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13 February 2008
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Are you worried about job-hunting in the midst of a potential economic meltdown? If so, fear not because according to the latest survey by the Association of Graduate Recruiters (AGR) the number of graduate vacancies is expected to rise for a fifth consecutive year.
Graduate vacancies continue to rise
The AGRs Graduate Recruitment Survey 2008 Winter Review held to be the definitive study of recruitment policies of the associations members found that last years 12.7 per cent increase in vacancies at AGR members is expected to be topped in 2008. It is predicted that graduate vacancies in 2008 will jump by a very healthy 16.4 per cent the highest percentage growth in a decade.
AGR chief executive Carl Gilleard admits that he was slightly surprised by the findings because of recent media headlines, which continue to paint a gloomy picture of economic prospects in 2008.
Nonetheless Gilleard argues that we are a long way off from vacancy numbers beginning to wane. I cant see it going into a negative situation where well see a fall in vacancies. Ive not picked up any hard evidence that employers are significantly adjusting their graduate recruitment targets, he says.
The survey was conducted among 217 top blue-chip employers, which together employed 26,575 graduates in 2007. Law firms were well represented, with Allen & Overy, Ashurst, Baker & McKenzie, Berwin Leighton Paisner, Bond Pearce, CMS Cameron McKenna, Dechert, DLA Piper, Eversheds, Irwin Mitchell, Jones Day, Linklaters, Mayer Brown Rowe & Maw, Nabarro, Pinsent Masons, Reed Smith Richards Butler, Simmons & Simmons, SJ Berwin, Slaughter and May, TLT Solicitors and Wragge & Co all contributing.
Camerons graduate recruitment partner Simon Pilcher echoes Gilleards views and says he too was taken aback by the conclusions of the AGR research. I wouldve thought that in the wider market recruiters would be more pessimistic, concedes Pilcher.
Meanwhile,Matthew Keats, graduate recruitment partner at magic circle firm Linklaters, says: From our point of view its very much business as usual and we dont see a downturn in the economy having a significant impact on our recruitment policies. Linklaters plans to hire around 130-140 trainees in the current recruitment round, which is roughly the same as in previous years.
Whats more Keats predicts a significant rise in the number of students applying for vacation schemes and training contracts. I think that a lot of students will look towards the safe haven of law in a way they might not have done when markets were more bullish, given our commitment to graduate recruitment as the key element of our long term resourcing strategy explains Keats.
Linklaters head of human resources Caroline Rawes adds: A legal qualification and experience in a firm like ours will equip you with a very transferable skills set. That makes law a very attractive place to start a career.
The fast moving consumer goods (FMCG) and IT sectors are leading the upward trend in available vacancies. The FMCG sector is expecting to recruit 53.7 per cent more people in 2008 than it did in the previous year, while in IT the number of vacancies is predicted to shoot up by 41.9 per cent. The picture, however, is less rosy in the legal and accountancy sectors, which expect vacancies levels to rise by a very modest 1.4 per cent and 2.4 per cent respectively. Investment banks and fund managers, the most prolific graduate recruiters behind accountants, meanwhile, anticipate a 28.2 per cent rise in graduate jobs. The only sectors that are expecting a dip in positions are chemical/pharmaceutical and insurance.
AGR members recruiting in accountancy and professional services are considerably more optimistic with regard to recruiting challenges in 2008 (with 23 per cent expecting a shortfall) than they were in the previous year when 58 per cent felt a shortfall was likely.
The legal sector is unusual, however, because it works on a different recruitment cycle. Indeed, the vast majority of City firms filled their trainee solicitor vacancies for Autumn 2008 and Spring 2009 two years ago and are now recruiting for 2010/2011 so it is already too late claims Pilcher, adding that to recruit on short-term economic trends is not very sensible.
Baker & McKenzies graduate recruitment partner Vincent Keaveny concurs. Law firms have to look beyond the short-term. Even if there is a very bad recession we have to be sensible, he says.
We dont anticipate any sort of knee-jerk reaction and the same will apply to our retention figures for trainees who are due to qualify this year, he adds.
And for those of you who are due to start your training contract this year the message is simple. Do not panic. Firms are legally obliged to honour these positions. For instance Rawes argues that theres no question of her firm not taking on trainees it has already made offers to.
But if things do get really bad then Keaveny advises the worse that could happen is your firm offering you a cash incentive to defer your start date. This was relatively common during the last recession and indeed proved very popular with some graduates recalls Keaveny.
Money, money, money
Money, of course, is always a key factor in attracting talent at all levels of business. The survey found that trainee solicitor pay has finally caught up with the graduate salaries on offer at investment banks. The median starting salary in 2007 for trainees and their peers in investment banks or fund managers is 35,500. Pity those wanting to carve out a career in the public or retail sectors these are the lowest paid, with graduates starting on a paltry 20,730 and 22,000 respectively.
Many of the large City law firms, however, pay their first year trainees above the AGR average. As highlighted in the Lawyer2B.com salary index the magic circle firms A&O, Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters pay their new joiners 36,200, 35,700, 38,000 and 36,000 respectively.
US firms, including Bingham McCutchen, Cleary Gottlieb Steen & Hamilton and Debevosie & Plimpton pay their first year trainees 40,000 while trainees joining Weil Gotshal & Manges and White & Case will receive starting salaries of 41,000.
The average trainee solicitor salary is expected to rise by 2.8 per cent in 2008 while investment banking and fund manager salaries are predicted to remain static.
Keaveny agrees with this statistic and also predicts that there is unlikely to be much upward pressure on trainee solicitor salaries after many firms dished out double-digit pay rises last summer.
This is the first time law firms have topped the AGR survey albeit jointly. Compared with the figures published in the previous winter review, these salaries represent a considerable increase for law firms, but a slight drop (from 36,000) for City bankers or fund managers.
Pilcher welcomed this finding. He says: The fact that law firms are paying on a par with the banks is a good thing. It will make us competitive.
That said, these numbers do not reflect the jaw-dropping bonuses, of as much as 100 per cent of base salaries, investment bankers pocket. Though admittedly these bonuses are typically paid out to a small handful of mid-ranking and senior bankers and traders. Whats more investment banks salaries structures are much more susceptible to economic cycles. Consequently, they are known to change their position on hiring and firing overnight.
The median starting salary paid to graduates at AGR employers stood at 23,500 in 2007, according to the review, and is expected to inch up by a modest 2.1 per cent this year to 24,000. This is consistent with the previous two years when salaries rose by 2.4 per cent in 2007 and 2 per cent in 2006 after a high of 7.1 per cent in 2005.
These days eye-watering salaries alone are unlikely to lure in the savvy job-hunter. Most are going to want benefits such as a pension, season ticket loan and subsidized gym membership chucked in. The AGR review found that as in 2007 the most common benefit offered to new joiners is the opportunity to join the company pension scheme (96 per cent), followed by training for professional qualifications. The latter is obviously a huge pull for wannabe solicitors. If a firm is willing to stump up the cash for the Legal Practice Course, and if necessary, the Graduate Diploma in Law this can be the difference between becoming a solicitor or abandoning the idea and opting for another profession.
The overall picture of the survey is one of increased opportunities and better conditions for graduates as the battle for talent hots up. So whether or not the recession experts are predicting becomes reality if you have a good degree from a reputable university, and you have the social and interpersonal skills to go with it, then youre going to be in demand. But as AGRs Gilleard puts it just because the statistics look promising there is absolutely no room for complacency. A correction in the attitudes of candidates as a result of the tightening of the market wouldnt be a bad thing, he concludes.