The graduate recruitment market
- Summary
- Introduction
- Graduate vacancies in 2006
- Graduate salaries in 2006
- Outlook for 2007
- Applications and selection
- Quality of applications and candidate skills
- References
Summary
According to the latest graduate recruitment review from the Association of Graduate Recruiters (AGR), the 2006 graduate recruitment season has seen a 16.7% year-on-year rise in graduate vacancies and 2.9% increase in starting salaries. The median starting salary for 2006 new recruits is reported to be just over £23,000. Looking ahead, AGR employers are confident of a similar growth in the recruitment market in 2007.
Over half (57%) of employers surveyed reported that applications received in 2006 were of a similar standard to last year, and an encouraging 28% felt they were generally of a higher standard. A notable minority, 15%, however, felt that standards have gone down.
Introduction
The Association of Graduate Recruiters (AGR) publish a review of the graduate recruitment market twice a year. The latest report, out earlier this summer, gives insights into the graduate vacancy levels for the 2005-2006 recruitment season (referred to as the ‘2006’ season hereafter), and the year-on-year changes. In addition, the report looks at salary levels for new graduates starting work in 2006, application levels, employers’ selection methods, and the recruitment outlook for 2007 [1].
As in previous studies, the results are based on questionnaire responses of AGR employer members. A total of 235 employers responded to the latest survey, representing a response rate of 68%.
Graduate vacancies in 2006
According to the latest AGR survey, the total number of graduate level jobs on offer in 2006 by the 235 AGR employers who took part in the survey was 21,157. This represents a 16.7% increase compared to the 18,127 graduates recruited by the same organisations in 2005. It also makes 2006 the third consecutive year with a year-on-year rise in graduate vacancies, confirming the buoyant outlook of most AGR employers.
Accountancy and professional services firms accounted for 22.5% of the total number of vacancies offered - the highest percentage of all industries. This was followed by investment banks and fund managers (18.6%) and engineering and industrial companies (8.4%). Together, these three types of employers accounted for half (49.5%) of all vacancies offered by the 235 AGR employers surveyed.
Similarly, breakdown of vacancies by type of work (as opposed to employer’s industry) show that just under a quarter (23.6%) of the jobs were in accountancy, reflecting the distribution of vacancies by industry. Positions in general management were the next most buoyant, accounting for 17.8% of the total vacancies on offer; followed by investment banking (9.1%), IT (7.3%), legal work (6.8%) and consulting (6.4%).
Most industry sectors have experienced graduate recruitment growth compared with the 2005 recruitment season. The industries showing the largest percentage increase in vacancies were insurance companies (43%) and telecommunication companies (29%), while breakdown by type of work reveals that civil engineering, electrical/electronic engineering and manufacturing engineering have all seen vacancies rise by over (or close to) 50%. The report, however, warned that the percentage change cannot be used as an indicator of changes in the absolute vacancy numbers. For example, the 43% increase in vacancies seen by insurance companies corresponded to a rise of only 59 vacancies. The same can also be said in the case of civil engineering, where the year-on-year vacancies rise was calculated from a relatively small base.
Just under half of the vacancies offered by AGR employers (45.9%) were in London. This was four times more than in the South East (11.6% of total) - the region with the second highest number of vacancies. The Midlands, South West and North West came next, accounting for 9.9%, 5.7% and 5.3% of vacancies respectively.
It is worth noting that many of the AGR employers are large, blue-chip organisations with operations in London, which contributed to the high percentage of vacancies reported in the capital. The vast majority of the employers surveyed are also from the private sector, and thus may not adequately reflect the role of the public sector as one of the major recruiters of graduates, especially in regions outside London [2]. A look at the latest Destinations of Leavers from Higher Education (DLHE) survey for 2005 graduates reveals that, six months after graduation, fewer than one in five (18.3%) UK-domiciled first degree graduates who were in full-time paid employment were working in London [3]. Although London is the most popular place for graduates to look for employment, it by no means attracts as many new graduates as the AGR survey suggests.
