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End-of-Year Review

The Graduate Market in 2013

Introduction
The Graduate Market in 2013 report, published in January, showed that Britains best-known and most successful graduate employers were expecting a modest increase in their graduate recruitment in 2013. For this special end-of-year review, High Fliers Research returned in June 2013 to the organisations that took part in the original research The Times Top 100 Graduate Employers to confirm the actual number of graduates that have been recruited to start work this year.

The Times Top 100 Graduate Employers is the league table of Britains most sought-after employers, researched from a poll of over 18,000 final year students to find Which employer offers the best opportunities for graduates?. The research is a key part of The UKGraduate Careers Survey conducted annually by High Fliers Research at thirty leading universities.
Chart 1 How Job Vacancies for Graduates have Changed between 2003 and 2013
2013
Down 0.8% Up 4.6%

2012
Up 2.8% Up 12.6%

2011 2010
Down 17.8% Down 6.7%

2009 2008
Up 10.1% Up 10.8% Up 10.9% Up 0.5%

2007 2006 2005 2004

Down 8.3%

2003

-20

-15

-10

-5

10

15

20

Percentage change in graduate vacancies on the previous year Source - The Graduate Market in 2013

The Graduate Market in 2013

Graduate Vacancies in 2013

The Graduate Market in 2013 report, published earlier this year, showed that after graduate vacancies at Britains leading employers stalled in 2012, the prospects for university-leavers were likely to improve in 2013, with employers expecting to take on a small number of extra graduates during the current recruitment round. The latest assessment shows that employers have exceeded these expectations and have actually recruited 4.6 per cent more graduates to start work in 2013, compared with the numbers employed in 2012 (see Chart 1 on previous page). Half the employers from The Times Top 100 Graduate Employers have expanded their graduate recruitment this year, with twenty-four organisations stepping up their recruitment by at least 20 extra graduate positions, compared with 2012. A fifth of recruiters have maintained their graduate intake but a third have reduced their vacancies this year, with six organisations reporting that they have cut more than fifty graduate positions from their annual recruitment. Year-on-year vacancies for graduates have increased in nine of thirteen key employment areas. In percentage terms, the most significant growth is at the consumer goods and media companies (see Chart 3), but both of these sectors only recruited a small number of graduates in 2012. There has been a substantial increase in graduate vacancies at engineering & industrial companies, public sector organisations and the Armed Forces amounting to more than 800 extra entry-level positions this year helped by an unusually high graduate intake at the Civil Service Fast Stream and the continuing expansion of the Teach First scheme, which has recruited almost 1,300 graduates this year. There are also extra vacancies at the top law firms, investment banks and accounting & professional services firms.
Chart 2 Graduate Vacancies at leading UKEmployers in 2013

More than 500 graduate vacancies 251-500 graduate vacancies 101-250 graduate vacancies 51-100 graduate vacancies 26-50 graduate vacancies 1-25 graduate vacancies No graduate vacancies

7% 12% 27% 24% 21% 9% 0%

0
Source - The Graduate Market in 2013

10

20
Percentage of top graduate employers

30

40

The Graduate Market in 2013

There are fewer graduate roles on offer in retailing and at the leading high street banks this year and there has been a small reduction in the number of opportunities at IT & telecommunications companies and consulting firms. Almost all the employers questioned for the research had already completed their 2013 recruitment or had closed-off applications for this year. The main exceptions were the largest round-the-year recruiters who continue to have a limited number of vacancies to fill and employers whose recruitment targets have been increased in the last three months. Several of the largest graduate employers are already preparing to open applications for their 2014 recruitment round. These latest results mark a welcome improvement in the graduate job market and suggest that graduate recruitment at the leading employers is now at its highest level for five years. Vacancies increased sharply in 2010 and 2011 when the number of graduate jobs rose by almost 16 per cent but employers cut their entry-level vacancies by 0.8 per cent in 2012.
Chart 3 How Graduate Vacancies have Changed since 2012, by Sector or Industry

Consumer goods Media Armed Forces Public sector Engineering & industrial Law Investment banking Accountancy & professional services Oil & energy
Down 1.8% Down 3.3% Down 9.4% Down 16.0% Up 11.7% Up 4.0% Up 3.6% Up 2.0% Up 0.7%

