The recent findings from the Institute of Student Employers (ISE) highlight a growing trend of graduates and apprentices leaving jobs due to pay dissatisfaction amidst the ongoing cost-of-living crisis.
- According to the ISE survey, over half of employers observed their entry-level staff departing for better-paying opportunities, a significant increase from previous years.
- Dissatisfaction with salary has become a predominant factor for job change, now second to shifting to similar roles across different firms.
- There is a notable movement towards higher-paying sectors like finance, with fewer graduates entering traditionally lower-paid public sector roles.
- Retention rates for graduates over a three-year period have decreased, while apprentice retention has seen a promising rise.
In a rapidly evolving employment landscape, the Institute of Student Employers (ISE) has identified a worrying trend – a sharp increase in the number of graduates and apprentices departing roles due to inadequate remuneration. The recent survey results indicate that over 51% of employers have reported their entry-level staff leaving for better pay, a marked rise from 40% in the preceding two years and just above 25% during 2021 and 2020. The data suggests a direct correlation between the cost-of-living crisis and the prioritisation of salary over career progression.
Historically, higher educational attainments led individuals to value career advancement opportunities over immediate financial gains. However, the current economic climate has shifted focus significantly towards immediate compensation. Dissatisfaction with remuneration has emerged as the second most common reason for job transitions, trailing only behind lateral moves to similar roles at different firms.
Furthermore, the ISE’s survey illuminated a distinct change in sectoral employment preferences. More graduates now gravitate towards professions offering lucrative salaries, notably in the finance sector. Conversely, there has been a decline in applications for public sector positions, known for their comparatively lower financial rewards. This trend underscores a broader shift in employment dynamics, heavily influenced by economic pressures.
While initial salaries for graduates and apprentices have seen some improvement, their growth post-hiring stagnates significantly. Despite entry-level salaries rising to £32,000 for graduates and £22,000 for apprentices in 2024, those who remain in their positions for three years see little change, highlighting a disparity in pay evolution. Economic pressures appear to benefit new joiners more than existing employees.
The ISE report also identified a decrease in graduate retention rates over three years, from 83% in 2016 to a mere 70% in 2023/24. However, a contrary pattern was observed among apprentices, with retention rates rising from 71% to 77%. This discrepancy may be attributed to school and college leavers perceiving the job market as less secure, thus opting for more stable options. Employers have noted retention challenges particularly with Black heritage hires and female employees.
Of particular note, employers maintaining higher retention rates for former interns and placement students suggest that work experience plays a crucial role in workforce stability. Those with prior internship experience bring enhanced skills and attitudes, thus proving more beneficial for organisations. As Stephen Isherwood, joint CEO of ISE, stated, “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. Employers are going to need to work harder to retain talent.”
The findings reveal an urgent need for employers to adapt strategies that address the evolving priorities of the labour market, particularly in regard to compensation and retention.
