GRADUATE PAY
New survey on graduate pay and recruitment
A recent survey from Incomes Data Survey shows that the median starting salary for first-degree graduates was £22,621 in 2007 while the average was £23,755.
But salaries offered by individual employers vary widely, from as low as £16,000 to as high as £38,000. The largest concentration of salary levels - just under a fifth - was between £22,000 and £23,000. This variation is reflected in the detailed industry breakdowns, which show that in 2008 median starting salaries will range from £33,000 in law firms to £21,000 in “other services”.
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A matched sample of graduate starting salaries providing information for three years showed increases in 2007 starting salaries were relatively high, running at a median 3.6% and an average 4.3%, one percentage point greater than originally planned in 2006.
For this reason, IDS said that the equally low projected median and average movements for 2008, at 2.5% and 2.8%, should be treated as being indicative rather than definitive.
It forecasts that the median starting salary in 2008 will be £23,500 and the average £23,800.
Published in February 2008 and based on the details of 96 employers with specific graduate training programmes, the study examined all the major aspects associated with graduate recruitment. It is the 22nd IDS survey on the subject and covers areas including starting salary levels, pay progression, recruitment numbers, vacation and sandwich placements, golden handshakes and sponsorship. Unlike most other survey providers, the IDS report provides all information by named employer.
Job prospects
Job prospects for UK graduates look set to improve in the coming year. The survey shows that employers are predicting an overall 12.2% increase in graduate recruits this year compared to 2007. There were variations across different sectors of the economy, however, with the increase buoyed by an anticipated 31.7% increase into manufacturing firms, with finance employers planning to take on 14.7% fewer.
Situation finely balanced
The findings of the survey do come with a health warning, however, with IDS noting the predicted cutback in the finance sector could indicate problems ahead. It therefore counsels: “As the 2008 graduate recruitment season unfolds, it appears that caution is the watchword guiding employers’ decisions both about how much to pay and how many to take on.”
As a result, it adds, the future trend is finely balanced and could easily tip downwards if a wider slowdown takes place.
Details of some of the more prominent survey findings are set out below.
Pay and career progression
By comparing the average salaries of those recruited three and five years previously with starting rates paid in 2007, IDS found average percentage salary leads of 38% and 55.8% respectively.
Current average salaries for graduates taken on three and five years ago were £31,709 and £38,233 respectively.
Recruitment prospects
Employers will be aiming to take on 12.2% more graduates this year than they did in 2007.
Graduate recruitment in 2007 increased by 18.3%.
The highest increase expected in 2008 is in the manufacturing sector.
The public sector is putting a break on recruitment, with double-digit growth of 2007 being replaced by a more modest 7.8% in 2008.
Another way of looking at recruitment trends is to measure the number of graduates employed per organisation. In 2006, employers in this year’s survey took on an average of 40.3 graduates each, while in 2007 this increased to 47.7.
By 2008, again if plans remain the same, then the all sector intake works out at an average of 53.5 graduates per employer.
Recruitment methods
As many as 83.6% of employers, up from 70% in 2007, said they use assessment centres for selecting candidates.
“Golden hellos” in 2007 ranged from £1,000 to £10,000.
Sponsorship and vacation pay
A median of 69.2% of sponsored students went on to be recruited by employers.
The median vacation payment in 2007 was £278 a week.
Nearly two-thirds of employers said they sponsor students or offer sandwich placements or vacation work.
A final word
“It is evident that the graduate labour market is holding up, but it is fragile at present and a bad turn in the economy could easily tip what currently seems to be a modest ‘jobs boom’ into a ‘jobs bust’.” - Steve Tatton, editor of the report.
Want to know more?
Title: Pay and Progression for Graduates 2008, Incomes Data Services.
Availability: The full 47-page report is priced at £275. To order a copy visit the IDS web site at www.incomesdata.co.uk or contact customer services on tel: 0845 600 9355 or email: sweetandmaxwell.customerservices@thomson.com.
Incomes Data Services is the “leading UK information and research service on employment issues”, providing a range of publications for employers, trade unions, government departments and other agencies. To find out more visit www.incomesdata.co.uk.