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YOU ARE IN » Home page > News and information main menu > Graduate Market Trends > Graduate recruitment (Spring 2009)

Graduate recruitment (Spring 2009)

• Graduate recruitment in 2008 and outlook for 2009
• Summary
• The 2008 recruitment session
• Forecast for 2009 and beyond?
• Recruitment shortfalls
• Postgraduate premiums
• Graduate employment packages
• New trends in recruitment activities

Graduate recruitment in 2008 and outlook for 2009

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Summary

Looking at recent employer surveys, the impact of the financial downturn is becoming apparent. However, so far the picture is not all doom and gloom but very much dependent on sectors. Kathrine Jensen from HECSU takes a look at what has been reported recently on the graduate recruitment market.

Graduate vacancies in 2009 are expected to fall, the expected decrease is 5.4%, the first time graduate vacancies has fallen since 2003, according to the latest Graduate Recruitment Survey from the Association of Graduate Recruiters (AGR)1.

The report, based on survey responses from 245 employers, was conducted at the end of 2008. The overall message was that 2008 has been a year of much lower than predicted graduate recruitment, in terms of vacancies growth levels, and this is forecast to continue in 2009. Salary growth slowed throughout 2008 and a freeze on salary levels is predicted for 2009.

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The 2008 recruitment session

Of the graduates that were recruited by the AGR employers in the last 2007-08 recruitment session, just under a fifth (19.4%) were for positions in accountancy, just over a tenth (11.9%) were in investment banking, whilst general management each accounted for almost one in 10 (9.4%) of all vacancies.

According to High Fliers research2 of the graduate market more than half of employers reduced their 2008 recruitment targets in response to the economic downturn. Investment banks and other financial employers cut more than 2,500 entry level positions from the 2008 targets. It is important to note that the High Fliers research is based on a sample of only 100 employers, which means that it only shows one small part of the overall picture.

Looking at where graduate vacancies are located, the AGR employers report that almost half (45.4%) of vacancies were in London, with another one in ten (10.5%) in the South East. The geographical concentration of vacancies amongst AGR employers is a reflection of the business interests of these employers which are biased towards large private sector firms as opposed to public sector employers, as well as companies which are London-based.

AGR employers are reported to have recruited fewer graduates from ethnic minorities in 2008 compared to the previous year. Over a quarter (26.7%) of the recruited graduates in 2007 were from an ethnic minority compared with just over one in seven (15.1%) in 2006. In 2008, this has fallen to a 21% average. Amongst ethnic minority graduates, Indian graduates has increased to 23.4%, Chinese graduates has fallen to 12.6% from one in five and recruits from a Black African background has fallen from 13.7% to 9.3%.

A surprising number of employers (30.2%) do not carry out diversity monitoring and could not provide any figures for the AGR Survey.

AGR reports that the median starting salary for the all sectors in 2008 was £25, 000, a very modest increase of 1.8% from the previous year.

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Forecast for 2009 and beyond?

According to the AGR review, 46% of responding organisations anticipate recruiting fewer graduates. Only four sectors are expecting an increase in vacancies compared to almost all sectors last year:

• Fast moving consumer goods (FMCG)
• Engineering or industrial
• Public sector
• Law firm

The Income Data Services (IDS) Review3 has found that manufacturing and law and accountancy4 are projecting a decrease in graduate recruitment numbers in 2009, while public and not-for-profit are forecasting a large increase (30.1 %) in recruitment numbers. The overall projection from IDS is that employers in 2009 expect to hire 7.9 % more graduates than in 2008 but as the numbers above show this masks differences across sectors.

According to the High Fliers report, although one in three employers report cuts in the recruitment budgets for 2008-2009, nearly half say their budgets were similar to last year and a fifth have increased spending on graduate recruitment for 2008-2009. The High Fliers employers are also reasonably optimistic about their graduate recruitment in 2010. A quarter expect to take on more new recruits next year and half expect to maintain recruitment at 2009 levels.

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Recruitment shortfalls

The majority of AGR employers (68.6 %) did not experience a shortfall in recruitment in 2008 and in spite of the economic downturn there is still a quite high anticipation of recruiting challenges among employers (37.3%). It seems that employers are still competing for graduates with the right skills even in times of falling graduate vacancies.

Looking at the AGR employer sectors, 75% of organisations in the engineering and industrial sector predict recruitment shortfalls in 2009, 58.3 % of FMCG and 53.8 % in consulting. This carries on the trend from last year where two-thirds (67.6%) of engineering companies and a similar percentage of fast moving consumer goods (FMCG) companies (61.5%) expected recruitment difficulties.

In the AGR survey, the median starting salary for 2009 is predicted to remain frozen at £25,000 and the IDS review is predicting a low median increase at 0.5 per cent.

According to AGR, the biggest fall in salaries (8.9%) is predicted to be seen in banking; retail, by contrast, is predicted to see the largest salary increase, by 10.0%.

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Postgraduate premiums

In 2008, for those 18 % of AGR employers who are prepared to pay an education premium for a postgraduate qualification, around half would pay a premium for PhD Graduates offering a median amount of £3,500 and a postgraduate qualification would attract a median premium of £2000. This is quite a difference from last year when two-thirds would pay a premium for PhD graduates, offering a median amount of around £6,540 and a postgraduate degree would attract a median premium of £3,508. The AGR report speculates that this difference may be due to an increase in postgraduate qualifications among current graduates.

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Graduate employment packages

According to the AGR, the most popular non-monetary benefits in the graduate employment packages remain pension schemes and training for professional qualifications. Pension scheme is offered by 95.5 % of AGR employers and professional qualifications training by 85.1%.

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New trends in recruitment activities

AGR reports that employers appear to be diverting their budgets from paper-based advertisements, online promotions and recruitment websites to face-to-face contact methods such as careers fairs and on-campus promotions. The mean number of universities targeted by AGR organisations in 2008 is 17, a trend that is predicted to go upwards. There is a rise in the communication method “personal contact with university careers advisers” with over 80 % pf AGR members using this method compared to the figure reported in the 2008 Winter review, which was 73.9%.

Overall, the message for the 2009 graduate recruitment years is that the outlook varies depending on how related the sector is to the current difficulties facing the finance industry and housing market. Graduate starting salaries are expected to stagnate thus putting an end to a long standing trend of increases. The good news is that the reports indicate employers retain a focus on - and a budget for - graduate recruitment and that there are few signs of recruitment completely stopping.

1.The AGR Graduate Recruitment Survey 2009: Winter Review, produced for the AGR by trendence Institute.

2.The Graduate Market in 2009 - Annual review of graduate vacancies & starting salaries at Britain’s leading employers by Highfliers Research Limited.

3.Pay and Progression for Graduates 2009, IDS.

4.The IDS class Law and accountancy together which may be why the IDS reports them to decrease in recruitment numbers while the AGR reports an expected increase for Law but not for Accountancy.