Graduate starting salaries are predicted to drop to their lowest in real terms for almost a decade because it is currently a “buyer’s market”, researchers have revealed.
According to a survey of more than 100 employers conducted by Incomes Data Services
, nine out of ten that run graduate recruitment schemes plan to freeze pay over the year ahead.
Median starting salaries will be about £25,000, a figure that has not changed since last year. But if retail price index inflation of 3.7% was taken into account, it amounted to a 2% pay cut in real terms, taking wages to the lowest levels since 2003.
Nasreen Rahman, principal researcher at IDS, said: “It remains a buyer’s market for graduate recruiters this year, with starting salaries set to stagnate for a further year. High rates of inflation over the last few years have been eating away at the purchasing power of starting salaries for new graduates.”
Even though demand for graduate recruits was starting to show “signs of revival”, high levels of competition in the jobs market means that employers had little incentive to increase current pay rates, she added.
The number of applicants for each vacancy increased from 41 to 46 over the last year, but IDS expects to see graduate recruitment levels rise by 9.1% during 2012 as the overall jobs market starts to recover.
Legal firms are forecast to pay graduates the highest starting salaries this year, with median pay at about £36,000, unchanged since last year. In contrast, the lowest wages will be paid by the public and not-for-profit sectors at £22,958.
Starting salaries in banking and finance are likewise expected to remain unchanged at £31,250, while pay in professional services will remain at £24,750.