Pay squeeze still hitting graduates

Pay analysts Incomes Data Services said graduates’ average starting pay increased by one per cent to £25,100 in 2010, while RPI inflation did not fall below 3.7 per cent all year.

Starting salaries are projected to increase by one per cent this year to an average of just over £26,000, while more than two out of three employers planned to freeze graduate recruitment, said the report.

Jessica Evans, of IDS, said: “With employers maintaining a guarded approach to setting starting salaries in 2011, there seems to be no let-up in the squeeze on graduate pay packets as employers continue to keep a lid on costs.

“Even though the demand for graduate recruits is showing some signs of revival, the competition for places means that employers are under little pressure to increase current rates despite high inflation.”

IDS said there were 44 applicants for every graduate vacancy in 2010, up 25 per cent from 35 in 2009, and warned that this could increase this year as a backlog of unemployed graduates have a second attempt at finding work in their preferred areas.

University and College Union general secretary Sally Hunt said: “As students are to be hit with threefold increase in fees and record levels of debt, it is disappointing that salaries are falling again.”

“The Government must stop using spurious graduate premiums to try and sell its highly regressive fees package and look again at the whole policy.”