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The IES Annual Graduate Review, 2001 update
Part 2: Graduating into Employment

Pearson R, Perryman S
Report 374b, Institute for Employment Studies, March 2001

a review supported by the IES Research Networks

This page is a summary of a briefing report for the IES Research Networks.
Full, detailed data for Research Network Members appear on the Members’ area of this website.

Each year, over quarter of a million students graduate with first degrees. Where do they go? What jobs do they get and what do they earn; and why do employers still have recruitment difficulties?

This is the second of three updates of the IES Annual Graduate Review 2000. Part 1 profiled the applicants entering higher education, the work experience of those on courses, and the number and characteristics of those graduating. Following on from that, this part examines the new graduates’ entry to the labour market. Part 3 focuses on the position of those with sought-after IT, engineering and science qualifications. These three Parts update key elements of the IES Graduate Review 2000 which remains a relevant and broader-based source document.

Still more are graduating

The number of first degree students graduating has continued to increase marginally but may fall back after 2001. This was the cohort when some students entered HE a year earlier and missed gap years to beat the introduction of student tuition fees in 1998. In 1999, some 264,000 first degrees, 116,000 postgraduate qualifications, and 68,000 HNDs and other undergraduate qualifications were awarded.

Early career turbulence and diversity

Among the 200,000 first degree graduates with known destinations in 1999, 120,000 (60 per cent) entered UK employment, while under two per cent entered self employment, many of these being in the creative arts. Another one in five went on to further study and research, rising to as many as 30 per cent of mathematicians, biologists and physical scientists, and as few as three per cent in education. Similarly, many newly qualified HND students often delay their entry to the labour market, with over 40 per cent with undergraduate level certificates or diplomas staying on to take first degree or other qualifications. In total, 11,000 graduates with sub-degrees, and 28,000 with postgraduate qualifications also entered employment in 1999, making more than 158,000 in total.

Fig. 1: First destinations of first degree graduates, 1999

Source: IES/HESA (2000), First Destinations of Students Leaving Higher Education Institutions 1998/99; Figures 1b and 4f

The proportion of first degree graduates still seeking work nine months after graduation has continued to fall and reached just six per cent in 1999. These crude figures, however, hide a degree of turbulence in matching job seekers with vacancies. Though most students enter HE with high hopes for their career (Connor et al., 1999), for many it can take three or four years to settle into a stable employment pattern, with many graduates experiencing a mixture of temporary jobs, further study and career jobs over this time period (Connor and Pollard, 1997). This turbulence reflects not only a lack of growth in the number of ‘graduate jobs’ to match the large increase in the number of those graduating in the last decade, but also the fact that many new graduates seem to be taking a relaxed view of job hunting. Financial pressure is forcing others to be less choosy about their first job (Pearson et al., 2000).

Not all enter graduate jobs

In 1999, after several years of growth, the number of vacancies for graduates among the major recruiters actually fell. While it has since recovered somewhat, it is still little different from the level a decade earlier, despite the years of economic growth. There has, however, been particular growth in the numbers entering graduate and lower level jobs as well as into the wider labour market. In 1999:

• six months after graduation, one in five of all new graduates was doing clerical or manual work

• nine months after graduation, around 27 per cent of new graduates were in temporary employment, although as the economy has improved, the proportion of graduates obtaining permanent employment has increased steadily

• one in five new graduates in employment was looking for a different job, three times the rate for those in the wider labour market.

Graduates can now be thought of entering employment through one of six broad streams which characterise the qualities sought and potential early career paths (see figure 2).

Fig. 2: IES typology of graduate initial employment

Source: IES

Focusing on the broader national statistical categories, nearly half of the first degree graduates entering employment in 2000 were in a managerial or professional job within six months of finishing their degree. A further 20 per cent were in associate professional roles such as laboratory technicians, nurses and personnel officers. Overall, about two-thirds of new graduates entering employment have gone into ‘graduate jobs’.

However, over the last three years, the proportion entering managerial or professional jobs has been falling, while those entering associate professional or lower level ‘other occupations’ has risen, despite the improvement in the overall job market. Those with IT, engineering, education and medical degrees were the most likely to enter managerial, professional or associate professional jobs, and have lower levels of unemployment. Those with humanities, biological sciences, creative arts and social economic and political studies were the least likely to enter graduate jobs. They were also more likely to be on temporary contracts, more likely to be clerical or manual workers and to have higher levels of unemployment.

