Graduate starting salaries 2015: Pay static as recruitment slows

The graduate labour market is showing signs of cooling, XpertHR research finds. UK employers have frozen graduate starting salaries for a seventh consecutive year and graduate recruitment activity is slowing down.

Levels of graduate recruitment activity are down slightly in 2015/2016 when compared with 2014/2015. Three-quarters of UK employers are seeking to recruit graduates, down from four-fifths a year ago.

The overall picture for graduate starting salaries is subdued. Seven in 10 organisations have frozen graduate starting salaries. Among the minority who have raised graduate starting salaries, the most common increase from the previous year was 2%.

The median graduate starting salary has fallen slightly. Across the whole economy, the median graduate starting salary is £23,000 for 2015/2016, down from £23,500 in 2014/2015. However, these figures are not based on a matched sample of respondents, and so may not indicate a trend over time.

By broad industry sector, manufacturing-and-production firms offer the highest median graduate starting salaries in 2015/2016, at £24,000. This compares with median graduate starting salaries of £23,000 at private-sector-services organisations and £21,600 in the public sector.

The range of graduate starting salaries on offer is wider than ever, going from £13,000 to £50,000. This compares with a range of £15,000 to £36,000 a year ago. The sharp increase in the maximum graduate starting salary recorded by XpertHR reflects what one respondent describes as “salary wars breaking out between employers trying to attract top-calibre graduates in what is becoming a very competitive environment” in some parts of the economy.

Graduate starting salaries 2015: benefits on offer

Some employers are looking beyond salary to attract the most sought-after graduate recruits, adding company cars, golden hellos and first-year bonuses to their offerings.

Overall, UK employers believe they are doing a good job on graduate recruitment. Four-fifths of those recruiting graduates in 2015/2016 rate their organisation as effective or very effective at recruiting and selecting high quality graduates. However, public-sector respondents are five times more likely than those in the private sector to rate their organisation as ineffective on graduate recruitment.

The main problem with graduate recruitment is the graduate recruits, according to a number of employers surveyed by XpertHR. Four-fifths have experienced problems when recruiting graduates. Half of these cite the poor quality of applicants as the main issue. “A degree alone will not guarantee them success,” says one private-sector respondent. “Experience, application and attitude are all important.” Another says that increasing numbers of graduates show “unrealistic expectations of development, progression and income”.

University careers services are partly to blame for the perceived poor quality of graduate applicants, says one private-sector respondent: “Links from university to industry are awful. Careers advisors often push graduates down the ‘bigger is best’ route. They don’t work with SMEs and don’t promote local careers.” Nonetheless, notifying vacancies to university careers services ranks as the second most popular method for attracting graduate candidates, beaten only by advertising graduate vacancies via the organisation’s own corporate website.

The survey also finds that some organisations are refocusing their recruitment efforts away from graduates. Among the one in four respondents not recruiting graduates in 2015/2016, the most common reason is that recruitment is now focused on more experienced staff.

• The 26th annual XpertHR Benchmarking survey on trends in graduate recruitment and graduate starting salaries is based on responses from 313 organisations with a combined workforce of 1,352,658 employees, and a combined expected intake for 2015/2016 of 4,488 graduate recruits. All XpertHR subscribers can listen to a podcast on the state of the graduate labour market and download a data report on the key findings, including exclusive data on the range of graduate starting salaries on offer in 2015/2016.