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Recruiting graduates and apprentices survey 2019/2020

Author: Michael Carty

XpertHR research provides insights on the recruitment and reward of graduates and apprentices in 2019/2020.

These are changing times for the graduate recruitment market. UK employers might be starting to reconsider their traditional reliance on recruiting graduates as a source of future talent, and instead be putting greater emphasis on the recruitment of apprentices.

About this survey report

This report covers key findings from the 2019 XpertHR survey on recruiting graduates and apprentices.

XpertHR's benchmarking service has the full data on the questions from this survey, covering graduate recruitment, graduate starting salaries and recruiting apprentices. Benchmarking subscribers can access data breakdowns by factors such as broad industry sector and organisation size.

A year ago, XpertHR research suggested that while the graduate labour market remained robust, the apprenticeship levy and degree apprenticeships were driving some employers to increase their use of apprentices.

To investigate this possible trend further, we explore employers' approach to and opinions on the recruitment of both graduates and apprentices.

Graduate intake for 2019/2020

Two-thirds (66%) of employers taking part in our research are currently recruiting graduates in the 2019/2020 recruitment round, or have already done so. This is down from nearly four-fifths (78%) a year ago.

As table 1 shows, three in five (58.7%) employers expect their organisation to recruit the same number of graduates in 2019/2020 as in 2018/2019, while one in three (37.3%) think that this number will increase. The most common reason for an increased graduate intake is business growth, followed by general demands from the business for more graduate new starters.

Table 1: Expected change in number of graduates recruited between 2018/2019 and 2019/2020

Size of organisation Increase
(% of respondents)
Stay the same
(% of respondents)
Decrease
(% of respondents)

n = 126 organisations.
Source: XpertHR.

1 to 249 employees 36.5 61.5 1.9
250 to 999 employees 36.1 61.1 2.8
1,000+ employees 39.5 52.6 7.9
All employers 37.3 58.7 4.0

The strongest demand for graduate recruits is for engineering vacancies (at three in 10 respondents), and for IT and marketing or accountancy roles (each mentioned by around one in five).

Among the one-third (34%) of employers that are not recruiting graduates in 2019/2020, the most common reasons are that:

  • they have decided to take on apprentices, rather than graduates (cited by 30.8%); and
  • recruitment is now focused on more experienced staff (16.9%).

Factors affecting graduate recruitment

More than half (54.8%) of employers currently seeking graduates say that external factors have affected their organisation's approach. Diversity initiatives are the second most widely mentioned factor (see table 2). One employer says that it is using graduate recruitment to attempt to counter the underrepresentation of black and minority ethnic talent in its sector. Another has its sights set on gender: "We have increased our focus on hiring a diverse workforce and are taking proactive steps to address the gender pay gap in the short and longer term."

Table 2: Factors affecting graduate recruitment over the past 12 months

Factors 1 to 249 employees
(% of respondents)
250 to 999 employees
(% of respondents)
1,000+ employees
(% of respondents)
All
(% of respondents)

n = 126 organisations.
Source: XpertHR.

Apprenticeship levy 9.6 19.4 23.7 16.7
Brexit 5.8 5.6 7.9 6.3
Diversity initiatives 3.8 19.4 34.2 17.5
Level of national minimum wage/national living wage 3.8 2.8 5.3 4.0
Skills shortages 34.6 41.7 36.8 37.3
Social mobility shortages 1.9 2.8 13.2 5.6
The organisation's gender pay gap 0.0 0.0 10.5 3.2
None 55.8 44.4 31.6 45.2
Other 1.9 2.8 0.0 1.6

Candidate attraction for graduate roles

Table 3 shows the candidate-attraction methods that employers use when recruiting graduates. It is notable that advertisements in traditional print media are now all but extinct as a means of attracting graduate talent.

Table 3: Graduate candidate-attraction methods in use

Candidate-attraction tool used
(% of respondents)

n = 126 organisations.
Source: XpertHR.

