Do graduate salaries seem mysterious? We're here to clear the confusion and talk cold, hard cash.
Figures for starting graduate salaries range from basic to extravagant, and it isn't always easy to see why. Some employers appear to offer lucrative remuneration packages for graduate positions, while others hide the salary under "competitive".
Whether you want to earn big right away, or you view a good salary more as a by-product of a rewarding and fulfilling job, you need to understand what you're being offered. After all, we all need to pay the rent!
Here are a few things to remember when you consider the salary of your first graduate job.
The numbers around graduate salaries can be misleading. High Fliers Research puts out numbers stating the average median salary for graduates is a very high £30,000 a year. They arrive at this number by looking at the average remuneration offered by the top 100 graduate employers which include sectors such as banking and energy. It follows that the companies who are able to employ the most graduates can offer higher salaries, so this number may not be indicative of many smaller companies with other things to offer.
It's important not to make all your job decisions based solely on salary-and don't assume you are above a salary in the £20,000s or lower. Research like that done by High Fliers should be taken with a pinch of salt. It's important to assess each salary package on a case-by-case basis.
Bonuses, Benefits + OTE
Negotiating a graduate salary is not always straightforward. For example, your actual pay packet may vary month to month depending on your performance at work-this is very common in popular graduate careers such as Sales or Recruitment. Employers sometimes offer £40,000 OTE, or uncapped commission, which means if you have a good month or quarter, you will be rewarded.
Other ways employers sweeten the deal is with benefits packages. While not directly part of your income, these benefits can include some very valuable things such as private health insurance, dental and eye care plans, tax free loans for a travel season ticket, cycle-to-work schemes and much more.
The "Competitive" Mystery
Why don't all employers tell you the salary outright? There are two main reasons:
- They don't want you to know the salary. The pay may be substantial (or very un-substantial) but they want applications from graduates who want to work there and are not only in it for the money (or lack thereof).
- They don't want their colleagues to know the salary. When you start work, you will soon realise salaries are kept very private, unless you are part of a graduate scheme (LINK) intake. Your employer doesn't want your colleagues to know what you're taking home in case it upsets the apple cart-cynical, we know.
Tax and deductibles
We're sorry to have to tell you this, but the salary you're offered will not be the number on your bank balance every month-there's lots to come out before then. You will pay income tax and national insurance before anything else. After this, your student loan deductions will follow-ouch!
You can find out more about the mechanics of these deductions and how much you can expect to pay on our Understanding your First Pay Cheque page.
If the numbers you are seeing are lower than you had hoped, you can take comfort in the likelihood that you will experience rapid salary progression in your first few years. As graduates gain more experience and responsibility in their role, their salary will rise to match.
The majority of graduates will earn a salary increase at around six months when they pass their probation period. If they are undertaking professional qualifications, like charterships in engineering or accountancy qualifications, these will also increase their earning power.
It is not very British to talk about money or how much we all earn, but it is important you understand the financial side of your first graduate salary. Varying salary predictions are not all doom and gloom-you can still earn a competitive salary which will only increase as you gain more experience and begin to specialise your skill set.