Not surprisingly, the best pay rates are on offer at the largest organisations and in the private sectorResearch recently published by Pareto Law reveals that graduates expect a significantly higher starting salary than they are likely to receive. Drilling down into the detail of the Pareto report, which was based on a poll of 492 graduates, just under half of those consulted anticipate earnings of an average of £9,000 more than they will be offered.
While these respondents predicted a first salary of between £21,000 and £30,000, just one in six graduates will receive this level of pay. Similarly, only 35 % of graduates will end up working in a field that is directly related to their area of higher education, and most of the remaining 65% will earn less than £16,000 per annum. What is the reason for this expectation gap?
The first point is that the UK has some of the world most expensive tuition fees; to put it simply, students can be forgiven for assuming that paying upwards of £9,000 per year for their degree constitutes an investment in a future that will include a great salary.
Few, if any, undergraduate programmes guarantee this, certainly in the early stages of a career. Even those jobs typically regarded as hugely lucrative – law, for example – offer relatively modest starting salaries outside some ‘magic circle’ City firms.
Secondly, as harsh at it sounds, graduates are not the rare commodity they were 25 years ago. To put this statement in some sort of context, a mere 3.5 to 4% of young people went to an institution of higher education in the 1950s. This percentage rose slowly to just under 10% by the early 1990s and currently floats at around 50%.
There might well be a perception lag; in other words, students might expect similar rewards to those that were often available to their predecessors, despite no longer being part of an especially exclusive group.
Finally, employers’ needs have changed dramatically in the past few decades and they require new skill sets. Degree programmes are no longer limited to traditional academic subjects and there has been a laudable attempt by universities to modernise not only the courses offered but also to adjust teaching methods to reflect the new working environment.
However, businesses argue that graduates remain unprepared for the challenges of a global marketplace. Put bluntly, if graduates – irrespective of their efforts at college – are not adding the expected value, they will not be paid the premium they expect.
How do we manage expectations without dimming ambition? The key approach is surely one of honesty. Graduates need to be attuned to reality as soon as possible and made to understand that the process of earning a great salary is typically a marathon rather than a sprint.
There is also space to reform education so that having a degree becomes an unquestioned asset. This will allow students to obtain full value from their investment by providing employers with the skills they really need and being remunerated accordingly.
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