Graduates scramble to secure scarce jobs

But the nearly 400,000 students graduating this summer from UK universities, more than 30,000 in Scotland, face months of soul-destroying job hunting and penny pinching before any hope of hitting the sunny uplands.

The number of graduate vacancies has fallen by nearly 7 per cent this year, after dropping 9 per cent last year, according to the Association of Graduate Recruiters, while applications for those posts have exploded.

Employers are drowning in 700,000 applications. One in ten firms which recruits graduates is being bombarded by 10,000 applications, with one in three firms receiving up to 2,500.

Applicants per job has more than trebled over the past two years, from 31 per vacancy in 2008 to 69 this year. This is partly due to higher numbers graduating, but also because those who failed to find the right post last year are still in the race.

London and the South East accounts for more than half the graduate vacancies available, with 5.3 per cent available in Scotland, a typical figure for the UK regions.

But job hunters should not be disheartened as many firms continue to recruit large numbers of college leavers. Jobs are available for those with good degrees who hunt in the right areas.

Perhaps surprisingly, graduate vacancies in the banking or financial sector are predicted to climb by 72 per cent, to make up for recent cutbacks. Insurance companies, too, are due to hike their graduate intake by half, with construction recruiting 45 per cent more college leavers than last year.

On the downside, opportunities in the public sector are likely to fall by 10 per cent, in law 12 per cent, in investment management by 9 per cent, engineering 21 per cent, and retail and IT by 31 per cent.

So where are the jobs to be found? Accountancy remains the biggest recruiter, providing 23 per cent of all graduate jobs, followed by banking, financial services and fund management, which together provide about 29 per cent of graduate posts.

Despite a recruitment freeze, the 2010 graduate recruitment survey still expects the state to employ one in ten new graduates, with law taking 6 per cent. The remaining big industries, such as transport, engineering, retail or construction employ between 4 and 6 per cent of college leavers.

Graduate salaries have on average remained unchanged over the last two years, according to a survey by the Association, with typical starting earnings across the UK of 25,000. In Scotland, they lag those of England, averaging 23,000, on a par with Wales and Northern Ireland.

This could be as a result of the dominance of the public sector, which has seen the highest wage increase of 5.5 per cent in 2010, pushing average starting wages up to 24,250.

Graduate salaries have also risen by 4 per cent in law to 36,500, and in retail by 2 per cent to 23,500.

Investment banking and fund management starting remuneration is down by 8.5 per cent, but is still typically pitched at around 35,000. Most other big industries have not changed their starting graduate salary, which comes in around 25,000.

Once you do begin work, then student loan repayments kick in when you earn 15,000, which almost all those with graduate positions should do. You repay 9 per cent of your gross salary above 15,000.

It makes sense to save as hard as you can in those early months, in case the job doesn't work out, so that you have a cushion of money to fall back on while contemplating your next step.

The next question is should you repay your student loan faster than the government requires.

The interest is going up to 4.4 per cent in September. Although this is a cheap form of borrowing, interest at this level is not negligible.

Furthermore, there is always the threat of higher charges to come, as selling off the loan book to a private company and charging a realistic interest rate is part of the proposals being examined by the current higher education review.

On the other hand, if you need to borrow money, perhaps to fund a mortgage, this may continue to be a relatively cheap way of doing so. There is no sense repaying one debt, simply to take on a more expensive one.