A wide range of salaries

As might be expected with the diversity of jobs entered, initial salaries also show wide variation. At the top end there are some London firms offering starting salaries in excess of £25,000 pa with a few offering up to £40,000, although the number of such vacancies is very small. At the bottom end, jobs are being advertised for graduates offering starting salaries of £11,000 or less, in sectors as diverse as retailing, finance and information services. Among the larger recruiters, who account for perhaps one in eight of those entering employment, salaries on offer ranged from £13,500 to £29,000 (Barber and Perryman, 2001). The type of industry, occupation entered and location, has a big impact on the salaries on offer. For example, among the major recruiters, firms in legal services offer an average of £21,250 and retail, leisure and public services just £17,000. Those starting in IT earned £18,900, while environmental planners got £17,000. London supplements, where specified, ranged from £2,000 to £5,000 pa, while salaries in low cost areas outside the south east were often significantly lower. In London, teachers start at £20,000 or more, nurses at £17,915 and police officers £23,184.

The average (median) starting salaries for all new graduates, regardless of type of job entered, was around £14,200. Those entering the professions earned a median salary of £15,900 pa, whereas those in secretarial, administrative and clerical positions were paid just £9,725.

Training opportunities

Salaries are not the only draw for graduates, many of whom focus on the training offered and career prospects. Many employers, and not just those in professions such as the law and accountancy where a further qualification is necessary, choose to brand and sell their employment opportunities in relation to the training and development opportunities provided. However, some provide little or no training. Only half of all new graduates entering employment reported that they had received training in the previous three months. Again, the availability of training varies according to industry. Nearly two-thirds of new graduates employed in education, health and social work received training, compared to only one-third of those in real estate, renting and business activities. Similarly, new graduates employed in graduate jobs received much higher rates of training than those who took clerical or administrative jobs.

Recruitment difficulties

In addition to differential starting salaries and the training and development offered, which can indicate the relative demand and rewards in different types of jobs, there is direct evidence of recruitment difficulties by those seeking new graduates. Interestingly, despite the sustained growth in the economy and more widespread reports of recruitment difficulties, the proportion of the major recruiters reporting such difficulties has not grown so fast. Indeed, it fell in 1998 and 1999 before growing again in 2000. Even though the major recruiters receive on average 35 applications for each vacancy (though this can range from five to 500), and they interview between four and five candidates for every place, major recruiters looking to fill their IT and engineering vacancies have reported difficulties for many years. Outside these disciplines, the most important characteristics identified by recruiters as being in short supply related to the personal characteristics of the graduates, such as their intellectual and personal attributes. While technical specialists also need them, there is little scope nowadays for ‘boffins’ or ‘technocrats’ who work in isolation from colleagues and other functions. Fewer problems were reported by employers seeking to fill HR, legal, administrative and general management posts.

Despite the continued strong demand for IT, physical science and engineering graduates, this does not appear to have tempted many more students to these courses. Although computer science has grown in popularity over the last five years, the numbers of new graduates with IT related degrees are still relatively small. This issue is covered in more detail in Part 3.

Conclusion

The new century sees a graduate labour market that is vastly different from that of a decade ago. The numbers graduating are much greater and their background is much more diverse, as shown in Part 1. Despite the growth in the economy, the number of high level graduate jobs has not grown to keep pace with the increased supply. Many more graduates are entering low level jobs and taking an increasingly long time to settle into stable employment. In part, this reflects differences in their personal characteristics and capability, but there are also subject differences, with those graduating in IT, engineering, medicine and education being in strongest demand and experiencing the easiest transition into employment. The labour market for science, engineering and IT graduates is considered in more detail in Part 3.

Key sources and references

The analysis, graphs and figures for this project are based on data published by HESA, UCAS, DfEE, ONS (the Labour Force Survey), CSU, as detailed in the IES Graduate Review 2000. Key sources are:

• The IES Annual Graduate Review 2000: a diverse and fragmented market
  Pearson, et al., 2000. IES Report 367

• Graduate Salaries and Vacancies 2001 Survey
  Barber L, Perryman S, 2001. AGR

• Making the Right Choice
  Connor et al., 1999. CVCP

• What do Graduates do Next?
  Connor H, Pollard E, 1997. IES Report 343

The IES Annual Graduate Review, 2001 update: Part 2: Graduating into Employment, Pearson R, Perryman S. Report 374b, Institute for Employment Studies, 2001.
ISBN: (no ISBN). £free

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