The job market for MBA graduates is improving, as employers have an increasing need for skilled management talent to drive the business through the challenging economic environment. Surveys show that considerably more employers plan to hire MBA graduates in 2012.
The collapse of Lehman Brothers in 2008 and the global economic downturn that followed in 2009 led to a deterioration of the labour market and to an all-time-low in MBA graduates hire. However, the situation has improved since and the number of companies planning to hire MBA graduates has increased across all industries in both 2010 and 2011 and is projected to rise even further in 2012.
GMAC survey shows markedly improved job market in 2012
The global 2011 Year-End Poll of Employers, conducted by the Graduate Management Admission Council (GMAC), showed that graduate business school students graduating in 2012 are expected to encounter an improved employment environment. The survey showed that 74% of employers plan to hire recently graduated management talent, up from 58% who hired MBA candidates in 2011. One third of the companies planning to hire MBAs in 2012 intend to raise the annual base salary of these hires compared with 2011, while almost all of the remaining companies plan to keep starting salaries at the same level. The climate, however, is competitive, and in addition to the educational background, employers mostly look for candidates with experience, either from internships, or pre/post-degree work. Only one in four employers would hire an MBA graduate with less than three years of work experience. "Competitive for top talent, still difficult for the masses (average performer with limited experience) to obtain a position," says one of the respondents. Gaining experience from internships, though, is getting easier, as 69% of employers plan to offer paid internships to MBA students in 2012, of which 22% will increase the number offered. In Europe, demand for recent MBA graduates is strongest in the sector of energy/utilities, with an average of 17.5 new hires per company in 2011, followed by the high technology sector with an average of 10 new hires.
Companies are looking for talent
While future MBA students worry about finding a job and getting back their investments, top executives are concerned about skill shortages. PricewaterhouseCoopers’ 2012 Annual Global CEO Survey shows that talent remains an overriding concern for CEOs, who state that skills shortages and talent related expenses have a strong impact on growth and profitability. One in four CEOs said they were unable to pursue a market opportunity or have had to cancel or delay a strategic initiative because of talent challenges. One in three is concerned that skills shortages will impact upon their company’s ability to innovate effectively. Rising compensation is one factor, but for more CEOs, there is simply a deficit of qualified candidates at a time when more CEOs expect to expand their workforces than to reduce. In the UK, 60% of the companies increased headcount in 2011 and over half UK CEOs surveyed expect to increase their global headcount in 2012.
The results of PWC’s CEO survey indicate that Europe has a strong need for high quality management talent and MBA graduates will be invaluable if they focus on acquiring the skills and competences that are looked for.
What qualities do European companies seek to hire?
“Skills – language – mobility - flexibility.”
That is the answer of a European company to a GMAC question on the characteristics a firm typically seeks in international candidates. “Ability to handle cultural diversity, mobile and flexible on location of work, linguistic and communication skills,” reads another answer. The GMAC Corporate Recruiters Survey 2011 shows that the most desired skill of an MBA job candidate by European employers is the proven ability to perform, which is required by 51% of the surveyed companies. Other important traits and skills, required by 40% of the European employers, include technical and quantitative skills, ability to apply business discipline to any job or function, and negotiation skills. Moreover, European companies are significantly more likely to seek specific language, country, or cultural expertise than companies in any other world region. Regarding on-campus recruitment, European companies tend to select business schools based on the school’s global recognition, international diversity of the class, quality of the faculty, and past experience at the school.
The core European labour markets for MBA graduates remain France, Germany and the UK, but new markets are also opening up, with growing interest from the Benelux countries and Scandinavia. A feature that is increasingly sought by European firms is an experience in key emerging markets like Russia, China, India and Brazil, as many companies benefit from business opportunities in those growth markets.
European starting MBA salaries higher than in USA
The GMAC Corporate Recruiters Survey shows that European companies tend to offer higher salaries to MBA graduates then U.S. employers, with an estimated average starting annual base salary of USD 91,693 for Europe and USD 91,433 for the United States. In fact, European employers place a higher premium on MBA graduate hires compared to the salaries they extend to other new hires than U.S. employers do. There are many factors that drive a new hire’s salary, including individual characteristics such as years of work experience, type of experience, and previous salary, as well as external factors such as level and type of position and industry. In Europe, employers in the consulting industry offer the highest salaries, followed by the sector of energy/utilities, while salaries in the products and services and nonprofit or government sectors lag much behind.
In May 2009 the European Union member states agreed on common rules to govern the immigration of highly qualified workers from outside the union and introduced the Blue Card, which is an approved EU-wide work permit scheme which allows high-skilled non-EU citizens to work and live in any EU country, excluding Denmark, Ireland and the UK. The Blue Card scheme is aimed at facilitating access of highly qualified employees, such as MBA graduates, to the European labour market and to help the EU compete effectively against the USA, Canada, Australia and New Zealand for highly skilled migrants. In order to be eligible to apply for a Blue Card, candidates must have professional level qualifications, a work contract or job offer from an EU employer with a salary at least 1.5 times the average gross salary, a valid travel document and sickness insurance. The Blue Card entitles the holder to work and live in the EU for a period of between one and four years, as it is also possible to renew it or apply for permanent residence.
Germany may loosen immigration law to draw more skilled employees
Faced with an ageing population and a shortage of skilled workers which could become an increasingly serious threat to its economy in the coming years, Germany should make it easier for talented foreigners to work in the country. A recent report, made by an independent expert committee set up by a group of prominent German institutions, recommended that visa requirements for non-EU workers coming to Germany be relaxed so that highly skilled workers should not necessarily have to obtain a job offer in order to enter the country. The experts advised that a criteria-based system should be introduced, allowing up to 30,000 skilled workers per year to enter Germany. "More and more German citizens become increasingly aware of the fact that immigration of foreign talents into Germany bears positive effects on the country," the report reads. It states that the number of employees in Germany will fall by some 6.7 million by 2025.