Graduate employers are warning that the number of vacancies will drop by almost 7 per cent in 2010, according to the Association of Graduate Recruiters (AGR).

Although the market is shrinking at a slightly slower rate than last year, when there was an 8 per cent drop in vacancies, applications for each post are expected to soar as unemployed graduates from previous years compete to find work.

The IT and retail industries will see some of the greatest cutbacks in graduate recruitment.

In its Summer Review, published today, the AGR says that the majority of employers (78 per cent) now insist their new graduate recruits must have a 2:1 degree as a minimum.

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The average graduate starting salary remains at £25,000 per annum, and has remained static since 2008. Those entering careers in law have the highest starting salary at £36,500, with the engineering and industrial sectors offering the lowest entry wage at £23,250.

The study took in 199 businesses across 18 sectors, and was carried out by consultancy firm CFE in May this year.

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Carl Gilleard, chief executive of the AGR, said that the findings showed that the recovery of the graduate market was slower than predicted.

He said it was “hardly surprising” that such a high proportion of employers were demanding a 2:1 from candidates. But while this approach did aid the sifting process, he said it could unnecessarily rule out promising candidates with the right work skills. Mr Gilleard added: “We are encouraging our members to look beyond the degree classification when narrowing down the field of candidates to manageable proportions.”

Responding to the survey’s findings, David Willetts, the universities minister, said a degree remained a “good investment in the long term”.

hannah.fearn@tsleducation.com