Degree costs rose while pay fell by £2,500 between 2007 and 2012
The average graduate starting salary has dropped 11 per cent over a five-year period to 2012 despite the huge rise in tuition fees, according to research by The Complete University Guide.
Average entry-level earnings fell from £24,293 to £21,702 in real terms between 2007 and 2012, the data revealed.
Dentistry continues to be the highest paid graduate occupation, but that also saw a decrease of 9 per cent to an average of £30,681 for a beginner’s salary.
The latest research, based on returns to the Destination of Leavers from Higher Education (DLHE) over a five-year period, shows that the drop in starting salaries for graduate-type jobs is accelerating. The previous survey, for the period between 2005 and 2010, showed a 4 per cent pay decline.
Only two-degree subjects recorded an increase in graduate starting salary between 2007 and 2012: materials technology (up 13 per cent) and librarianship and information management (up 3 per cent).
In contrast, the median starting salaries for many of the most sought after degrees have seen a sharp decline since the economic downturn, including law (17 per cent) and medicine (15 per cent).
This is a concern for students, said Dr Bernard Kingston, author of TheCompleteUniversityGuide.co.uk, because they look at the earning potential of different occupations when choosing what to study at university.
“While financial returns should not be the only consideration, they are becoming more important, whether we like it or not,” he said.
The survey results raise questions about the value of spending up to £9,000 a year on a degree, as the average graduate premium – the difference between starting salaries in graduate-type and other employment – remained relatively low at £6,717.
Having a degree in construction related subjects seemed to be most valuable, as the average graduate working in the building sector recorded an £7,174 advantage over a fellow student entering non-graduate work. This is a 77 per cent rise on the graduate premium in 2010.
Pay for social policy and civil engineering graduate entry posts showed the greatest increase in the difference between graduate and non-graduate starting salaries, which rose to 32 and 30 per cent respectively.
Charles Cotton, pensions and reward adviser at the CIPD, said students shouldn’t be deterred from going to university based on these results.
“It’s not just graduates who have seen a decline in wages since the recession and in fact the average starting salary for workers across the UK is around £21,500, so today’s results compare quite favourably,” he said.
He suggested that as there remains a skills shortage in today’s labour market, students are becoming more conscious of the types of skills employers want, and the types of skills that will help them land a job after university.
Engineering, manufacturing and language skills are the most sought after among UK employers, Cotton said.
Stephen Isherwood, chief executive of the Association of Graduate Recruiters (AGR) agreed that a university degree still stands students in good stead when they enter the jobs market, and he is optimistic that graduates will be rewarded with higher starting salaries as the market recovers.
“It’s fair to say that the last few years have been difficult ones in the employment market, with fewer vacancies available at graduate level as companies rode out the recession. Those larger companies that continued to recruit and bring in fresh talent each year kept graduate salaries at a relatively flat rate, but as we begin to see the market recovering, we expect to see salaries rise," he said.
There has already been some positive news on pay today with forecasts from professional services company EY predicting that average salaries for all UK employees were likely to rise by more than inflation this month for the first time in almost six years.