Sharp increase in graduate demand

PAY DATA

Sharp increase in graduate demand

Job prospects for graduates look promising for 2007, but will be accompanied by low increases in starting salaries. These are among the findings of a new report from Executive Compensation Review, a journal published by Incomes Data Services.

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The report, examining the pay and prospects of graduates on specific graduate programmes in 90 named companies, found that employers plan to take on 20% more graduates this Summer, which compares to growth of just 0.5% in 2006. This aggregate figure masks variations across different sectors though.

The optimistic recruitment forecasts were not matched by equally buoyant expectations about starting salaries, however, with employers intending to increase the starting salaries on offer to first-degree graduates by an average of 3.4% this year – less than the current rate of inflation.

Examples of current and forecast starting salaries and the related increases are provided in the table below:

Graduate starting salaries in 2006 and 2007

Year (no.)	Lower quartile £pa	Median £pa	Upper quartile £pa	Average £pa
2006 (88)	20,147	22,000	23,563	21,987
2007 (60)	20,378	22,000	24,000	22,426
Matched increase
2006 (65)	2.3%	3.9%	5.5%	4.6%
2007 (54)	0.3%	2.6%	4.6%	3.4%

Source: Pay and Progression for Graduates 2007, Executive Compensation Review, Incomes Data Services.

Survey results

Among the other findings from the report, Pay and Progression for Graduates 2007, are:

Starting salaries, increases and progression

• the median (mid-point) rise in starting salaries for first-degree graduates in 2006 was 3.9%, while in 2007 the median rise is expected to be just 2.6%
• the average starting salary for first-degree graduates in 2006 was £21,987
• the forecast average starting salary in 2007 is £22,426
• the maximum recorded starting rate in 2007 was expected to be £35,000 in a law firm and law firms made up four of the top-five highest-paying employers in 2007
• current average salaries for graduates taken on three and five years ago were £33,042 and £36,077 respectively.

Demand

• the highest reported intake in 2006 was in manufacturing, where 10.9% more graduates were taken on than in 2005 while public sector demand actually fell in 2006 by 5.1%
• the largest growth areas in 2007 are in the public sector and the service sector with 28.6% and 16.1% increases in recruitment forecast
• on average, employers took on 45.8 graduates each in 2006, a figure set to rise to 55.1 graduates per organisation in 2007.

Recruitment prospects

• a breakdown by sector showed that there were significant differences in demand levels for 2006 and forecast levels for 2007
• in 2007, the outlook is more bullish with predicted increases of 7% in finance and 28.6% in the public sector.

Recruitment methods

• 70% of employers now use assessment centres for selecting candidates
• 38% of employers said that face-to-face communication, either on-campus or at careers fairs, was the best method of attracting applications.

Sponsorship, sandwich placements and vacation schemes

• 33% of firms provided bursaries to graduates in 2006
• on average, nearly 80% of students receiving a bursary went on to be recruited by their sponsors
• sandwich placement fees ranged from £9,000 to £18,500 in 2006
• the average weekly rate for vacation placements was £287 in 2006, although the median was lower at £269.

A final word

“While our latest survey suggests that graduates could find it relatively easy to find a job this Summer – they should not expect to be paid much more than last year’s recruits. At the same time, graduates also need to be cautious. Employers often have ambitious recruitment plans, but past experience suggests that expectations do not always match reality.” - Steve Tatton, editor of the report.

Want to know more?

Title: Pay and Progression for Graduates 2007, Executive Compensation Review, Incomes Data Services.

Methodology: Questionnaires were sent to reward specialists and graduate recruiters in the private, public and voluntary sectors in late 2006.

Sample size: Completed questionnaires were received from 90 named organisations.

Availability: The £275 report can be purchased online at www.incomesdata.co.uk/mpr/gradpay.htm or call customer services on 0845 600 9355.

Incomes Data Services is an independent research organisation providing information and analysis on pay, conditions, pensions, employment law and personnel policy and practice. To find out more visit www.incomesdata.co.uk.