Graduate salaries to fall to lowest level since 2003

Monday, 16 April 2012 08:17

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Graduate pay is set to drop in real terms this year as the rising cost of living continues to outpace starting salaries, new research shows.

This means that graduates entering the workforce this summer will find themselves worse off than their predecessors back in 2003, according to the report by Incomes Data Services.

The typical starting salary for graduates will be £25,000 this year, unchanged from 2011, the equivalent of a pay cut when accounting for inflation.

In a further blow, nine in 10 employers surveyed by IDS said they would be freezing graduate pay this year.

There were 46 applicants for every graduate vacancy in 2011, up 12 per cent from 41 in 2010.

Legal firms are projected to pay graduates the highest starting salaries this year, at an average of £36,000, unchanged from 2011.

In contrast, last year’s lowest starting salaries were paid by the public/ not-for-profit sector at £22,958.

Graduate pay in banking and finance is also projected to remain at £31,250 this year, while starting salaries in professional services stay at £24,750.

Nasreen Rahman, principal researcher at IDS, said this year would be another buyers’ market for graduate recruiters.

“High rates of price inflation over the last few years have been eating away at the purchasing power of starting salaries for new graduates,” she said.

“Even though the demand for graduate recruits is showing signs of revival, the competition for places means that employers are under little pressure to increase current rates despite high inflation.”

IDS forecasts a rise of 9.1 per cent in graduate recruitment from last year, as the overall jobs market recovers.

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