Is there an emerging traffic for High Flyer Graduates?



I could not find a relevant NEWS subforum here so decided to post this in Accounting and Professional Services section as it is the most visited one by you guys. I did not make it short/concise as all the info given is very interesting.

By Naomi Caine
June 18 2008

Get a degree and get ahead. That’s the theory, at least. And many final year students will be hoping to put it into practice when they graduate this summer. After all, graduates on average have better job prospects and earn more than their colleagues who left school at 16 or 18.

Graduates won’t get stuck in a dreary job in a supermarket. Instead they can look forward to running a multinational company or manipulating markets in the heady world of global finance. They are paid well, too. In a lifetime, the average graduate can expect to earn about £160,000 more than the typical non-graduate.

But is the future really so bright? Or are this year’s graduates more likely to be slaves to the economy than masters of the universe?

Graduates: are you optimistic about the future?

Lesson in Economics 101
Let’s look at the popular professions. A record number of final-year students are hoping to join a City bank when they leave university this summer, according to the latest report by High Fliers Research. The UK Graduate Careers Survey 2008 reveals that one student in eight from the class of 2008 hopes to land a graduate job in investment banking - only a career in the media is a more popular choice.

Five signs of a great work place

Sadly, they might be disappointed. Banks and other financial institutions have been battered by economic storms and the City is expecting between 10,000 and 40,000 job losses by the end of the year.

The CBI warned earlier this week that more than 200,000 people will lose their jobs by the end of 2009 as the economy takes a turn for the worse. It predicts that the number of people out of work will rise to a 10-year high of 1.89 million by the end of next year, 50,000 more than it predicted in March. Not surprisingly, workers in the building trade and people in the financial services industry are likely to be hit hardest by the job cuts.

Recession worries
The CBI was quick to dismiss talk of a recession. Richard Lambert, the director-general, said: “It is important to remember this is not a forecast for recession. Back in the early 1990s, we had a prolonged period of plummeting consumer demand and there were large job cuts across the board. These days, firms are leaner and more efficient and our economy’s reach is far more global. We should avoid believing a recession is inevitable, or talk ourselves into unnecessary trouble.”

But many students are worried. More than half (59%) who are due to graduate this year fear that a potential recession could hit their job prospects, according to Accenture, the consultants. In fact, the economic downturn is already making things difficult: more than two-thirds of final-year students have yet to find a job.

Four surprisingly well-paid jobs anyone could do

Graduate pay
Graduate salaries are also starting to suffer. The median, or midpoint, starting salary of £20,100 last year was just 3% higher than the figure for 2006. By comparison, average earnings in the economy as a whole rose by 3.5%, according to a survey by Employment Review.

The best-paid jobs are in private-sector services companies, which offered a median starting salary of £22,000, followed by manufacturing and production firms, at £20,000. Graduate starting salaries were lowest in public sector organisations.

If you are a bread head, you should find a job in a private sector consultancy or IT firm, where you could expect to earn a starting salary of £23,487 and £23,167 respectively.

Find your dream job after graduation

But don’t try and talk your way to a better deal. Most employers see graduate starting salaries as non-negotiable, with just one in four (26%) prepared to discuss rates. Just over half (58%) also operate a single starting salary for all graduates within the organisation.

The Employment Review’s findings are broadly in line with graduate salary surveys published by careers website Graduate Prospects, which identified a median figure of £18,000, and the Association of Graduate Recruiters (AGR), whose headline figure was £23,500.

More graduates for each job
The relatively modest wage increase might have something to do with supply and demand, because there are an awful lot of graduates. Some 7.7 million people in the workforce already have a degree or equivalent qualification. So do employers need the extra 185,000 graduates who flood onto the market each year?

The supply is unlikely to dry up any time soon. UCAS figures show that applications to universities in England for 2008 are at an all-time high. Numbers are up over 7% on this time last year - that’s at least 20,700 more applications. The rise follows a record number of applications for 2007 and is higher than was widely expected.

The surge in numbers is partly down to the sheer force of political will. In 1999 Tony Blair announced that 50% of people under the age of 30 should be university educated by 2010. We are getting close to the target: about 43% of the under-30s have now been to university, up from 39% in 2000.

But some employers wonder whether we have sacrificed quality for quantity. They complain of graduates that lack basic skills in numeracy and literacy, as well as motivation or business awareness. So they are reluctant to pay a premium salary.

Unrealistic expectations
It might come as a shock to many graduates. Final-year students expect to earn an average of £22,700 when they start work and £39,900 after five years in employment. One in six is banking on a starting salary of £30,000 or more, and a quarter think they will be earning at least £50,000 a year within five years.

Don’t forget debt. The typical graduate leaves university with debts of £15,000. And the debts drag down their income, making it more difficult to buy a house - if it weren’t tricky enough already.

The number of first-time buyers is at all-time low as they struggle with high house prices, hefty moving costs, increasing mortgage rates and tougher lending policies. The rates on fixed mortgages, for example, have climbed to a 10-year high of 6.75%. And you can’t get a 100% mortgage any more, unless you can persuade your parents to act as guarantors.

Pipe dreams
So it’s testament to their delusion that 54% of students believe they will be able to buy a house within five years of leaving university. James Crocker, an independent financial adviser with Endsleigh Financial Independent Tailoring, said: “It seems highly unrealistic that a graduate with approximately £15,000 of debt will be able to save anywhere near enough for a deposit to buy a house within five years in the current mortgage market.”

Endsleigh has calculated that a graduate on a salary of £19,000 would have a maximum of £126 a month left over after living expenses, rent, student loan repayments, utility bills and pension payments to save for a deposit on a house. So it would take approximately seven years to build up the deposit to buy a home worth £190,000.

The government believes that higher education is one of the most important investments a young person can make. But I wonder whether today’s graduates will get a good return on their investment.

Top Jobs:

  1. Investment banking
  2. Accountancy
  3. Management consulting
  4. Engineering
  5. Science, research & development
  6. Media
  7. Marketing
  8. Teaching
  9. Law
  10. Finance


  1. Teaching
  2. Media
  3. Charity or voluntary work
  4. Marketing
  5. Science, research & development
  6. Law
  7. Accountancy
  8. Management consulting
  9. Human resources
  10. Investment banking

Source: The UK Graduate Careers Survey 2008, High Fliers Research