Labour market guides: do graduates earn the highest salaries?

Table full of banknotes
Graduates tend to have higher earnings than workers whose highest qualifications are apprenticeships or A levels. However, this isn’t always the case.

You’ll probably want to consider future earnings when deciding which qualifications to take. But be aware that average figures hide lots of variation, so there’s no guarantee that one route will be more financially rewarding than another.

On average, the more highly qualified that workers are the more they earn. The picture regarding apprenticeships is complicated and depends on their level. They appear to be associated with higher earnings than A levels. Top-level apprenticeships may give degrees from non Russell Group* universities a run for their money.

Be aware that statistical links (eg between qualification level and salary) don’t prove that one thing caused the other. People who take high level qualifications tend to be self-motivated and intelligent, which is likely to play a part in their success. Getting good qualifications may well increase your earning potential but other factors will also have an influence.

Average salaries for graduates and non-graduates

The Office for National Statistics (ONS) tends to issue reports relating to graduate earnings every couple of years. Graduate Labour Market Statistics: 2015 (published in 2016) found that among 21 to 30 year olds:

  • Those with a postgraduate degree earned £28,000 a year on average
  • Those with an undergraduate degree (but not a postgraduate one) earned £24,000 a year on average
  • Non-graduates earned £18,000 a year on average.

Among working age adults (16 to 64 year olds) as a whole:

  • Those with a postgraduate degree earned £39,000 a year on average
  • Those with an undergraduate degree (but not a postgraduate one) earned £31,500 a year on average
  • Non-graduates earned £22,000 on average.

Looking at the class of degree achieved, among 21 to 30 year olds:

  • Graduates with a first class degree earned £27,000 on average
  • Graduates with a 2.1 earned £24,000 on average
  • Graduates with a 2.2 or a third earned £21,500 on average.

However, there was less of a difference in salaries by degree class among working age adults as a whole. This might indicate that degree class matters less as workers gain experience – or that degree class matters more now than it did for those leaving university 20 or 30 years ago.

Higher qualifications pay – but not straight away

An earlier report, Graduates in the UK Labour Market 2013, looked at various related issues. Salaries have stayed very similar in the years between the two reports, so these figures should still be useful.

The report found that, for workers over the age of 25:

  • those who had qualifications above A level standard (eg degrees, HNDs and HNCs) earned more on average than those who had completed an apprenticeship
  • those who had completed an apprenticeship earned more on average than those whose highest qualifications were A levels
  • those whose highest qualifications were A levels earned more on average than those whose highest qualifications were GCSEs at grade A* to C.

However, the picture is complicated by the fact that some apprenticeships include studying for qualifications that are above A level standard, especially higher apprenticeships and degree apprenticeships.

Interestingly, the report found that among 21-year-olds, those with qualifications above A level standard earned less on average than those who had completed apprenticeships. In fact, they had similar salaries to those whose highest qualifications were GCSEs. Reasons for this might include:

  • young people who had been to university taking low-skilled jobs as a short-term measure before returning to education or while searching for a job in their desired field
  • young people who had been to university attempting to enter competitive areas with low starting pay.

However, earnings for those with qualifications above A level standard rose more sharply in their 20s and early 30s than those with lower levels of qualifications.

  • Incomes of workers educated beyond A level standard rose on average until they were around 38 years old, levelling out at £35,000.
  • Workers whose highest qualifications were A levels saw their incomes rise on average until age 34, levelling out at £22,000.
  • Workers whose highest qualifications were GCSEs at grades A* to C on average had incomes that rose until age 32, levelling out at £19,000.

Precise figures for those with apprenticeships are not given, but their salaries appear to peak at around £28,000 in workers’ late 30s.

The report also found that workers who had an undergraduate degree from a Russell Group* university were more likely to work in a role defined as ‘high skill’ (67%, as compared with 53% from non Russell Group universities) and to earn a higher average hourly wage (£18.60, as compared with £14.97 for those from non Russell Group universities). The report considers that this may be due to a higher percentage of Russell Group than non Russell Group undergraduate degree holders having studied medicine, engineering or physical or environmental sciences, the three subjects associated with the highest salaries (see below).

Lifetime earnings for graduates and former apprentices

The Sutton Trust is a think tank that is interested in social mobility. In October 2015 it published a report entitled Levels of Success: the Potential of UK Apprenticeships, which included a comparison of the average lifetime earnings of workers with apprenticeships and workers with degrees. As some of the qualifications are relatively new (and so long-term data isn’t available), the report is based on projected figures calculated by Boston Consulting Group.

You’ll need to be familiar with the framework of levels for different qualifications to make sense of this information. Advanced (level 3) apprenticeships are equivalent to A levels. Higher (level 4 or 5) apprenticeships are ranked above A levels but below a degree.

The report’s projections of average annual earnings were as follows:

  • degree from University of Oxford or University of Cambridge: £45,850
  • degree from a Russell Group* university (excluding Oxford and Cambridge): £40,960
  • degree from a non-Russell Group university: £35,520
  • higher apprenticeship (level 5): £34,220
  • higher apprenticeship (level 4): £32,790
  • advanced apprenticeship (level 3): £23,210
  • A levels: £23,170
  • No qualifications: £15,820

When looking at total projected earnings over a working lifetime, the figure for higher apprenticeships (level 5) was higher than for degrees from non-Russell Group universities. The report comments that this may be ‘partly a product of the head start that is provided by beginning to earn earlier’.

*The Russell Group is a group of 24 leading UK universities

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