University in San Francisco showed their collections in fashion shows in New York this week but they face a dismal job market.

Rather than land full-time jobs as they would have just a few years ago, design graduates now are often expected to intern or take freelance assignments as fashion companies slash their budgets.

"I'm seeing a trend where a lot of companies are posting internships that really seem to resemble part-time or full-time jobs," said Angie Wojak, director of career services at Parsons New School for Design in New York.

As a result, some young designers are interning well after they graduate.

"(Employers) are wanting to see how people perform, seeing if it is going to be an investment that they want to make before they throw that contract commitment," said Simon Ungless, director of graduate fashion at the Academy of Art in San Francisco.

Students applying for jobs are feeling the changes.

"People want your services, but they don't want to pay for it," said Amanda Cleary, a 31-year-old graduate of the Academy of Art, who showed her collection at the Mercedes-Benz Fashion Week in midtown Manhattan this year.

Still, the economic downturn may position design school graduates to better compete for jobs, as the fashion world places more emphasis on professionalism, experts said.

And in spite of the grim economic outlook, there are signs of recovery.

"The first two quarters have been relatively slow with little or no activity... (but) the past few months we have seen activity begin to pick up," said Kristy Watson, a spokeswoman for 24 Seven, a fashion industry staffing agency.

ENTREPRENEURIAL OPPORTUNITY

A dearth of full-time design jobs actually might present opportunities for new and innovative designers who want to be entrepreneurs, some in the industry said.

"What an economy like this does is that it allows complete creative freedom ... It breeds a lot of creativity because there aren't the jobs there," said Ungless.

Sara Shepherd, a designer in her 30s who graduated from design school in 2005 and launched a solo collection in 2007, just as the economy began to decline, said the downturn has created an opening for her collection.

"In this economy, when people are spending money, they are very conscious of what they are spending," said Shepherd, who said she has attracted clients by making more durable designs.

Molly Yestadt, a millinery designer who began working on her line full-time a year ago, seemed unperturbed by the tough retail environment.

"It's a big risk to start a business in this time period," said Yestadt, who showed her collection at Fashion Week for the first time this season, but added, "It can't get worse, it can only go up."

(Editing by Ellen Wulfhorst and Patricia Reaney)