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Friday, 25 May, 2001, 07:12 GMT 08:12 UK
Graduates lured by top salaries

By BBC News Online's Briony Hale

Some lucky graduates will find that the prospect of 60,000 a year provides that little bit of extra motivation when sitting their final exams.

The Caudwell Group, a mobile phone group based in Stoke-on-Trent has felt the need to pay that level of salary in order to lure the very best workers away from city jobs.


Someone out there is the cream of the crop and we want them rather than any other person

Caudwell Group
Unemployment is at the lowest level for a generation, and there are some specific pockets of skills shortages.

But given that there are still more graduates than jobs, just what is motivating the companies to increase graduate pay?

Best of the bunch

"Someone out there is the cream of the crop and we want them rather than any other person," a spokesman from the Caudwell group told BBC News Online.

Student graduating
Some firms are determined to attract the best
"We saw that our competitors were offering around the 35,000 mark and we simply wanted to get the best," said the spokesman when asked why their salaries were so much higher than the going rate.

Mr Caudwell - himself a multi-millionaire - justifies the high starting salaries by setting very ambitious sales growth targets.

In addition, the graduates should aim at becoming group managing directors by the age of 30 and use salary negotiating tactics as part of the interviewing process in order to get their 60k salary.

Talent spotting

Many other leading firms have jumped into this battle for talent, acknowledging that to get the best you have to pay the most.

Management consulting firm Accenture, for example, hit the headlines last year for offering a 10,000 golden hello.


There is no shortage of graduates, but the expectations and the standards of some employers have risen

Carl Gilleard
Chief Exec, AGR
But there is a large body of firms that resist the peer pressure to play along the same lines, according to Carl Gilleard, chief executive at the Association of Graduate Recruiters which represents a body of large blue-chip and public sector firms.

"There are a group of employers largely based around the city who will pay whatever it takes to get the best," Mr Gilleard told BBC News Online.

But he added that there were other ways of attracting good staff, including the chance of an early move into management, friendly staff, and an attractive company ethos.

Divergent pay

The average starting salary for graduates is expected to rise to 19,157 in 2001 compared to 18,671 in 2000, according to a study by the Income Data Services.

This can range from about 13,500 in the public sector or insurance firms and up to 35,000 for law or consultancies.

The rate of increase on pay packets also varies greatly from sector to sector.

Those students targeting the human resources profession will see the smallest increases - typically just 2.8% more than the previous year, according to data from the AGR.

But the lucky ones heading into the legal profession are expected to get pay packets worth 6.6% more this year than those recruited the previous year.

Peer pressure

In the legal profession, the driving force is globalisation rather than demand for more lawyers.

American firms have expanded into London and offered much more competitive salaries.

Kings College, Cambridge
Kings College, Cambridge - producing some of the cream of the crop?
Companies are left with the choice of upping their salaries too, or losing the most potential candidates to rivals.

"It only takes one company to start it, and then the pressure is on to follow," said Mr Gilleard.

Many of the firms that have given way to the pressure to hike prices have been those such as accountancy and legal services where the employers report almost no difficulty in recruiting staff.

The shortfall of graduates is focussed on the engineering, science, research and development and information technology posts - firms which have often tried to keep graduate pay tied firmly on the ground.

Company loyalty

Companies are also wary of the churn factor: it is becoming increasingly common for graduates to be paid well during a two or three year training scheme and then choose to up and leave.


Staff retention is critical since it costs around 200,000 to take on and train a graduate over a five year period.

The best 10% of firms retain 80% of their graduate intake after five years. But the worst 10% can be left with just 20%.

"Its Catch 22," says Mr Gilleard, "If you don't develop graduates they will leave you, but if you do develop them then they might leave you."

Despite the pressures to increase pay, many sectors reported few difficulties in finding enough employees last year.

Talent seeking

But all this does not mean that it is easy for graduates to walk into high-paid jobs.

Companies still complain that it is hard to find the right mix of academic excellence, strong inter-personal skills and business acumen.

"There is no shortage of graduates, but the expectations and the standards of some employers have risen," says Mr Gilleard.

And many of the real talent seekers will leave vacancies open rather than employing some of the more run of the mill candidates.

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See also:

14 Mar 01 | Business
UK jobless drops below one million
11 Apr 01 | Business
Can unemployment continue to fall?
27 Nov 00 | Business
Higher education, larger debt
04 Apr 01 | Education
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08 Dec 00 | Education
Graduates pick and choose jobs
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Bright future for graduates
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