It’s clear that university students are struggling with the cost of living crisis, which isn’t helped by the ‘Maintenance Loan Crisis‘ that highlights maintenance loans aren’t keeping up with real-time inflation. But what about graduates? Are graduate salaries rising in response to higher costs of living? Findings show that average graduate earnings are going up, but that’s not the whole story. Find out more about how much average graduate earnings are in the UK and why we’re really seeing a decrease in salaries.

What are the average graduate earnings in the UK?

average graduate earnings

It’s difficult to determine average graduate earnings in the UK as different studies use different measures. For example, the Institute of Student Employers (ISE) found that the average graduate salary was £33, 229 in 2022. However, this salary is believed to be slightly above average, as the sample they conducted their research on was primarily graduates working in large businesses or on graduate schemes. Meanwhile, StandOut CV reported that in the same year, the average graduate starting salary was £24,291 and Glassdoor advertised graduate roles with an average salary of £29,293.

Are average graduate earnings increasing or decreasing year-on-year?

average graduate earnings increasing or decreasing

When looking at data provided by HESA (Higher Education Statistics Agency) that examines nominal earnings fifteen months after graduation, average graduate earnings are increasing. This is from £27,052 for 2017/18 graduates to £29,699 for 2020/21 graduates, which is almost 10% over four years. However, HESA interpret real earnings, which show a different picture.

What’s the real story behind average graduate earnings?

Imagine every year you put the same amount of money in your savings. But each year, the things you want to buy with that money get more expensive. So, even though you’re saving the same amount, you can’t buy as much as you could before. That’s what’s happening with the money graduates earn.

In 2019, average graduate earnings were £25,095 a year. But in 2022, new graduates were earning £24,647 a year, when looking at real earnings. This might seem like almost the same amount, but because things got more expensive over those years, graduate salaries weren’t going as far. Thus, real earnings echoed lower buying power i.e. you can’t buy as much with the same amount of money.

Which industries are better for graduates salaries?

average graduate salaries by industries

Not all jobs are the same though. Some jobs need more skills or training. The survey by HESA found that people in higher-skilled jobs, like managers or professionals, saw their real earnings go down more than those in jobs that don’t need as many skills. For example, people in caring or service jobs didn’t see their earnings go down as much, and some even earned a bit more in real terms.

The ONS suggested that some industries with lowest wage growth are those with a high proportion of public sector workers. In their analysis, they noted that as 2022 progressed, inflation rates surged significantly, leading to a scenario where, in most sectors, regular salary increases could not keep up with the rate of inflation. The notable exception was the professional and scientific sector, encompassing fields such as legal services, management, engineering, and scientific research, where wage growth still surpassed inflation. Conversely, in various other sectors, including public administration and education, the rate of salary growth has been trailing behind inflation since the latter half of 2021.

Does the university you go to impact average graduate earnings?

University College of Estate Management
University College of Estate Management

Again the answer here isn’t clear cut, but data suggests that it’s possible. According to StandOut CV, the best university to go to if you want a chance of earning higher than £51,000 as a graduate is University College of Estate Management. Here, almost a third (29%) of graduates went on to earn a pretty decent salary.

These are the best universities for graduate salaries, as well as the percentage of graduates earning about £51k!:

  1. University College of Estate Management (29%)
  2. London School of Economics and Political Science (LSE) (12%)
  3. BPP University (11%)
  4. Birkbeck College (9%)
  5. Imperial College of Science, Technology and Medicine (8%)
  6. The Open University (8%)
  7. The University of Cambridge (7%)
  8. Arden University (6%)
  9. The University of Oxford (6%)
  10. The University of Warwick (5%)

It’s important to note that four of these universities are based in London, which may mean that graduates go on to receive London graduate salaries. London salaries are generally higher than the rest of the UK due to the increased cost of living in the capital. Also, two of the others on the list make up Oxbridge, which are prestigious but also notoriously challenging (they’re the type of universities that Nobel Prize winners and royalty go). So while this list might show that you could earn more as a graduate by going to these unis, it’s not necessarily accurate.

Future outlook for graduate salaries in the UK

The outlook for graduate salaries in the UK shows a varied landscape. According to the Graduate Outcomes report by HESA, the average graduate salary in the UK in 2023 was just over £24,000, with a wide range reported from £16,000 to £90,000. However, other reports, such as the Graduate Market in 2023 report by High Fliers claim the average salary is £33,500 (as a nominal value rather than HESA’s real earnings).

This variation indicates a diverse job market with different sectors offering varying compensation levels. Industries like investment banking, law, and consulting are among the highest paying for graduates, with starting salaries at £55,000, £50,000, and competitive rates respectively.

Graduate starting salaries in 2023

So here’s the deal with starting salaries for graduates in the UK in 2023:

  • Salary increase: This year, the average starting salary for graduates is expected to be £33,500. That’s £1,500 more than last year, which means salaries have gone up by about 11.7% in two years.
  • Top salaries: Some of the best-paying companies are offering more than £50,000 to start. But, there’s also one company paying as low as £20,000.
  • £40,000 club: About one-sixth of the top jobs are starting at £40,000 or more.
  • Who’s raising salaries?: More than half of the companies are bumping up their pay this year, most by up to 10%. But, not everyone’s increasing pay; two-fifths are keeping it the same, and a few are even paying less than before.
  • Best paying sectors: If you’re looking into investment banking, law, or strategy consulting, you’re in luck. These sectors are offering some of the highest starting salaries, like £55,000 for banking, £50,000 for law, and £47,500 for consulting.
  • Other high paying jobs: Aldi and a tech company called TPP are also paying big, with starting salaries around £50,000.
  • Inflation comparison: Just for context, if salaries had kept up with inflation over the last ten years, the average starting salary would be around £39,000 now, which is more than what most graduates are getting today.

It’s unclear whether average graduate earnings will rise in 2024, when measured by real earnings. They may rise nominally, however it’s a case of measuring nominal earnings against inflation and the cost of living.

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