Article date: 12 May 2004
Britain’s graduates entering the working world for thefirst time this year are facing a massive bill of £378m just to getthemselves through the office door – that’s nearly£2,000 per graduate, according to a new report.
And when they start work graduates are in for a furtherfinancial shock as there is an average 30% gap between what theyexpected to earn when they graduated and what they’llactually get.
The study by Norwich Union of more than 500 university andcollege leavers reveals that they will spend around £230 on clothesand accessories; £50 on books and equipment; £1,500 on a car and£24 on grooming just to get them to their first day at work.
With the average starting salary at £16,000*, graduates have adisposable monthly income of just over £1,000, although nearly aquarter admit that their basic outgoing expenditure is more thantheir monthly wage.
The research also revealed that three-quarters of graduatesleave college with a student loan, with the average debt standingat £13,000** which is more than many will take home in their firstyear’s salary. Nearly half of these people are also saddledwith an overdraft with their bank.
James Evans, Norwich Union says: "The figures will make sombrereading for graduates returning to college for their final termafter the Easter holidays. The fact is many graduates will probablyhave to borrow more money just to get them to the office door ontheir first day. Many will also be weighed down with student loandebt and a bank overdraft that at some point will have to berepaid.
"While a good degree and landing a first job are greatachievements students need to be more realistic about their initialearnings potential and should not get carried away with spendingwhen they start to get their pay cheques."
Other findings from the Norwich Union report include:
- The average monthly out-going for most graduates is £793
- Graduates in their first year pump more than £2.4bn into theeconomy
- More than a third (36%) have no money left from their salaryat the end of each month
- One in five fork out £100 or more a month to help pay offtheir debts
- More than a third (36%) said they live at home and payrent/keep to their family
- ends -
Media contacts: Stacey Haddon, CharlotteRuddesdin or Liz Fay at QBO Bell Pottinger on 020 7861 2424.
James Evans, Lorna Wiltshire or Louise Soulsby at Norwich UnionPress Office on 01904 723236 or 07788 471849.
Notes to editors:
An ISDN facility is available for studio quality interviews.Call Jo Misson, Stacey Haddon or Liz Fay on 020 7861 2424 forfurther information.
Calculation on the up-front bill graduates face is based on atotal of 209,945 graduates in the UK (figures from GraduateProspects survey 2001) multiplied by the average bill of items weestimate graduates need to buy to get them selves ready for theirfirst day work.
209,945 x £1,801 = £378,110,945
Research was carried out on behalf of Norwich Union by TheSurvey Shop, who surveyed 515 21-25 year-olds, all of whom werefirst-time college leavers, during March 2004.
*Institute of Employment survey, 2003.
** NUS survey, 2004.
For all life and pensions media enquiries call 08703 66 68 73.For all other media enquiries call 08703 66 68 68.
Norwich Union is the UK’s largest insurer. It is a leadingprovider of life, pensions and investment products and one of theleading IFA providers. IFAs provide around 70% of thecompany’s long-term savings business.
Norwich Union has strategic alliances with building societiesand other leading UK brand names including Tesco Personal Financeand The Royal Bank of Scotland Group.
Norwich Union’s news releases are available on the Avivaplc website at www.aviva.com
1. One-off cost spent on getting each graduate ready fortheir first job
|Breakdown of items needed to get to yourfirst job||Cost||UK cost|
|Accessories e.g: briefcase, handbag||£22||£4.6 million|
2. Cost of average monthly outgoing items
|Monthly Outgoing Items||Monthly Cost||UK cost||First Year UK cost|
|Accommodation||£224||£47 million||£564 million|
|Clothes/shoe/accessories||£68||£14.3 million||£171 million|
|Entertainment/socialising||£138||£29 million||£348 million|
|Food||£79||£16.6 million||£199 million|
|Grooming||£25||£5.2 million||£63 million|
|Loan repayments||£96||£20.2 million||£242 million|
|Phone bills||£35||£7.3 million||£88 million|
|Travel||£82||£17.2 million||£207 million|
|Utility bills||£46||£9.7 million||£116 million|
|TOTAL||£793||£166.5 million||£2 billion|