New figures show UK graduate pay freeze

Graduate salaries in the UK have not risen since 2008, according to the latest government figures.

The annual graduate labor market statistics published by theDepartment for Business, Innovation and Skills (BIS)show that themedian salaryfor a graduate aged 21–30 in 2015 was£24,000—the same as it was in 2008.

But the figures show there is still a financialadvantage to having a college degree in the UK. The median salary fornon-graduatesin the same age group was just£18,000in 2015.

Graduates are also more likely to have a job, with theunemployment ratefor young graduates standing at4.9%in 2015, compared to8.6%for non-graduates. These figures mark a return to unemployment rates a decade ago, following a sharp increase in the wake of thefinancial crisis.

The figures showdegree resultsalso have an impact on pay. Young graduates with a first-class degree earn£3,000 morethan those with an upper-second-class degree, who in turn earn£2,500 morethan those with a lower-second-class or third-class degree. Degree subject is also a factor, withsciencegraduates earning more than those witharts and humanitiesdegrees.

Across all age groups, the median salary in 2015 was£31,500for graduates and£22,000for non-graduates. These figures have risen only slightly since 2008, when they stood at£31,000and£21,000respectively.

The government statistics do not takeinflationinto account, so in real terms graduates areworse offthan they were seven years ago.

Thecost of a degreehas also increased significantly since 2008. In 2010, the government increaseduniversity tuition feesin England from £3,225 to£9,000 a year.

Douglas Webberhas written for IZA World of Labor aboutthe financial benefits of a college degree. He writes that: “Students deciding whether to invest in college and what field to study may be makingthe most important financial decision of their lives. The return to education varies greatly byinstitutional quality,discipline, andindividual characteristics. Estimating the returns for as many options as possible, and making that information as transparent as possible, are paramount in helping prospective students make the best decision.”

The BIS report can be accessedhere.

Related articles:
Is the return to education the same for everybody?byDouglas Webber
The boom in university graduates and the risk of underemploymentbyGustavo A. Yamada
Overeducation, skill mismatches, and labor market outcomes for college graduatesbyPeter J. Sloane
Find more IZA World of Labor about theeconomic returns to education