Average starting salaries for graduates have broken the £20,000 barrier as competition for jobs intensifies, say findings by the Association of Graduate Recruiters (AGR).

However, the AGR’s Graduate Recruitment Survey, conducted last month amongst many of the UK’s largest graduate recruiters in both public and private sectors, found that employers have cut their vacancies by 3.4% and the average number of applications per post has jumped to 42 from 37.

Although 42% had fewer vacancies for degree holders, 36% had more and 22% said recruitment remained at 2002 levels.

The average graduate starting salary rose by 4.1% to £20,300 in January, an above-inflation rise of 4.1 per cent on 2002.

A fifth of employers now offer new recruits £25,000 or more. One in 10 offer £17,500 or less, but almost half have increased their starting salaries by more than 2.5%. Only 2% of employers have reduced entry-level pay deals.

The AGR survey also indicates that work experience placements remain popular with employers. Nearly three-quarters of employers surveyed are offering some form of work placement for undergraduates in 2003-4 and more than half are offering work experience placements for undergraduates during the 2003 summer holidays.

The outlook for 2004 suggests that both salaries and vacancies will remain fairly stable next year.