Employers report a surge in graduates leaving jobs because of pay, which is one of five key trends to watch in 2024, reveals Georgia Greer, Institute of Student Employers' head of insights
ISE's Student Development Survey has been conducted annually for the past nine years in its current format, this year's issue ran in January and February 2024 and is based on the views of 139 employers.
The survey reveals some important trends to consider if you're in the business of recruiting and developing early talent.
1. Dissatisfaction with pay
The survey shows the impact of the cost of living crisis with more entry-level staff favouring pay over progression.
This year more than half (51%) of employers reported graduates and apprentices were leaving for better pay, compared to 40% in 2023 and 2022, and just over a quarter in 2021 and 2020.
Dissatisfaction with pay has become the second most common reason for people quitting, behind moving to a similar role in a different company. Before the cost of living crisis, graduates were more likely to leave their employer for better progression opportunities than higher salaries.
The trend was reflected in ISE's Student Recruitment Survey which showed a shift to more applications for higher paying sectors such as finance, and fewer graduates applying for jobs in the public sector, which are traditionally lower paid.
ISE's survey also shows that pay progression once in employment hasn't kept pace with the market and only new joiners - both entry-level graduates and those moving for better pay - seem to be reaping the benefits.
While starting salaries for graduates increased this year, the levels for those who've been in the job for three years have remained static.
| Year | On hire | After 3 years |
|---|---|---|
| 2024 | £32,000 | £45,000 |
| 2023 | £30,921 | £45,000 |
2. Declining graduate retention
The cost of living crisis still impacts students once they have found work. Increases in rent, travel and general living costs mean that salary levels are not keeping pace with inflation. So, in a competitive market for talent more people are leaving for better paid opportunities.
The survey shows that employers are going to need to work harder to retain talent as we see graduate retention after three years is in gradual decline.
In 2016 employers retained 83% of their graduates after three years, in 2023/24 it had dropped to 70%. Employers reported that they found Black heritage hires and women particularly hard to retain.
Offering work experience can help retention, around a third of employers (32%) reported that they retain former interns at a higher rate.
Office attendance isn't the only thing that's on the up, the report showed more graduates willing to attend in-person training events.
3. Return to face-to-face
Hybrid working remains a hot topic and our survey showed that the shift to more in-person activities is definitely a trend to pay attention to.
This year's survey showed an increase in the number of graduates attending the office every day (9%, compared to 5% last year) and none working fully remotely anymore (0%, compared to 2% last year). With the majority (73%) working one to two days a week from home.
Office attendance isn't the only thing that's on the up, the report showed more graduates willing to attend in-person training events.
While online learning was still one of the most common ways to educate new joiners, nearly half of employers (47%) told us they thought in-person development activities had the highest impact for learners.
4. Declining career readiness
ISE's Student Development Survey takes a deep dive into the skills graduates possess when they enter employment, whether they meet expectations and those employers tend to develop as part of a role.
Overall, about half of employers (49%) strongly agreed/agreed graduates were career ready at the point of hire, however this is a decrease from 54% in 2023. In comparison, school and college leavers tend to be less ready to hit the ground running - only 25% of employers strongly agreed or agreed that school and college leavers were ready at the point of hire, compared to 39% in 2023.
The areas where employers are most likely to have concerns about in graduates are self-awareness and resilience. Compared to last year, more employers reported that graduates did not meet their expectations in resilience (37% in 2024; 30% in 2023) and self-awareness (43% in 2024; 35% in 2023). However, most employers reported developing these attributes as part of development programmes.
The survey highlighted the importance of work experience programmes. Most employers (74%) agreed that graduates who completed an internship or placement arrived with better skills and attitudes than other graduates.
5. Human centric approach
Along with increased in-person activities, there continues to be a move towards a more human-centric approach to supporting graduates making the transition to the world of work.
Nearly all of the activities used by employers had some form of human focus to them. The most popular were to offer a buddy/peer support scheme (97% offer this) and mentoring (85%).
With the levels of graduates declaring mental health issues and seeking support continuing to grow - 60% employers reported increases compared to last year's intake – 64% of employers are offering more support. And line manager training and support for mental health were on offer by over 80% of employers.
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