Graduate pay set to beat inflation

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Labour Editor

Graduates can expect pay increases of 10 per cent on top of any cost of living awards during their early years of employment, according to research published today.

Demand for graduates is also increasing and average starting salaries at major employers is likely comfortably to outstrip inflation.

Average pay is forecast to rise by 3.5 per cent - the first increase in two years, according to research group Incomes Data Services (IDM).

The report is published at a time when some City analysts are predicting an inflation rate of two per cent or less by the end of the year.

Competition for jobs will be intense with 217,000 people graduating this summer, but by no means all of them will enter the labour market. A survey of 7,000 students by High Fliers Research found that 41 per cent wanted to undertake postgraduate studies or travel.

The IDS Management Pay Review predicts that graduates leaving university this summer can expect median starting salaries of around pounds 15,000, some pounds 550 more than last year. The biggest boost to salaries among the 100 companies in the survey was found at NatWest Bank which has uprated starting pay by 14.9 per cent from pounds 13,400 to pounds 15,400.

Nearly a fifth of the respondents however - including Cadbury, Unilever and Coopers & Lybrand - are freezing salaries at 1995 levels.

The big growth in demand for degree holders comes from the service sector where employers anticipate recruiting 29.6 per cent more.

The lowest rise in demand - at only 1.3 per cent - was found in the finance sector. In manufacturing the percentage increase is forecast to decline from 15.2 per cent in 1995 to 6.1 per cent this year.