Up 22.6% Up 20.0% Up 19.8% Up 18.6%

Consulting IT & telecommunications Banking & finance Retailing

-20

-10

10

20

30

Percentage change in graduate vacancies between 2012 and 2013 Source - The Graduate Market in 2013

The Graduate Market in 2013

Changes to Graduate Recruitment during 2013

When The Graduate Market in 2013 report was produced in January 2013, it showed that Britains leading graduate employers were expecting to increase their entry-level vacancies by 2.7 per cent for 2013, compared with their graduate intake in 2012. This latest research confirms that the total number of graduates recruited this year has in fact increased further and that vacancy targets in eight key industries and business sectors have been stepped-up since January (see Chart 4). There are, however, fewer graduate vacancies than expected in retail, banking & finance and IT & telecommunications. More than a third of employers have expanded their 2013 graduate vacancies over the last six months (see Chart 5) and overall, the number of vacancies on offer to graduates in 2013 has expanded by 1.9 per cent since the beginning of the year (see Table 6). This is a marked contrast with the previous two recruitment seasons, when employers January graduate vacancy targets were subsequently downgraded later in the year in both 2012 and 2011.
Chart 4 How Graduate Vacancies for 2013 have been Revised, by Sector or Industry
Up 33.2% Up 13.5% Up 11.8% Up 9.6% Up 3.3% Up 3.2% Up 2.6% Up 1.4%

Armed Forces Media Public sector Consumer goods Accountancy & professional services Investment banking Law Engineering & industrial
Down 1.6% Down 1.8% Down 10.4% Down 14.5% Down 22.4%

Oil & energy Consulting IT & telecommunications Banking & finance Retailing

-30

-20

-10

10

20

30

40

Percentage change in graduate vacancies during the 2013 recruitment season Source - The Graduate Market in 2013

The Graduate Market in 2013

Chart 5 How Employers Graduate Vacancies for 2013 have been Revised
Recruiting 50+ graduates more than expected Recruiting 1-50 graduates more than expected Actual recruitment matches expected graduate vacancies Recruiting 1-50 graduates fewer than expected Recruiting 50+ graduates fewer than expected
0
Source - The Graduate Market in 2013

7% 28% 33% 29% 3%

10

20

30

40

50

Percentage of top graduate employers

Table 6 Analysis of Graduate Vacancies in 2013, by Industry or Business Sector

Actual graduates Graduate vacancy Revised graduate % difference Number of recruited for 2012, targets for 2013, vacancies for 2013, between vacancy vacancies as confirmed in as updated in as updated in targets & actual added (cut) December 2012 January 2013 June 2013 recruitment in 2013 since 2012

Industry or Business Sector

Accounting & professional services Armed Forces Banking & finance Consulting Consumer goods Engineering &industrial Investment banking IT& telecommunications Law Media Oil & energy Public sector Retailing ALL SECTORS
Source - The Graduate Market in 2013

