Graduate salaries will remain largely static this year, but some employers, particularly in the banking and financial sectors, will cut them by up to 8%. According to the Association of Graduate Recruiters’ 2009 Winter Survey, the median starting salary has been frozen at 2008’s £25,000 level. Salary growth is expected in just four sectors this year – fast-moving consumer goods, the public sector, construction and retail. Only one-fifth of employers expect to raise graduate salaries by more than 4% in 2009.
FULL PRESS RELEASE:
Graduate Recruitment Survey 2009
Reality bites for Generation Y as graduate recruiters predict vacancy cuts and salary freeze
- Vacancies for graduates fall for first time since 2003 with a projected decrease of 5.4% in 2009
- Banks expect massive 28% cut in number of vacancies
- Engineering sector bucks the trend with expected 8.3% rise in jobs but there may be a shortfall of graduates to fill them
- Graduate salaries frozen for the first time
- Employers urge struggling graduates to research jobs and prepare for interviews more thoroughly than ever as competition intensifies
The number of graduate vacancies in the UK is to drop this year for the first time since 2003 according to the Association of Graduate Recruiters (AGR), which published the winter edition of its bi-annual survey of the graduate jobs market today (Wednesday 11 February). Vacancies overall are expected to decrease by 5.4% with most employers blaming the economic downturn for the cuts. This follows an unexpected last minute drop in recruitment levels in 2008.
Even those graduates who do secure a job in 2009 face disappointing news. For the first time in the survey’s history, graduate starting salaries are set to be frozen. This year’s median starting salary is stuck at the 2008 figure of £25,000, while some employers, notably in banking and financial services, will be cutting graduate salaries – by up to 8% in some cases. The salary freeze will be a particular blow to 2009’s graduates who are the first to have contributed tuition fees for the full three years of their degree courses.
Against this gloomy backdrop, recruiters surveyed by the AGR have warned this year’s cohort of graduates to research the employers and sectors they apply to more throughly than ever. They have also urged graduates not to automatically consider returning to university or taking a year out as the first alternative when the job search gets tough unless they believe it will add to their employability. Most said taking temporary paid work was preferable.
Carl Gilleard, Chief Executive of the AGR said: “Last summer our members predicted an optimistic growth in vacancies of over 11%. Soon after that we saw a series of catastrophic events in the financial sector with serious consequences for many other sectors such as construction. It comes as no surprise that these seismic shifts in the economy are being mirrored to some extent in the graduate jobs market. The predicted rise in jobs in 2008 simply did not occcur.
“However, though we are set to see a drop in vacancies this year, the situation is certainly not as severe as it could be. We saw a sharper decrease in 2003, for example, when recruiters had a negative reaction to the dot.com crash. By and large, while no one doubts the seriousness of the current economic downturn, the picture for graduate recruitment, though worrying, could be bleaker. There are even some silver linings with growth predicted in the engineering and public sectors – both of which are likely to appeal to graduates seeking job security this year.”
“What is certain is that the economic crisis is concentrating employers’ minds on the war for the best and most well-informed talent. The message coming through loud and clear for this year’s graduates is research, research and more research – know your potential employer and know your sector. For those who do not secure that dream job first time round, the key is to take some form of paid employment if you can.”
The AGR is the voice of graduate recruitment in the UK and its bi-annual survey provides the most extensive and detailed insight into the state of the graduate jobs market. Today’s edition is based on the responses of 245 of the country’s graduate recruiters across 12 main sectors employing 21,144 graduates. The research was carried out by trendence in November and December 2008 and updated in mid-January 2009.
Employers are predicting a 5.4% decrease in vacancies in 2009 in sharp contrast to last summer’s predicted increase of 11.7%. The last time vacancy numbers decreased was in 2003 when the market saw a 6.5% drop. 46% of organisations expect to hire fewer graduates this year. 34.7% said this was a direct result of the economic climate and 29.7% said their decision has been indirectly affected by the downturn.
Accountancy and financial services continue to provide the lion’s share of graduate jobs with a quarter still coming from the former and 13% from the latter. Engineering has knocked the ailing investment banking sector out of third place this year with an expected 8.3% rise in vacancies. The FMCG sector is set to experience the biggest growth in job vacancies at 12.9% and there is also good news in the public sector which is anticipating a 3% rise in jobs. Unsurprisingly, vacancies have been badly hit in the financial sector with a 28% cut in vacancies due in investment banking and a 10.7% decrease in financial services. Construction has also been hard hit with 16.6% fewer vacancies predicted this year.
68.6% of employers filled their graduate vacancies in 2008 but this figure is expected to drop in 2009 with just 62.7% confident of avoiding a shortfall. This is a particular problem in the engineering sector where a huge 75% of organisations are expecting to struggle to fill their graduate jobs.
Graduate salaries are set to freeze this year for the first time in recent history. This year the median starting salary is stuck at the 2008 figure of £25,000. In 2008 law firms maintained the top spot with a median salary of £37,000, investment banks remained static at £35,000, business and financial services at £28,000 and IT crept ahead to £27,000. In marked contrast to 2008, salary growth is expected in just four sectors this year – FMCG, the public sector, construction, and, perhaps surprisingly, retail. For the first time ever, three sectors are predicting salary cuts with banking expecting a median salary decrease of up to 8.9% this year. Only one-fifth of employers expect to raise salaries by more than 4%.
Advice to graduates in difficult times
With widespread jobs cuts and a salary freeze predicted, graduates are facing a particularly tough year in 2009. The survey asked employers to advise graduates on how to tackle the jobs market. 65.3% urged graduates to conduct rigorous research into potential employers and sectors so that there was less of a mismatch between applicant and employer expectations. Half said applying early was particularly important this year and 44.3% suggested applicants should be willing to relocate. One third advised graduates to widen their jobs criteria.
For those graduates who are not able to secure their ideal job quickly, the advice was very clear; two thirds of employers said that securing temporary paid employment was a desirable alternative and 54.4% recommended gaining graduate-level experience in another sector. Employers had mixed feelings about ‘years out’ – just 39.6% thought this was a sensible move. The least favourable option for employers was further study. Only 30% thought this would give graduates an edge in the job hunt. With applications to postgraduate courses up sharply in recent months, this last statistic may well give this year’s graduates pause for thought.