An overview of the graduate job market

Graduate vacancies in 2008 are expected to rise by 16.4% this year, topping the 12.7% year-on-year growth seen in 2007, according to the latest Graduate Recruitment Survey from the Association of Graduate Recruiters (AGR).

The study, based on survey responses from 217 employers, was conducted at the end of 2007. The overall message was that 2007 had been a year of healthy graduate recruitment in terms of vacancies growth, and this is forecast to continue in 2008. Salaries growth, however, had been small and recruiters are not under pressure to offer large rises in the coming year under the current market conditions.

A buoyant 2007 recruitment session

A total of 26,575 graduates were recruited by the AGR employers in the last 2006-07 recruitment session. Just under a quarter (22.7%) of these were for positions in accountancy, one in seven (13.4%) were in investment banking, whilst IT and general management each accounted for one in 13 (7.7%) of all vacancies.

Two fifths (41%) of vacancies were in London, with another one in ten (10.3%) in the South East. Research from the Higher Education Careers Services Unit (HECSU) has found that finance, law, consulting and related activities are the most popular graduate employment sectors in the capital, unlike in other parts of the UK where health and social work dominates. The geographical spread of vacancies amongst AGR employers is, therefore, a reflection of the business interests of these employers, and are biased towards large private sector firms as opposed to public sector employers, as well as companies which are London-based

AGR employers are also reported to have recruited more graduates from ethnic minorities than ever before: over a quarter (26.7%) of the recruits in 2007 were from an ethnic minority compared with just over one in seven (15.1%) in 2006.

The median starting salary for the 2006/07 recruitment session was £23,500, a modest increase of 2.4% from a year ago.

Forecast for 2008

According to the AGR review, all sectors, with the exception of chemical/pharmaceutical industries and insurance companies, are anticipating growth in graduate recruitment in the current 2007-08 session. This is contrary to the findings of another annual survey from Incomes Data Services (IDS), which reported that although overall graduate vacancies are forecast to rise by 12.2% this year, finance firms are planning to take on 14.7% fewer graduates. Certainly, the impact of the ‘credit crunch’ has already led to forecasts of job losses in the City, with the Centre for Economic and Business Research (CEBR) predicting 11,000 jobs to be lost in 2008 and 9,000 more to go next year, whilst JP Morgan expects a potential 40,000 job losses in the financial services industry.

The AGR report predicted a 30.8% increase in graduate vacancies in 2008 amongst consulting or business services firms. Competition, however, appears to be as rife as ever. Deloitte has reported a 22% increase in the number of students applying for graduate positions starting in 2008, with positions in actuary, consulting and corporate finance in particularly high demand. This perhaps echoes the overall sentiment in the industry, as the AGR report reveals that amongst all sectors, employers in consulting and business services are the least concerned about a recruitment shortfall this year. Only one in ten of these recruiters are expecting recruitment difficulties in 2008, compared with two-thirds (67.6%) of engineering companies, and a similar percentage of public sector employers (62.5%) and fast moving consumer goods (FMCG) companies (61.5%). Graduates’ perceptions of the industry sector and not having enough applicants with the right skills were thought to be the two main issues facing recruiters expecting a shortfall this year.

The median starting salary for 2008 is predicted to increase by 2.1% over 2007’s to reach £24,000, compared with £23,500 in our Prospects Directory Salary and Vacancy Survey reported in the Winter 07/08 issue of Graduate Market Trends, and £23,800 in the IDS review. Despite predicting double digit growth in graduate vacancies in the sectors, investment banks/fund management and banking/financial services employers in the AGR survey actually foresee no change and a 1.7% drop respectively in starting salaries in the 2008 recruitment session, indicating that these employers are under no pressure to increase their graduate salaries in the current labour market conditions.

Postgraduate premiums

In 2008, for those AGR employers who are prepared to pay an education premium for a postgraduate qualification, around two-thirds would pay a premium for PhD graduates, offering a median amount of around £6,500, whereas a Masters degree would attract a median premium of £3,508, and an MBA is worth £12,000 to some employers.

More global competitions ahead

In addition to recruiting graduates from UK institutions, a quarter (24.9%) of the AGR respondents also market their UK graduate vacancies to overseas audiences, with the majority of these employers (70.6%) searching for talents globally and not limiting their recruitment activities within Europe. The main reasons cited were to ‘recruit the very best talent that is available’, and to employ ‘a global/European workforce’.

Overall, the message for the 2008 graduate recruitment year is that the outlook continues to be optimistic for most sectors, at least for the time being. However, whether the current difficulties facing the finance industry and the housing market will impact on graduate recruitment in other sectors is still to be borne out in months to come.

(last updated May 08)