3,877 1,012 875 620 288 1,202 2,262 631 755 245 552 2,519 1,453 16,452

3,827 910 927 620 322 1,324 2,270 681 765 259 565 2,672 1,572 16,900

3,955 1,212 793 609 353 1,343 2,343 610 785 294 556 2,988 1,220 17,217

3.3 33.2 -14.5 -1.8 9.6 1.4 3.2 -10.4 2.6 13.5 -1.6 11.8 -22.4 1.9

78 200 (82) (11) 65 141 81 (21) 30 49 4 469 (233) 765

The Graduate Market in 2013

Applications for Graduate Jobs in 2013

Around three-quarters of the organisations featured in The Times Top 100 Graduate Employers provided data about the graduate applications they had processed during the 2012-2013 recruitment season, compared with the number of applicants for graduate roles they had received during 2011-2012. This data shows that up to half of the UKs leading employers have seen their application levels decrease in the 2012-2013 graduate recruitment season (see Chart 9). Overall, total application numbers are 8 per cent lower this year, following annual rises of 11 per cent in 2012, five per cent in 2011 and seven per cent in both 2010 and 2009. The reduction in this years applications is partly due to several of the biggest City investment banks closing-off their applications earlier than usual, because many of their graduate roles had already been filled by candidates who had completed student internships with them. In addition, two of the major public sector employers featured in the research have reduced their graduate vacancies significantly this year and have scaled back their recruitment promotions accordingly, leading to substantially fewer graduate applications. As a result, this means the total number of graduate applications to investment banks were a sixth lower this year, compared with 2012, and applications to public sector employers have dropped by a fifth (see Chart 10). By contrast, applications to engineering & industrial companies and banking & finance were up by at least 10 per cent year-on-year and the number of graduates applying to law and accounting & professional services firms also increased. On average, Britains top employers have received 46 applications for each graduate job in 2013 (see Table 8), compared with 51 in 2012 (see Table 7). Pre-recession in 2008, the figure was 35 applications per vacancy. This year, competition for places has been toughest at consumer goods companies, media firms, high street banks and oil & energy companies.
Table 7 Applications per Vacancy 2012
Average

Table 8 Applications per Vacancy 2013

Average

Consumer goods Media Oil & energy Banking & finance Public sector Investment banking Retailing IT & telecommunications Law Consulting Engineering & industrial Accounting &professional services ALL SECTORS
Source - The Graduate Market in 2013

202.9 177.0 80.9 69.1 68.7 61.4 55.2 43.0 37.6 36.3 34.4 20.6 51.3

Consumer goods Media Banking & finance Oil & energy Retailing Public sector Investment banking IT & telecommunications Engineering & industrial Law Consulting Accounting &professional services ALL SECTORS
Source - The Graduate Market in 2013

160.1 109.7 84.2 74.1 64.3 48.5 47.7 43.1 38.1 37.7 30.8 20.7 45.9

The Graduate Market in 2013

Chart 9 How Applications for Graduate Jobs Changed in 2013

More than 50% increase in applications Up to 50% increase in applications Up to 25% increase in applications No change in applications Up to 25% decrease in applications Up to 50% decrease in applications More than 50% decrease in applications

3% 8% 26% 17% 35% 7% 4%

0
Source - The Graduate Market in 2013

10

20

30

40

50

Percentage of top graduate employers

Chart 10 How Applications for Graduate Jobs Changed in 2013, by Sector or Industry
Engineering & industrial Banking & finance Law Accounting &professional services
Down 0.4% Down 4.8% Down 6.9% Down 9.7% Down 16.0% Down 16.9% Down 20.9% Down 26.6% Up 10.4% Up 3.1% Up 2.4% Up 18.1%

Consumer goods IT & telecommunications Retailing Oil & energy Investment banking Consulting Public sector Media

-30

-20

-10

10

20

30

Percentage change in applications for graduate jobs in 2013 compared to 2012 Source - The Graduate Market in 2013

The Graduate Market in 2013

Employers Application & Selection Processes

The research also examined the application and selection processes used by organisations featured in The Times Top 100 Graduate Employers during the 2012-2013 graduate recruitment season. The results show that almost all of the UKs leading employers now require their graduate applicants to meet minimum academic standards (see Chart 11). Three-quarters of recruiters insist on a 2.1 degree, one in ten require at least a 2.2 degree, and a quarter specify a minimum UCAS tariff for candidates, typically in the range of 260 to 340 (equivalent to BCC to AAB at A-level). Virtually every major employer uses an online application form at the start of their graduate selection process but a third of recruiters accept emailed CVs with a covering letter (see Chart 12). More than four-fifths of employers use some form of aptitude test (such as verbal reasoning, numeracy etc) but fewer rely on personality or psychometric questionnaires. Most graduate recruiters use competency or behavioural-based interviews but over a third conduct skills-based or strengths-based assessments. More than half of employers interviewed candidates by telephone during the 2013 recruitment round, either as part of the pre-screening process or the first-round interview. At selection centre stage, four-fifths of employers evaluated applicants through group exercises and two-thirds used presentations. Other popular elements were written exercises, case studies and role plays. Just one in twenty organisations used a dinner, drinks reception or other social occasion to assess candidates during their recruitment process. Interestingly, fewer than half of graduate employers said they pursued reference checks and only two-fifths conducted other forms of background checks on their graduate recruits. A quarter of employers insisted on a medical assessment and four organisations required graduates to have security clearance.
Chart 11 Minimum Academic Requirements at the UKs Top Employers in 2013

