<< back to previous page
Slow growth in graduate starting salaries leaves many deferring life decisions and wishing they had done
Friday, 22 December 2006
Life after graduation
Graduate Job sector Reports
One-third of graduates feel they did the wrong course, and many feel the costs and related debts are stopping them from buying a house, starting a family and saving for retirement six years after they graduated. These are some of the findings from a new survey that explores the impact of tuition fees and looks at what organisations must do to attract and retain graduates, from the Chartered Institute of Personnel and Development (CIPD).
The new survey – Graduates in the workplace – does a degree add value? – finds that 23% of those who graduated in 2005 that would choose a different course would opt for a more scientific/technical course and 22% would choose a business-based course or a professional qualification.
Victoria Winkler, CIPD Learning, Training and Development Adviser, says: “A combination of fierce competition for graduate jobs and graduates taking longer to find work appears to be having an impact on their views about their choice of degree. The findings show that with reflection many graduates would study a subject that relates directly to business or that will better equip them with skills that are transferable into the workplace. However most graduates value their time at university, and would still go to university if they had their time again.
“These findings suggest that the Government needs to work alongside employers to find out what skills are needed in the workplace. This information then needs to be fed into schools and colleges so that school leavers have the information needed to make a more informed decision about the course they choose to study and their future career.”
• The increase in average starting salaries between those who graduated in 2000 and 2005 is just 8%, with those graduating in 2005 earning a mean starting salary of £19,451 and 2000 graduates starting with a mean of £18,016.
• One-third of those who graduated in 2005 are failing to contribute to a pensions saving scheme. And despite receiving a rapid increase in salary once they are working – year 2000 graduates have seen their salary increase by an average 55% to a mean current salary of £27,879 – one-fifth of those who graduated in 2000 still fail to contribute to a pension.
John Philpott, CIPD Chief Economist, says: “The increase in starting salaries over the last five years is well below the increase in both retail price inflation and average earnings during the same period. A combination of the drop in starting salaries, slightly weaker labour market conditions and increased inflation makes it much more difficult for many new graduates to get a foot on the property ladder and to start saving for retirement.
“The rapid increase in salary once graduates are working enables them to start to repay debt and gain a foothold on the housing ladder. But the obvious temptation will be to devote whatever disposable income is left after meeting debt repayments and essential living costs to lifestyle spending – socialising, holidays – rather than saving for the future. But in doing this graduates are failing to save for the future and their wish to retire in their early sixties looks doubtful.”
Female graduates at a disadvantage
• The gender pay gap has doubled since 2001 – men graduating in 2005 earn a starting salary that is 14% more than the average woman graduating in 2005.
• Just 57% of women graduating in 2005 contribute to a pension scheme compared to 70% of men.
• Women who graduated in 2005 are twelve times more likely to believe that gender is holding them back in their career than men.
“Women are more likely to take time out of work to have children and work part-time which means many will be contributing less to pension investments than men. This makes it even more important for women to start contributing to pension investments early on, however almost half of women who graduated in 2005 are failing to make any contribution to pension funds. This could leave many women unable to make the necessary contribution to pension investments in order to retire at the same age as men,” adds Victoria Winkler.
Graduates value time at university
• Over 90% of respondents, regardless of when they graduated, state they would go to university if they had their time again.
• 84% of respondents graduating in 2005 state their time at university has been most helpful in terms of gaining independence and better life skills.
• 74% of respondents graduating in 2005 feel that going to university has given them the opportunity to earn a higher wage.
• 69% of respondents graduating in 2005 believe it has helped with career progression.
• Around three-quarters (64%) of respondents graduating in 2005 believe it has helped with the skills and ability required to do the job.
• Around three-quarters of graduates indicate that their time at university has been helpful in terms of communication skills, presentation skills, team-work and confidence.