Graduate salaries in 2006
The median salary paid by AGR employers for new 2006 graduate recruits was £23,136, an increase of 2.9% from £22,494 in 2005. The highest regional median starting salary, at £26,880, was offered to graduates working in London, followed by the South East (£23,000) and South West (£21,500). At the other end, graduates finding work in the North East, Wales and Northern Ireland were paid the lowest median starting salaries, at £19,625, £19,500 and £17,000 respectively.
Analysis by type of work shows that graduates employed in investment banks were paid the highest median salary, at £36,000. This is a massive £7,000 more than the next highest median, at £29,000, for graduates in legal work. Other high paying types of work include consulting (with a median salary of £28,500), actuarial work (£25,750), IT (£25,000) and financial management (£25,000). The lowest salaries, on the other hand, were offered to graduates starting work in logistics (£19,500), sales (£17,000) and general management (£16,500).
The vast majority of AGR employers are large organisations and they contributed to only a fraction of the vacancies on offer to graduates. Many graduates instead find work with smaller firms. As a result, the salaries offered by AGR employers are likely to be higher than the figures reported in student surveys. For example, the latest DLHE survey has revealed that the average salary for 2005 full-time, first degree graduates entering full-time employment was £17,697, with a median figure of £17,000 (rounded to the nearest thousand), which are lower than the figures reported by the AGR [3] [4].
The differences in salary distribution reported in the AGR and the DLHE surveys are illustrated in Figures 1 and 2. They show that while four in five (81%) AGR employers offered starting salaries of £20,000 or above, just under 30% of 2005 graduates in full-time employment surveyed reported salaries at this level.
Outlook for 2007
More than half (55%) of the AGR employers surveyed reported that they expect their recruitment levels in 2007 to be similar to 2006’s. Another 28% expect to recruit slightly more graduates, while a small minority, 7%, expect to recruit many more.
Half of the employers (50%) also anticipate a cost of living rise in starting salaries in 2007, while one in seven (14%) expect them to rise above this level. One in six employers (16%), however, do not expect salary levels to change and one in five (20%) are unsure how salaries will develop in the next year.
All in all, the report concluded that the recruitment market is confident of a similar growth in the next year to that recorded during 2006.
Applications and selection
On average, AGR employers received 28.4 applications per graduate vacancy in 2006, compared with 32.9 a year ago, making 2006 the fourth consecutive year that the number of applications for each vacancy has decreased. Analysis by industry has revealed that fast moving consumer goods (FMCG) companies received the highest number of applications for each graduate position (92.8), followed by oil companies (65.9). At the other end, construction companies and accountancy/professional firms received the least numbers, at 14.2 and 12.5 applications per vacancy respectively.
The AGR survey also found that candidates applying to positions in telecommunications companies had the best chance of making it through to a first interview, with 38.2% of applicants being offered an interview, while the most difficult industry in which to get a first interview was investment banking (11.1%).
Quality of applications and candidate skills
Employers were asked how they felt about the overall quality of applicants in 2006 compared with 2005. Over half (57%) of employers reported that applications were of a similar standard to last year, and an encouraging 28% felt they were generally of a higher standard. A notable minority, 15%, however, felt that standards have gone down.
Commitment and drive and motivation and enthusiasm are the qualities AGR employers consider as the most important in a candidate, while project management, risk taking/enterprise, leadership and commercial awareness were the most difficult skill criteria to fulfil. The latest GradFacts survey of 2006 final year students indicated that students are aware of their lack of commercial awareness [5]. When asked what are the skills they are least likely to be able to offer to employers, presentation skills, numeracy and business awareness came top. On the positive side, the top skills listed were: reliability, the ability to work unsupervised and to use their own initiative, which match some of AGR employers’ top priorities.
References
1. The AGR Graduate Recruitment Survey 2006: Summer Review, produced for Association of Graduate Recruiters (AGR) by Hobsons.
2. See Regional perspectives on graduate destinations, Graduate Market Trends, Spring 2005.
3. Data for the Destinations of Leavers from Higher Education survey 2005/06 was purchased from the Higher Education Statistics Agency (HESA).
4. The median figure came from the HESA press release PR103, 14 August 2006, while the DLHE salary distribution reported in Figure 2 was derived from figures reported in the same press release, Higher Education Statistics Agency (HESA).
5. Grad Facts 2006, The Guardian.
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