Online job advertisements (own corporate website) 84.1
Notifying vacancies to university careers services 61.9
Social media 59.5
Online job advertisements (general job boards) 59.5
Links with universities 52.4
Online job advertisements (specialist job boards) 47.6
Recruitment fairs 45.2
Employee referral schemes 44.4
Ex work-placement students 38.9
Presentations on/near university campuses 34.1
Speculative applications 30.2
Employment agencies 17.5
Open days for prospective applicants 11.9
Sponsored students 8.7
Specialist journals and/or trade press 6.3
Published directories of vacancies for graduates 6.3
Published bulletins of vacancies for graduates 5.6
Local newspaper advertisements 4.0
National newspaper advertisements 0.0
Other 10.3

Graduate starting salaries

The median increase in graduate starting salaries between 2018/2019 and 2019/2020 is nil. The last time that XpertHR recorded an increase above this was in 2008/2009. This means that employers have effectively frozen graduate starting salaries for a decade.

The median graduate starting salary in 2019/2020 is £24,000, with an interquartile range of £21,000 to £27,000 (see table 4).

The range of starting salaries across the entire sample is £17,000 to £47,000. Only three organisations offer graduate starting salaries pitched at or above £35,000. One of these is a law firm, while the other two are manufacturing firms seeking graduates for specialist engineering roles.

Table 4: Graduate starting salaries 2019/2020

Size of organisation Lower quartile
(£pa)
Median
(£pa)
Upper quartile
(£pa)
Average
(£pa)

n = 118 organisations.
Source: XpertHR.

1 to 249 employees 20,000 23,000 25,000 24,163
250 to 999 employees 21,000 24,000 26,000 23,581
1,000+ employees 22,266 25,750 28,000 25,309
All employers 21,000 24,000 27,000 24,359

Time-series analysis of graduate starting salaries monitored by XpertHR over the past decade shows very little movement, with the median fluctuating only slightly within a tight £1,500 band between £23,000 and £24,500.

More than two-thirds (70.6%) of employers say that their organisation's graduate reward package includes other pay and benefits in addition to basic salary. The most popular additional reward element is bonus scheme participation, offered by more than half of these employers. Other common offerings include pensions and travel-related benefits (such as season ticket loans and cycle-to-work schemes). A minority offer new graduate recruits a signing-on bonus, typically pitched between £1,000 and £2,000.

Graduate recruitment issues

Just over four-fifths (82.5%) of employers report having experienced problems when recruiting graduates. Employers taking part in XpertHR's graduate surveys over the past five years have consistently identified the poor quality of applicants as the main problem that they have experienced with graduate recruitment. This is once again the case, with more than two-fifths (43.7%) citing this as an issue. The next most widespread problems are graduates' salary expectations being too high (mentioned by 31.7%) and too few applicants for graduate roles (28.6%).

Apprentices

In his March 2019 Spring Statement, Chancellor Philip Hammond reaffirmed the Government's commitment to a range of measures to help UK employers tackle productivity issues and skills shortages by boosting the quality and availability of apprenticeships. Boris Johnson promised during his Conservative Party leadership campaign to increase funding for apprenticeships. This emphasis on apprenticeships as an entry route into the workforce means that they might represent a complement or an alternative to graduate recruits for some employers.

The apprenticeship levy - introduced in April 2017 - has also served to focus employers' minds on how they use apprenticeships. The apprenticeship levy requires employers with a paybill exceeding £3 million a year to pay 0.5% of their paybill to fund the costs of apprenticeship training and assessment. Around three-quarters (73.8%) of employers in our sample currently pay it, while more than three-fifths (63.9%) are currently recruiting or plan to recruit apprentices in 2019/2020. This number rises to nearly seven in 10 (68.8%) at organisations that pay the apprenticeship levy. A number of respondents comment that they have felt compelled to increase their recruitment and use of apprentices due to the levy. One private-sector-services employer says: "We've promoted and encouraged the recruitment of apprentices where opportunities exist, to get value from the levy."

Recruiting apprentices

The median number of apprentices that employers expect to hire in the 2019/2020 recruitment round is five. Half (49.2%) of employers say that this number is unchanged from 2018/2019, while two-fifths (42.6%) say that it has increased. One private-sector-services employer comments that it has increased its intake of apprentices "as they are a great source of future talent and we love to grow our own talent into management roles".

