Graduates more likely to leave employer now than at any point pre-pandemic, study finds

But experts highlight that younger workers have ‘surprising sticking power’ if managed properly

Graduates are more likely to leave their employer now than at any point pre-pandemic, a report by the Institute of Student Employers (ISE) has found.

The survey, which collected data from 107 employers in January and February, found that firms were retaining 72 per cent of graduates for three years after joining a company: a “sharp decrease”, down from a peak of 83 per cent in 2016.

The only time graduate retention was lower was last year, where firms were keeping hold of just 71 per cent of graduates.

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The proportion of school leavers retained for three years after joining a company also fell to 71 per cent, down from 77 per cent when the ISE started collecting this data in 2019.

Stephen Isherwood, chief executive of the ISE, said younger workers “have more sticking power than many believe” if they are managed well.

“Graduates and apprentices don’t stop exploring their career preferences and options when they start work, so employers that build flexibility into their progression pathways can see better retention,” he said.

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“This year we're seeing more dissatisfaction with salary, which could become a big issue particularly if salaries don't keep up with inflation,” Isherwood added.

The report found that the average graduate earned £28,563 on a graduate scheme, increasing to £40,000 after three years. However, inflation meant that graduates now earn less than they did in 2008/09.

The number of graduates who left an employer because of company pay increased from 28 per cent in 2021 to 40 per cent this year.

Charles Cotton, senior performance and reward adviser at the CIPD, said that pay was likely to have an even greater influence on retention levels with the upcoming rise in cost of living, but stressed that employers should also focus on other aspects of good work.

“Opportunities for training and development, clear pathways for them to progress into more senior roles and working arrangements that provide a better balance between work and life” were also likely to have a positive impact, Cotton said.

The report also found that the proportion of graduate leavers who left to pursue a different type of work or career more than doubled, increasing from 20 per cent in 2021 to 44 per cent this year.

A third (33 per cent) of employers agreed that Covid-19 had increased turnover in early careers, while two-thirds (63 per cent) have implemented initiatives to improve retention.

However, half of employers said they did not design interventions for marginalised employees, while two in five (38 per cent) said they did not track the diversity data of their leavers.

Graduates in the health and pharmaceuticals sector were most likely to stick with their employer, with a five-year retention rate of 80 per cent. In comparison, graduates in the legal sector had the highest turnover levels, with only 28 per cent staying with their firm for five years.

The typical organisation polled had a budget of £275,000 for early career development, with more than two-thirds (68 per cent) of employers running a formal graduate development programme – down from 80 per cent in 2021.

The vast majority (87 per cent) of employers recruited apprentices this year, and employers spent an average of 47 per cent of their apprenticeship levy pot.