First class degree 0%

2.1 degree

73%

2.2 degree

11%

Minimum UCAS tariff

25%

No minimum academic requirement

16%

0
Source - The Graduate Market in 2013

25

50
Percentage of top graduate employers

75

100

The Graduate Market in 2013

Chart 12 Assessment & Selection Used by the UKs Top Employers in 2013
Initial Application

Online application form CV with covering letter Online self-selection/ pre-qualification exercise
Testing

92% 34% 30%

Aptitude tests (e.g. verbal, numeracy, abstract) Personality questionnaires (e.g. behavioural, work style)
Interviews

82% 28%

Competency/ behavioural-based interviews Telephone interviews Skills-based interviews Strengths-based interviews

Selection Centre

84% 52% 24% 13%

Group exercises Presentations Written exercises Case studies Role plays In-box exercises Dinner, drinks reception or other social occasion that is assessed
Other

81% 66% 52% 45% 30% 14% 5%

Reference checks Background checks Medical assessments Security clearance

47% 40% 24% 4%

0
Source - The Graduate Market in 2013

25

50
Percentage of top graduate employers

75

100

The Graduate Market in 2013

Starting Salaries for Graduates

The Graduate Market in 2013 also analyses the starting salaries that Britains top employers are intending to pay new graduates who begin work with their organisations in 2013. The research shows that the median salary for new graduates at the leading employers is set to remain at 29,000 in 2013, the same level as in 2012, 2011 and 2010 (see Chart 13). Despite this, thirty-nine individual employers have increased their graduate starting salaries for this years new recruits, most by between 500 and 2,000. The salaries quoted are the average national salaries that have been promoted by employers during the 2012-2013 recruitment round. The figures do not include additional benefits such as relocation allowances, starting-work bonuses, regional weighting, subsidised company facilities or bonus schemes. Between 2004 and 2007, salaries rose by between 2.3 and 3.0 per cent marginally higher than a cost-of-living rise each year and by 4.1 per cent in 2008. Despite the substantial cuts in graduate recruitment during 2009, starting salaries actually increased by a higher rate, 5.9 per cent year-on-year. There was a further sharp rise in 2010, largely because of significant increases in the salaries paid by the leading investment banks. For 2013, the highest-paying UK employers are the investment banks and law firms (see Chart 14). Whilst very few banks openly publicise their graduate packages, this research
Chart 13 How Starting Salaries for Graduates have Changed between 2003 and 2013
2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

29,000 29,000 29,000 29,000 27,000 25,500 24,500 23,800 23,100 22,500 22,000

15,000
Source - The Graduate Market in 2013

20,000

25,000
Median starting salaries

30,000

35,000

10

The Graduate Market in 2013

confirms that the best-known employers in the City are currently paying between 37,000 and 49,000 to new recruits. A number of the top City law firms have increased their graduate starting salaries in the last six months, taking the median pay for new recruits up to 39,000. Six other sectors oil & energy, consulting, media, banking & finance, the Armed Forces and IT & telecommunications are now offering median graduate salaries of 30,000 or more. The lowest graduate starting salaries are for those beginning work with public sector employers, which offer median starting salaries of 22,000. This is the sixth consecutive year that the public sector has appeared at the bottom of the graduate pay chart. Over half of employers confirmed that they would also pay their new graduate recruits a relocation allowance or some form of starting work bonus, typically in the range of 1,000 to 4,000, although the most generous packages provide payments of up to 10,000.
Chart 14 Graduate Salaries at the UKs TopEmployers in 2013, by Sector or Industry
45,000 39,000 32,500 31,500 30,000 30,000 30,000 30,000 29,000 29,000 27,500 26,000 22,000

Investment banking Law Oil & energy Consulting Media Banking & finance Armed Forces IT&telecommunications Accounting &professional services Consumer goods Engineering &industrial Retail Public sector