Employers report receiving a median 10 applications per apprentice vacancy.

Table 5 shows the factors that employers say have affected their approach to recruiting apprentices over the past 12 months, with the apprenticeship levy and skills shortages identified as having the biggest impact.

Table 5: Factors affecting recruitment of apprentices over the past 12 months

Factors 1 to 249 employees
(% of respondents)
250 to 999 employees
(% of respondents)
1,000+ employees
(% of respondents)
All
(% of respondents)

n = 117 organisations.
Source: XpertHR.

Apprenticeship levy 23.7 52.9 62.2 47.0
Brexit 2.6 2.9 2.2 2.6
Diversity initiatives 0.0 11.8 24.4 12.8
Level of national minimum wage/national living wage 5.3 0.0 8.9 5.1
Skills shortages 31.6 35.3 48.9 39.3
Social mobility initiatives 2.6 2.9 17.8 8.5
The organisation's gender pay gap 0.0 0.0 6.7 2.6
None 50.0 35.3 20.0 34.2
Other 10.5 8.8 6.7 8.5

Apprentice roles and degree apprenticeships

Employers mentioned a wide range of roles for which they are recruiting apprentices, from administrative roles to engineering, IT and finance positions.

One in three employers (33.5%) offers or plans to offer degree apprenticeships, which represent an alternative to the traditional graduate recruitment model. Among those providing details of their organisation's current or planned use of degree apprenticeships, the emphasis is mainly on STEM subjects (science, technology, engineering and mathematics) or digital/IT skills. Other employers say that they are planning to use degree apprenticeships to build managerial skills and assist with succession planning. One employer says that the planned introduction of degree apprenticeships is partly to make the organisation more appealing to potential recruits.

Paying apprentices

Just under three in 10 (28.7%) employers pay apprentices at the statutory minimum rate of £3.90 an hour for apprentices aged under 19, or aged 19 and over but in the first year of their apprenticeship.

The remaining employers pay apprentices above this level:

  • Example hourly rates of pay for apprentices range from £4 to £8.80, both at private-sector-services organisations.
  • Example annual rates of pay for apprentices range from £8,000 at a manufacturing-and-production employer to £20,972 at a public-sector-services organisation.

Employers' attitudes to recruiting graduates and apprentices

We canvassed survey respondents' attitudes to the recruitment of graduates and apprentices (see chart 1). Perhaps the most notable finding is that nearly two-thirds (63.4%) agree or strongly agree with the proposition that "increased use of apprenticeships is key to solving skills shortages in the UK". In contrast, just three in 10 (30.7%) agree or strongly agree that "graduates represent the best and most reliable source of new talent for employers".

One-third (35%) of employers agree or strongly agree that "the apprenticeship levy is an unwelcome additional cost to business". This is around half the level recorded by XpertHR in response to a similar statement around the time of the introduction of the apprenticeship levy in 2017.

A small number of employers (7.4%) disagrees or strongly disagrees that "the apprenticeship levy is causing some employers to rebrand graduate roles as apprenticeships".

Chart 1: The extent to which employers agree with the following statements on recruiting graduates and apprentices

Chart 1: The extent to which employers agree with the following statements on recruiting graduates and apprentices

n = 189 organisations.
Source: XpertHR.

Overall, our research suggests that the perceived value of and reliance on apprentices is rising. But it is too early to conclude that graduate recruitment might be in decline, with employers transferring wholesale to apprentices.

Our research

This summary report is based on original research carried out online by XpertHR in May and June 2019. Useable responses were received from 191 organisations with a combined workforce of 280,335 employees. The breakdown of respondents by economic sector is as follows:

  • 125 (65.4%) are in private-sector services;
  • 49 (25.7%) are in manufacturing and production; and
  • 17 (8.9%) are in the public sector.

Broken down by workforce size, the organisations comprise:

  • 85 (44.5%) employing between one and 249 employees;
  • 54 (28.3%) employing between 250 and 999; and
  • 52 (27.2%) employing 1,000 or more.

The smallest organisation in the survey has 10 employees and the largest has 45,000. The median number of employees is 300.

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