Graduate job crunch ‘set to ease’

Recruiters predict vacancy cuts will level off in 2010 but pay stand-still will hit fee-paying graduates hard 

• Average graduate salary frozen at £25,000 for second consecutive year as Browne Review considers further student fee rises
• Vacancy figures for graduates stabilise with a modest projected decrease of 1.6% for 2010
• More graduate vacancies predicted in oil companies and consulting but third and transport sectors expect cuts
• Post-graduate study should not be an automatic substitute for finding paid employment, say recruiters

The dramatic graduate job cuts feared last summer have failed to materialise according to the Association of Graduate Recruiters (AGR), which published the winter edition of its bi-annual survey today (Tuesday 9 February). Vacancies in 2009 actually fell by 8.9% rather than the 24.9% predicted. These figures compare favourably with employment statistics overall and suggest graduate recruitment is emerging from the recession relatively unscathed. 

The average graduate salary, however, is predicted to remain at £25,000 for the second consecutive year – an unprecedented development in the 20-year history of the AGR survey. This freeze represents a double hit for graduates of 2009 and 2010 who are the first to pay top-up tuition fees for all three years of their degree. 

Amid unprecedented levels of youth unemployment the recruiters surveyed had clear advice for the so-called ‘Generation Crunch’ and urged graduates to improve their employability by taking temporary paid employment, skills training or unpaid work if a job offer is not forthcoming. Further educational development was not considered as good an option by employers: a clear indication that only those with serious academic aspirations should consider post-graduate study and that it should not be treated as a fall-back position when the job search gets tough. 

Carl Gilleard, Chief Executive of the AGR said: “Today’s survey suggests that the graduate employment market is starting to normalise and to begin the process of recovery. A small decrease following a large one the year before is consistent with previous trends and, by 2011, we could be seeing vacancy increases for the first time since 2008. It is heartening to see employers remain steadfast in their commitment to graduates. 

“Though vacancy figures are starting to turn the corner, the picture for salaries is less positive from the graduates’ perspective. This could not have come at a worse time for the current crop of graduates who are the first to enter the workplace with the daunting task of paying off three years of tuition fees ahead of them. Those with jobs in banking, finance and law will be somewhat cushioned from the impact but graduates starting out in the third and public sectors will really feel the pinch this year. If the Browne Review recommends lifting the cap off tuition fees the need to secure a good graduate starting salary will become even more vital in future years.”   

The AGR is the leading voice of graduate recruitment in the UK and its bi-annual survey is the longest running, most extensive and most detailed barometer of graduate recruitment levels and practices. Today’s edition assesses the latest graduate vacancy levels and salary information and examines employers’ predictions for the future. It is based on the responses of 214 of the country’s graduate recruiters employing 19,247 graduates in 2009 across more than 20 business sectors. The research was carried out by CFE in November and December 2009. 

  

Vacancies  

Employers are predicting a 1.6% decrease in 2010 compared to cuts of 8.9% in 2009. This mirrors a pattern seen in 2002 and 2003 when vacancies declined first by 6.5% and then 3.4% in response to the dot.com crash. 51% of organisations expect to have more vacancies this year than last year and only 31% are reporting a decrease compared to 46% last year. 

The sectors which have traditionally been the biggest recruiters of graduates are all feeling optimistic about 2010. Banking and financial services is predicted to see a 24.5% increase and investment banks and fund managers are set for a 16.2% rise. However, the largest growth this year is expected in oil companies (49.7%) and consulting (47.2%).  These increases are attributed to anticipated and actual business growth and, pleasingly, more focus on graduate recruitment. 

Meanwhile the third sector and transport are expecting cuts of 49.2% and 13.5% respectively. Even the public sector, traditionally the safest place to be in a recession, is cutting vacancies by 7.5% this year. According to AGR members these cuts are primarily due to the recession – either directly or indirectly. 

Accountancy continues to provide the biggest share of graduate jobs as in previous years with 18.2% of the total graduate vacancies in 2009. However, banking and financial services have slipped down the table and last year provided just 7.9% of vacancies – an obvious knock-on effect of the banking crisis. Oil companies, shown as a standalone sector for the first time ever in the AGR survey, accounted last year for a massive 15.1% of all graduate jobs and are now the second highest recruiter of graduates amongst AGR members. 

Salaries 

The average graduate salary in 2009 remained at £25,000 and that trend looks set to continue in 2010. The figure compares well with the median starting salary for all degree-educated adults (£30,004 according to the most recent Labour Force Survey). Two thirds of AGR employers expect to pay between £22,001 and £31,000. 

Investment bank or fund managers topped the chart in 2009 with a salary of £38,250 while law firms dropped from £37,000 to £35,000. The public and third sectors trail the bottom of the table with salaries of £23,000 and £19,000 respectively. While London remained the highest paid region in 2009, it has seen a drop of £625 a year on average since 2007. This year the biggest salary growth is expected in construction, transport and IT/Telecommunications, while cuts are looming in engineering, insurance and FMCG.   

One third of employers plan to offer a premium for a post-graduate degree in 2010 – an increase of 11.7% compared to last year. This suggests that the war for talent has not abated despite the downturn. A PhD attracts the highest financial premium followed by such postgraduate qualifications as an MA or MSc. 

Hot topics  

Aside from number-crunching vacancy and salary figures, the AGR asked its members to consider some of the other pressing issues relating to graduate recruitment this year including overseas recruitment and how this year’s graduates can maximise their chances of a securing a job. 

The number of AGR employers recruiting overseas to fill their vacancies is predicted to fall from 22.8% to 18.4% this year. This is perhaps a sign that UK candidates are sharpening up to match competition from abroad in a tighter graduate jobs market or that the overly complex visa process for recruiting foreign graduates is putting employers off. 

Finally, what words of wisdom did employers have to offer the class of 2010? When asked to rate different pieces of advice, the need to conduct rigorous research into employers and sectors came top, followed by gaining interview practice and a willingness to relocate. If forced to postpone their jobs search, graduates were strongly advised to take temporary paid employment, skills training or unpaid work. Taking a gap year or gaining graduate job experience in a different field were less popular and undertaking further educational development the least advisable course of action (ranking only 3.5 on a scale of 6).