A significant number of graduates and apprentices are leaving jobs for better pay, highlighting a growing trend tied to the cost-of-living crisis.
- The Institute of Student Employers reveals over 51% of employers report graduates leaving roles for financial reasons in 2024.
- Dissatisfaction with pay has become the second leading reason for job changes, surpassing career progression opportunities.
- Graduates show increased interest in higher-paying sectors such as finance, with less interest in traditionally lower-paid public sector roles.
- Retention rates for graduates have declined, while apprentice retention shows improvement.
The Institute of Student Employers (ISE) released its annual Student Development survey, revealing a marked increase in the number of graduates and apprentices abandoning their current positions in pursuit of better remuneration. Dissatisfaction with pay now ranks as the second most common reason for changing jobs, a shift aligned with the ongoing cost-of-living crisis. In 2024, this exodus is reported by over 51% of employers, compared to 40% in the previous two years, and just a quarter in the years 2020 and 2021.
Traditionally, graduates were inclined to change jobs in favour of opportunities providing better career progression. However, the current economic climate has prompted a recalibration of priorities, with salary overtaking career advancement as the primary motivator. Notably, there is a trend of increased job applications to more financially rewarding sectors such as finance, while interest in public sector roles, known for lower pay, is waning.
The survey highlights that starting salaries for graduates and apprentices have seen an increment, yet salaries for those with three years of tenure remain unchanged. Only new hires and those moving for better compensation appear to be benefiting from current market dynamics. This static salary progression has been a critical factor in the declining three-year retention rate for graduates, which has dropped from 83% in 2016 to 70% in 2023/24.
Conversely, there has been an uptick in apprentice retention, reaching 77% this year from 71% in 2023. This could be attributed to the job market’s current climate, where school and college leavers feel a sense of insecurity, prompting them to hold onto positions longer.
Stephen Isherwood, the joint CEO of ISE, voiced concerns over the impact of the cost-of-living crisis on employee retention. He 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.”
To maintain their workforce, employers must adapt to the shifting priorities of graduates and apprentices driven by economic pressures.
