Wage expectations are way off the mark

Students overestimate starting salaries by 10 per cent on average, study finds. John Gill reports

April 23, 2009

Graduates who do well to find work in the midst of the recession may be setting themselves up for disappointment by overestimating how much they will earn.

Research conducted by the University of Southampton and presented at the Royal Economic Society's annual conference this week found that students overestimated their starting salaries by about 10 per cent on average.

The findings were published as the Conservative Party turned up the heat on the Government over the issue of graduate employment.

George Osborne, the Shadow Chancellor, warned that thousands of graduates could be "scarred for life" by emerging from university and failing to find work.

About 400,000 students are expected to graduate this summer, but estimates have suggested that the number of graduate-level vacancies will have fallen by 5 per cent compared with last year.

The Southampton study on wage expectations was carried out by John Jerrim, a PhD student at the university's School of Social Sciences. It identified wide variations between the expectations of different groups.

For example, while students over-estimated their starting salaries by an average of £1,600 overall, first-years, those studying at post-1992 universities and language students overestimated by about £3,000 on average, it found.

Mr Jerrim said: "This is equal to the yearly tuition fee for most university courses. In contrast, part-time students and those studying degrees in education have more accurate expectations, and could even be underestimating the value of their degrees.

"A university education can bring financial benefits over a graduate's lifetime, along with significant non-monetary gains. However, it is also possible that some young adults enter university with unrealistic aspirations about future income levels."

Mr Jerrim added: "It is vital that students thoroughly research their future employment prospects when going to university, so they can make informed choices.

"They need to understand that starting wages vary dramatically by course and university. Simply having a degree does not guarantee a graduate job and a silver-plated salary."

The study's findings were presented at the Royal Economic Society conference in Guildford on 20-22 April.

The figures were based on the wage expectations of 3,000 full-time students, compared with the average starting salaries of more than 40,000 graduates.



Graduates recruited to take part in knowledge transfer partnerships (KTPs) that exploit academic research for economic gain are underpaid by the companies they work for, a study suggests.

Despite their high-level skills and qualifications, KTP "associates" - who are typically new graduates, many of whom have a postgraduate degree - are being paid salaries that do not reflect their expertise.

Researchers at the University of Portsmouth found that the starting salaries for associates were 15 per cent lower than for graduates generally.

Two thirds of the associates questioned said low salaries were "an issue", and one even warned that firms were using the KTP programme "to get cheap labour".

Despite concerns over remuneration, former associates were found to earn 23 per cent more than the graduate average in the longer term and 13 per cent more than those with higher degrees.


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