It’s no great secret that the accountancy profession has hit a recruitment rut. A report by High Fliers shows that in 2015 PwC and Deloitte snapped up 1,670 graduates between them, and found that almost 75% of the unfilled graduate vacancies were at accounting and professional services firms.
In recent years, the number of graduate recruitment vacancies has gone up across several industries, however a striking number of graduate positions in the accounting and auditing sector remain empty. Smaller firms and regional practices are now having to think strategically and come to the negotiating table to compete for the best qualified graduates.
So how did this recruitment problem begin, and what is the future likely to hold for practices outside the Big Four?
Recession-hit Britain
During the recession, most large accountancy firms reduced their graduate intake and only took the highest qualified graduates. Once the ‘cream of the crop’ had filled these positions, a huge pool of accountancy graduates had to scramble and compete for positions elsewhere, turning to the smaller practices and, in most cases, settling for a more modest salary but gaining rich experience in a smaller team. Some graduates may have abandoned accounting altogether in order to get a job at all.
In the coming years, the number of graduates receiving investment from accountants in the form of training and qualifications began to rise, albeit at a slower rate than pre-recession, and the industry failed to address a shortfall in the number of qualified accountants entering the industry.
As a result, it is also likely that in the next few decades there will be fewer managers and directors, as the smaller pool of qualified accountants increase in seniority. The impact on legacy and succession for practices could indeed become a critical issue for the industry with a gap in the number of senior accountants with the experience to take on a directorship.
How has this impacted the market?
With greater economic stability over the last few years, the Big Four firms have now increased the number of vacancies available for graduate positions, turning the tables on the practice and corporate markets. It’s safe to say that the market belongs to graduates as package negotiation hits an all-time high, with average annual starting salaries 46% higher than anticipated, at £59,463.
What’s Next?
Graduate recruitment is set to remain a challenge in the coming years, with accounting and auditing positions falling by as much as 50% due to the impact of artificial intelligence, according to Ernst Young.
However, this is not all bad news for the smaller practices, as graduates losing out on places with the Big Four will find plenty of places regionally to start their careers and work their way up the practice ladder.
The impact of Brexit may also restrict the number of graduate places available, as some financial chiefs have already delayed hiring and investment for six months, as they waited for the outcome of the EU referendum to be announced.
While the true impact of leaving the EU has yet to be determined, currently the employment landscape for graduate accountants is positive, and both practice and corporate employers are under pressure to compete for the best graduates by offering attractive package elements.
Our next blog will look at the range of tactics that accountants can employ to attract the best graduate candidates.