15,000
Source - The Graduate Market in 2013

20,000

25,000

30,000

35,000

40,000

45,000

Median starting salaries

11

The Graduate Market in 2013

Changes in Graduate Recruitment during the Recession & Beyond

The global financial crisis had a major impact on graduate recruitment in the UK and between 2007 and 2009, vacancies at organisations featured in The Times Top 100 Graduate Employers fell by an unprecedented 23.3 per cent and the number of entry-level positions reduced in thirteen of fourteen key industries and business sectors. The most substantial cuts took place at the investment banks, IT&telecommunications firms, chemical & pharmaceuticals companies and within the media, where graduate vacancies halved during the course of just two recruitment rounds. There were sharp falls too in recruitment at consumer goods manufacturers, engineering & industrial employers, oil & energy companies and accounting & professional services firms graduate vacancies dropped by between a quarter and a third in each sector between 2007 and 2009. Just one employment area the public sector managed to increase its graduate intake over this period, increasing vacancies by 44.9 per cent from 1,475 places in 2007, to an impressive 2,137 posts in 2009. This growth was partly down to the considerable expansion of the Teach First scheme over this period, as well as significant increases in recruitment at the NHS, the Civil Service Fast Stream and the Government Communications Headquarters (GCHQ). It is interesting to benchmark how graduate vacancies have changed over the last ten years since the end of the last economic downturn in 2002 (see Chart 15). This indexing of vacancies shows that during the four recruitment seasons between 2004 and 2007, opportunities for graduates grew by more than a third at Britains top employers. Virtually all of this growth was wiped out in the following two years, and by 2009 graduate recruitment had returned to a similar level to that recorded in 2004. Twelve months later, the graduate job market bounced back and vacancies grew by 12.6% in 2010, with a further increase of 2.8% in 2011. But the recovery stalled again in 2012 and
Chart 15 Indexing Graduate Vacancies at the UKsTop Employers 2003 to 2013
150

Graduate vacancies, indexed to recruitment in 2003

136

127

123

120

50

100

101

104

100

111

117

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

119

2013

Source - The Graduate Market in 2013

12

124

The Graduate Market in 2013

although graduate recruitment has increased by 4.6% in 2013, to its highest level since 2008, vacancies for university leavers at the UKs best-known and most popular employers remain below the pre-recession intake seen in 2007. Comparing the graduate recruitment targets for 2013 with the numbers hired in 2007 shows that within nine individual industries and business sectors, graduate vacancies are lower than before the start of the recession (see Chart 16). This year there are a third fewer entry-level positions at the City investment banks, compared with six years ago and recruitment at the major oil & energy companies is 25% lower than in 2007. The worst-hit sector is the media where there are currently around half the number of graduate jobs than there were before the downturn. By contrast, graduate recruitment at the public sector employers has actually increased by almost three-quarters during the last six years and there has been a rise too in entry-level vacancies at IT & telecommunications firms, retailers and consumer goods companies.
Chart 16 Changes to Graduate Vacancies 2007 to 2013, by Industry or Business Sector

Public sector IT & telecommunications Retailing Consumer goods

Down 7.2% Down 8.4% Down 8.7% Down 16.8% Down 25.5% Down 25.7% Down 29.3% Down 31.6% Down 54.4% Up 42.1% Up 30.2% Up 10.3%

Up 72.0%

Accounting & professional services Engineering & industrial Consulting Law Oil & energy Banking & finance Armed Forces Investment banking Media

-75

-50

-25

25

50

75

Combined percentage change in graduate vacancies between 2007 and 2013 Source - The Graduate Market in 2013

13

The Graduate Market in 2013

Outlook for Graduate Recruitment in 2014

The final part of the research looked ahead to the likely level of graduate vacancies at the countrys leading employers in 2014. Although a fifth of organisations were unsure of their future recruitment plans, half expected to hire a similar number of graduates as they did in 2013 and eighteen employers thought that their intake was likely to increase in 2014 (see Chart 17). However, thirteen organisations including five City law firms, a high street bank and two oil & energy companies warned they were planning to take on slightly fewer university-leavers in the year ahead. When asked about their priorities and challenges for the 2013-2014 graduate recruitment season, more than half of recruiters said they would be focusing on building up their profile on campus and improving students perceptions of their organisation (see Chart 18). Similar numbers felt they needed to increase the quality of the graduates they recruited. Although two-fifths of recruiters were worried about increased competition from other employers and over a third feared they didnt have sufficient resources in their graduate recruitment team, it is interesting that noticeably fewer graduate recruiters this year were concerned about having a limited marketing budget for the next recruitment round. A quarter of employers said they would be actively trying to reduce the total number of applications they received and one in six were planning to set social mobility targets. Few graduate employers believed that their graduate recruitment budgets would be increased significantly in 2013-2014 (see Chart 19). Three-fifths thought they would have a similar amount to spend in the coming year, fourteen organisations expected their budget would increase a little but twenty-six employers expected to cut their spending in the year ahead.
Chart 17 Likely Graduate Vacancies at the UKs Leading Employers in 2014
Many more graduate vacancies than in 2013 Slightly more graduate vacancies than in 2013 About the same graduate vacancies as in 2013 Slightly fewer graduate vacancies than in 2013 Many fewer graduate vacancies than in 2013 No graduate vacancies at all in 2014 Dont know yet

