UK graduate pay lags behind Northern Europe

As the UK looks to combat a brain-drain resulting from Brexit, it has been revealed that the nation offers some of the lowest graduate starting salaries in Northern Europe. Graduates in Britain can expect to earn £14,000 less than their German counterparts, and less than half of the amount Swiss graduates rake in.

With Brexit negotiations continuing to cast doubt over freedom of movement between the UK and Europe, young, well-educated and high-earning EU nationals are the most likely group to be planning to return to the mainland. At the same time, UK nationals may also be weighing up their options at the last minute, with graduates looking to the continent for broader opportunities, an improved quality of life, and above all an improved pay-packet, which could lead to a brain drain.

According to an analysis of graduate starting salaries from Willis Towers Watson, people starting their careers with a bachelor’s university degree earn a maximum average of £28,705 in the UK. The consultancy found that this is 41% more than the average of £20,303 paid to those who stopped their education at high school. However, following a decade of wage stagnation, British graduate pay is lagging drastically behind equivalent nations in the rest of Europe.

Indeed, while British graduate pay is higher than in the nations where austerity hit hardest, it is scarcely more than in Ireland or Italy. Beyond this, the UK is only 12th in the list of highest starting salaries for graduates, just below Slovenia. At the same time, the continent's other largest economies of Germany and France both offer substantially more generous salaries to graduates, with French graduates bringing in more than £3,000 extra per annum, and German starters earning £14,000 more. Switzerland pays its graduates most by far, with a starting salary of £65,000.

According to Willis Towers Watson, the differences between countries can be attributed to a variety of factors, such as graduate supply in the workforce, average worker age, collective bargaining coverage rates and the relative proportion of skilled roles in the UK labour force, among others. However, as a large number of corporate studies indicate that the UK is enduring a ‘skills shortage’, and companies are engaged in a ‘war for talent’, the fact this has not translated into higher wages being offered by employers suggests they are relying on the labour pool being reluctant to relocate overseas.

Commenting on the latest Starting Salaries Report, Keith Coull, Director of Global Data Services at Willis Towers Watson, said, “With some employers being challenged by skills shortages and facing greater competition for talent, having robust information and insights at hand can make certain hard decisions a bit easier. In a world of work increasingly susceptible to sudden transformation, whether due to technological, economic or political change, the challenge of getting starting pay right has intensified and the consequences of getting it wrong potentially substantial and long-lasting.”