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Graduate pay trends around the world

Does it still pay to go to school in 2018?

Compensation Strategy & Design|Total Rewards
Beyond Data

May 02, 2018

Starting pay plays an important role in establishing expectations for new graduates. What are the trends for 2018?

The World of Graduate Pay 2018

Minimum Starting University Graduate Pay

Graduate pay is something of a two-sided coin. On one side are employers, who commonly depend upon steady stream of fresh graduates to inject new vitality into their workforces. Determining what to pay inexperienced hires can be more challenging than it appears on the surface. Depending on how many new employees are needed, the investment can be substantial. What’s more, starting pay plays an important role in establishing expectations and can send a variety of messages to staff (and not just those being hired).

On the other side are fresh graduates poised to enter the work force. Students typically select their field of study with some manner of future expectations, one of which is commonly what sort of living they can make in their chosen field, a potentially crucial consideration considering the cost of studies in certain countries. What can (or should) graduates expect when they enter the market place?

The answer is: it depends where in the world we’re talking about. Fortunately for employers looking for answers, the Willis Towers Watson’s 2018 Global Starting Salaries Report provides variable information and insights, highlighting prevailing paid rates and contextual differences in many of the world’s largest economies.

Minimum Annual Starting Salary for University Graduates as a Percentage of National Average Wage

chart showing as a percentage the annual starting salaries of university graduates

For example, what does having a university education mean in terms of where graduates will enter the market?  When looking at large economies, one can observe a broad trend based on relative market development. Generally, in more mature economies such as France and the UK, university graduates can expect to enter the workforce well below the national annual average wage.

This can be attributed to a variety of things, such average worker age, collective bargaining coverage rates and the relative proportion of skilled roles in the labor force among others, all of which would serve to increase the average wage. Conversely, such influences are less likely to be present in many developing economies. Among the major economies shown above, the typical minimum pay rates university graduates can expect equate 106.5% of the respective annual average wage. At median, the minimum annual base salary for a university graduate without prior experience is US Dollar 26, 105 but the variance among countries is substantial, with students in the United States entering the work force being able to expect to earn more than 10 times their counterparts in Indonesia.

University Graduates Pay Premium Over Secondary Graduates

graph showing pay premiums between uni and secondary graduates

Another common influence on university graduate pay is the relative availability of potential hires with advanced degrees.

Generally speaking, we can observe in the 2018 Global Starting Salaries Report an inverse relationship between the availability of university graduates in the labor force and the minimum starting pay rates employers provide versus those paid to secondary school graduates. At median across major economies, university graduates can expect starting pay rates nearly 50% higher than those paid to secondary graduates with no experience. In some cases, the differences can quite substantial, such as in South Africa, Saudi Arabia, Mexico and India where a university degree may double or even triple one’s starting pay. This stands in stark contrast to countries such as France, Germany, Russia and Italy where the typical premium advanced degree holders can expect is below 30% or even 20%.

Naturally, pay isn’t the only reward – or necessarily even the primary one – which employers need to be mindful of when attracting, retaining and engaging young talent. However, as a foundational package element, the consequences of getting starting pay wrong can substantial, long-lasting and potentially send ripples throughout organizations. As such, having robust information and insights at hand can make certain hard decisions a bit easier.

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