Are Graduate Salaries Getting Worse?
Graduating from university is a monumental occasion in any young professional’s life. Years of study, hard work, and investment finally about to pay off—or at least, that’s the hope.
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It’s a bit gloomy in the headlines and has been for at least the last 2 years. Thanks in part to the disruption with COVID, many clients are pushing for experienced candidates to get their projects off the ground and up and running.?
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As a graduate in 2012 during the height of the financial crisis I have a lot of sympathy for the situation. Even during my time, degrees, STEM especially, were being pushed as “the only way to get a good job”. Apprenticeships were looked down on and hands-on jobs like construction weren’t even given a look in. Now my builder mates all own 4 houses and can fix their toilet when it breaks and keep asking me about how to send PDFs to their accountants.
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Largely I think that message is still the same today, thankfully I think apprenticeships are now seen as a genuine way into a good career, including in STEM, but is it even worth it when you get there?
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The salary figure being touted for a graduate back then was around ￡30,000, if you were lucky enough to get it, many didn’t. In fact, salary data from 2012 shows first time graduates accepting a range between ￡17-23,000.
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Adjusted for inflation using the BoE calculator that ￡30k on offer should be closer to ￡42,000 in today’s money.
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As university places exploded and more and more people are graduating this has increased competition and squeezed available vacancies, pushing salaries in only one way. Down.
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With increasing talk about stagnating wages, rising inflation, and the cost-of-living crisis its hardly surprising our graduates are considering careers in the USA, Australia and Dubai where I’ve seen STEM graduates start (yes you read that right, start) on six figures.
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The Current Picture of Graduate Salaries
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According to recent data, starting salaries for graduates in the UK have remained relatively stagnant over the past decade. The Institute of Student Employers reported that while the average graduate starting salary is around ￡30,000, the figure hasn’t shifted much since 2015.
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While this figure may seem competitive at first glance, it’s important to consider the broader economic context. With inflation hitting new heights, the actual purchasing power of that ￡30,000 is significantly reduced. For many graduates, especially those living in expensive cities like London, high living costs mean that disposable income is shrinking.
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When adjusted for inflation, it’s reasonable to argue that graduates today are actually earning less in real terms than their predecessors did five or ten years ago.
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They don’t have any experience and will get salary progression when they get a role if they are any good, why should they earn any more?
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All good points I guess, but America, Dubai and Australia are all paying far more. Software graduates in America can expect $90-100k as a starting salary, trainee doctors up to $95,000 and graduate teachers in Dubai can expect ￡30-35k salaries that are tax free and inclusive of living costs. Anecdotally I’ve heard of interns on over $55k, which would be more than the average UK graduate.
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So, do they just pay better?
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Supply and Demand! It’s so easy to get into University these days, they should make it harder!
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It’s actually just as hard to get into top Universities today as it has been in at least two decades. If anything, its more difficult, in a global market with our universities competing and accepting talent on the world stage. There are just more universities, more places and more degrees on offer than ever before.
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We’re forgetting something in this equation though, many routes into work that existed since the 80s have died off. Heavy industry, steel working, construction, even more traditional office working routes simply don’t exist anymore, and worse still, much of the financial burden of this education is now falling to the student to finance, double whammy.
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So, the message is clear. Students should/must go to university to compete.
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Yeah, but there is a cost of living crisis, everyone is finding it harder!
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The cost of living crisis certainly hasn’t made the situation any better. Rent, utilities, food, and transport have all become more expensive, particularly in cities where many graduates start their careers. Recent reports suggest that rents in the UK have risen by an average of 10-15% in the last year alone, and that’s if you can actually find somewhere that doesn’t have a long waitlist. In cities like London, rent can easily eat up half (or more) of a graduate’s salary, leaving them with very little for savings or disposable income.
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This situation creates a sense of financial stagnation for many graduates, making it harder for them to achieve traditional milestones like buying a house, starting a family, or even saving for the future.
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Well there are so many young people graduating these days!
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We’re back to that supply and demand argument aren’t we.
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?Arguably the most important then, and probably the reason why Dubai is paying more for teachers, Australia more for trainee doctors and America has an overabundance of software work to do. This could explain why these roles are in demand and the cultures there drive the salary motivations.
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Universities are producing more graduates than ever but the harsh truth is the number of graduate-level jobs hasn’t increased at the same rate in the UK, if anything its going down, possibly causing some of the salary pressures.
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This doesn’t change that we have a shortage of talent, especially in STEM and Tech and not investing in junior and graduate roles is a major oversight.
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Even in these in-demand industries where you can see better starting salaries, there are major concerns around salary progression and inflation, and bear in mind that as minimum wage is now reaching nearly ￡24k, is it really worth the thousands of pounds worth of debt you’ll be taking on to find out your degree isn’t opening the doors you thought it might.
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Okay, so what do we do about it?
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Great question. I haven’t the foggiest and there certainly isn’t a silver bullet. There are a few things we can suggest if you are a graduate though:
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So, are graduate salaries getting worse?
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In many ways, yes. Adjusted for inflation, graduates today are likely earning less than they were a decade ago. Increased competition, the cost of living, and wage stagnation are all contributing to a tougher economic reality for today’s graduates.
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These are our employees of tomorrow and the shortage of skilled talent is ever present. The harder it gets for our young people to break into their careers the more chance we have of losing them to competition or falling out of the skilled talent pools we desperately need them for.
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What do you think we can do to change this?
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How can we help?
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If you’re ready to explore the next steps in your tech career, whether you’re looking for a new opportunity or advice on how to advance, we’re here to help. At SourceCo Tech Recruitment, we specialise in IT recruitment, and we’d be happy to assist you with navigating the complexities of the job market.
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For more tips or advice on your career in tech, reach out to me directly or give us a call at 01527 407140. You can also learn more about us here: SourceCo IT Recruitment.
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About the author
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Sam Birtwistle is a technical recruiter and head of the IT division at SourceCo Recruitment. With years of experience managing end-to-end recruitment solutions for contract and permanent positions, Sam can help you find your next tech role or hire top tech talent.
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