1% 17% 48% 13% 0% 0% 21%

0
Source - The Graduate Market in 2013

25

50
Percentage of top graduate employers

75

100

14

The Graduate Market in 2013

Chart 18 Graduate Employers Challenges & Priorities for 2013-2014

Stepping up profile on campus Improving students perceptions of organisation Increasing the quality of the graduates recruited Increased competition from other employers Not enough resources in graduate recruitment team Limited graduate recruitment marketing budget Reducing the total number of applications received Managing expectations of graduate hires Lack of students graduating from specific degrees Retention of graduates once they join the organisation Setting and achieving social mobility targets

52% 51% 47% 42% 36% 34% 24% 19% 17% 17% 17%

0
Source - The Graduate Market in 2013

25

50
Percentage of top graduate employers

75

100

Chart 19 How Employers Recruitment Budgets are expected to Change in 2013-2014

Likely to increase considerably Likely to increase a little Likely to be similar to this year Likely to decrease a little Likely to decrease considerably

2% 14% 58% 23% 3%

0
Source - The Graduate Market in 2013

25

50
Percentage of top graduate employers

75

100

15

The Graduate Market in 2013

Summary of Research

This end-of-year update to The Graduate Market in 2013 is based on a study of graduate recruitment at the UKs best-known and most successful employers, completed by High Fliers Research during June 2013. The research confirms that graduate vacancies at employers featured in the latest edition of The Times Top 100 Graduate Employers have risen by 4.6 per cent in 2013 more than was predicted in January to their highest level for five years. Graduate vacancies decreased by 0.8 per cent in 2012 following increases of 2.8 per cent in 2011 and 12.6 per cent in 2010. Application levels for the best graduate jobs remain very high, with the leading employers receiving an average of 46 applications per vacancy in 2013, a small decrease from the 51 applications per vacancy recorded in 2012. The average graduate starting salary for 2013 remains unchanged at 29,000, the same rate that was paid to new graduates in 2012, 2011 and 2010.
Table 20 Analysis of Graduate Recruitment in 2013, by Industry or Business Sector
Changes in vacancies in 2013 Applications per vacancy in 2013 (2012) Median graduate starting salaries in 2013 How median salaries have changed since 2012 NO CHANGE

Industry or Business Sector

Accounting & professional services Armed Forces Banking & finance Consulting Consumer goods Engineering &industrial Investment banking IT& telecommunications Law Media Oil & energy Public sector Retailing ALL SECTORS
Source - The Graduate Market in 2013

p 2.0% p 19.8% q 9.4% q 1.8% p 22.6% p 11.7% p 3.6% q 3.3% p 4.0% p 20.0% p 0.7% p 18.6% q 16.0% p 4.6%

20.7 (20.6) 84.2 (69.1) 30.8 (36.3) 160.1 (202.9) 38.1 (34.4) 47.7 (61.4) 43.1 (43.0) 37.7 (37.6) 109.7 (177.0) 74.1 (80.9) 48.5 (68.7) 64.3 (55.2) 45.9 (51.3)

29,000 30,000 30,000 31,500 29,000 27,500 45,000 30,000 39,000 30,000 32,500 22,000 26,000 29,000

p 500
NO CHANGE NO CHANGE

p 500
NO CHANGE NO CHANGE

p 3,000 p 1,000 q 2,500

NO CHANGE NO CHANGE

p 2,000
NO CHANGE

High Fliers Research Limited Kings Gate, 1 Bravingtons Walk, London N1 9AE Telephone 020 7428 9000 Web www.highfliers.co.uk