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More top jobs, but grads lack skills

Employers fear they cannot fill the rising number of vacancies because graduates lack vital work skills

The number of top graduate jobs available is spiralling upwards but employers worry they cannot fill all the vacancies because of a serious skills gap in applicants.

That’s the findings from an industry-leading survey by the Association of Graduate Recruiters (AGR), which revealed that graduate vacancies will continue to grow in 2006 for the third consecutive year.

The AGR Graduate Recruitment Survey 2006, an independent barometer of graduate employment in the UK, foresees a rise in graduate positions of nearly 15 per cent, compared with five per cent last year.

However, almost half of recruiters are concerned they will not be able to find candidates with the right skills, qualifications, abilities and experience. Reasons cited for this by employers include: ‘Not enough applicants with the right skills or qualifications’, and ‘Graduates’ perception of the industry sector’.

The AGR said as well as academic achievement employers want so-called ‘soft skills’, which include being a good team-worker, communicating effectively, leadership and having cultural awareness.

Graduate salaries also look set to continue rising, albeit only marginally - AGR members are predicting an average starting salary of £23,000 this year. While this is an increase of just 2.3 per cent on 2005, the smallest increase for five years, employees said they did not see this as an obstacle to recruitment.

The biggest salary increases are reported by organisations in the public sector (9.5 per cent), telecommunications (4.7 per cent) construction (3.9 per cent) and oil (3.7 per cent). For the fifth year in a row, several sectors predict no change in starting salary for graduates – including law, insurance, banking or financial services and IT. Investment banking starting salaries remain unchanged for the third year at £35,000.

More than half of employers said they expected to recruit more graduates in 2006 than last year, while just 18 per cent expected to hire fewer. Most of the vacancies are in London and the south-east, although recruitment in the north-east is expected to rise by 50 per cent.

Around one in four vacancies this year are in accountancy and professional services, either within accounting firms or financial institutions, or accountancy roles within organisations in other sectors. Law and investment banking are also forecast to recruit large numbers of graduates.

The greatest percentage increase in vacancies is expected in manufacturing, engineering, sales, research and development, IT and investment banking.

The number of organisations planning to pay graduates a lump sum signing-on payment has increased only slightly to 38 per cent, and the average bonus paid has also remained the same for the third year running at £2,000. The majority of organisations offering such a bonus will pay the graduate when he or she starts work.

Carl Gilleard, chief executive of the AGR, said: ‘For the third year running, vacancies for graduates are predicted to rise, which is great news for the ‘Class of 2006’. Starting salaries are also set to increase, with the graduate recruitment market remaining buoyant, and employers continuing to acknowledge the additional contribution to the bottom line that graduates bring.

‘However, final year students should be aware that nearly half of recruiters expect to face difficulties in fulfilling recruitment objectives – with the largest factor being a lack of applicants with the right skills.’
The government said the report, which covers 222 firms which are among the UK's biggest graduate recruiters in both the public and private sectors, vindicated its policy of having half of young people in higher education.

Higher Education Minister Bill Rammell welcomed the research and said: ‘Employers are rightly concerned that future graduates possess suitable skills for the economy. That is why we have placed much emphasis on the growth of foundation degrees, because they are vocational higher education qualifications designed with employers.’

Boris Johnson, higher education spokesman for the Conservatives, said: ‘This survey shows once again how valuable it can be to have a degree. We must work harder to ensure that students are signing up for courses that will genuinely improve their career prospects.

‘We have a serious shortage of graduates in the sciences and engineering and let us hope that students are able to see a huge and growing gap in the market.’

Key findings
-    Graduate jobs up 14.6 per cent on 2005
-    Average pay up 2.3 per cent to £23,000
-    Investment banking pay tops the poll at £35,000
-    Strong demand for soft skills from employers
-    About 25 per cent of vacancies are in accountancy and professional services
-    More than a third of firms offer a ‘golden hello’ – with an average payment of £2,000
-    Most of the vacancies are in London and the south-east, but the number of jobs in the north-east is expected to rise by 50 per cent.
-    Greatest increase in vacancies is in manufacturing, engineering, sales, research and development, IT and investment banking.

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