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YOU ARE IN » Home page > News and information main menu > Graduate Market Trends > Graduate and non-graduate earnings

Graduate and non-graduate earnings from the Labour Force Survey (Spring 03)

Earnings survey description

In this study, male and female graduate and non-graduate weekly earnings are compared. In particular, graduate earnings are further analysed by types of degree, work and employers, private and public sectors, and region of place of work. The information is taken from four quarters of the Labour Force Survey (LFS)*, from September 2001 to August 2002. The LFS is a random sample survey of households in the UK undertaken by the Office for National Statistics (ONS), covering around 60,000 households every quarter. The survey collects information about the personal circumstances and work of everyone living in these households, and is the largest regular household survey conducted within the UK.

For the purposes of this analysis, information on individuals’ employment and educational background is used. The focus is on individuals between age 21 and 60 who were in full-time employment for which there was weekly earnings information recorded. The word ‘graduates’ in the discussion refers to those with degree or equivalent qualifications, including those with higher degrees.

Since the LFS collects information only on a sample of the population, to convert this information to give estimates for the whole population, the ONS has given each case in the survey a weight which can be thought of as the number of people that case represents. For this analysis, the total number of weighted individuals aged 21-60 who are in full-time employment and have given earnings information is 17,337,000 (11,104,000 males and 6,233,000 females). The ONS recommends that for LFS analysis involving earnings data, estimates of less than 30,000 people are not used as they are likely to be unreliable. These cases are labelled with an asterisk in the tables in this report.

Graduate information from the LFS is extremely useful, and its use is complementary to the Prospects Today (PT) salary and vacancy survey which we carry out twice a year. Whilst the PT survey is a rich source of information about graduates’ early employment prospects, the information is from job advertisements in our weekly graduate vacancy publication PT which are aimed specifically at graduates. There is thus a bias towards larger firms and specific graduate jobs with generally higher salaries. The LFS provides information about graduates of all ages and includes those in ‘graduate’ and ‘non-graduate’ jobs, from all degree disciplines.

More information about the LFS can be found from the not found (id=47247) website.

*supplied by the Economic & Social Research Council (ESRC) Data Archive at the University of Essex.

In this study, graduate earnings are analysed according to the following critera:

• Earnings by highest educational qualification and age
• Earnings by gender
• Graduate earnings by type of degree and gender
• Graduate earnings by type of work and gender
• Graduate earnings by type of employer and gender
• Graduate earnings by private and public sectors
• Graduate earnings by private and public sectors and region of place of work

Limitations of the survey

The following facts must be taken into account when making inferences from this survey.

• This study does not include those who are in part-time or self-employment.
• When analysing earnings with regards to different levels of educational qualification, only the highest qualification level that an individual has achieved is taken into account, regardless of what other qualifications the individual possesses.
• This survey does not distinguish between mature and non-mature graduates. For example, a graduate aged 40 in this survey may have graduated last year or any time in the last 20 years.

Earnings by highest educational qualification and age

Table 1 and Figure 1 give the weekly earnings of full-time employees by highest educational qualification and age, whilst Figure 2 shows the difference in weekly earnings between graduate and non-graduate full-time employees. For details on the educational classifications used, see definitions of highest educational qualification used in the Labour Force Survey.

• With the possible exceptions of GCSE grades A-C or equivalent and other qualifications, generally the higher the educational qualification levels, the higher the earnings.
• Across all ages, graduates earn on average 49.4% more than those who reported their highest qualifications as GCE A-level or equivalent, and more than double compared with those with no qualifications.
• In most cases, the differences in graduate and non-graduate weekly earnings generally increase with age.
• Between ages 21-40, the rise in earnings is steeper for graduates than non-graduates, suggesting more rapid career progression.

Earnings by gender

Tables 2a and 2b show the weekly earnings of full-time employees by gender, highest educational qualification and age, whilst Table 3 gives the difference in weekly earnings between male and female graduates by age. Figure 3 shows the weekly earnings of male and female graduates by age.

• Across each of the highest educational levels, males have higher weekly earnings than females of the same age group.
• For males aged 21-25, graduates earn 23.2% more than those who reported their highest qualification as GCE A-level or equivalent. The corresponding figure for females is 32.8%, suggesting that although both genders benefit financially in having a degree, the effect is greater for women.
• Male graduates earn more than their female counterparts across all ages, and the differences increase between age 21-45 but level off thereafter.
• For all qualifications, males' weekly earnings increase between age 21-45, in contrast to females' earnings which peak between age 31-35. The situation is slightly better for female graduates whose weekly earnings reach their highest at a later age between 36-40.

The marked differences in earnings between the two genders shown here alone should not be taken as evidence of discrimination. Males and females enter different occupations, do different degrees, have different academic backgrounds and different skills. Only by comparing males and females with the same characteristics could we accurately measure any discrimination.

Graduate earnings by type of degree and gender

Table 4 gives the weekly earnings of full-time graduate employees by type of degree and age. These figures are also represented in Figure 4. Table 5 compares the earnings between male and female full-time graduate employees aged 21-40 by type of degree. Higher degrees include Doctorate, Masters, Postgraduate Certificate in Education (PGCE) and other postgraduate degree or professional qualifications. Examples of the others category include graduate member of a professional institute and chartered accountant.

• Generally, graduates possessing qualifications in the others category have the highest weekly earnings, followed by those with higher degrees and first degrees.
• Across all ages, having qualifications in the others category increases weekly earnings by 22.8% compared with that of a first degree graduate. The corresponding figure for a higher degree relative to a first degree is only 13.9%.
• For graduates aged 21-40, the gender difference in weekly earnings is the highest for those whose highest qualification is a first degree at 28.4%.
• The financial benefits in having a higher degree or a qualification in the others category is greater for women than for men. At age 21-40, female graduates with higher degrees or others qualifications earn on average 15% and 29.5% more than those with just a first degree. The corresponding figures for male graduates are 8.9% and 24.9% respectively.

Graduate earnings by type of work and gender

Table 6 shows the weekly earnings of full-time graduate employees aged 21-40 by type of work and gender. The occupational classifications used are based on the Government Standard Occupational Classification 2000 (SOC2000). The others category include skilled trades occupations, personal service occupations, process, plant and machine operatives and elementary occupations. See examples of types of work for more details.

• With the exception of sales and customer service, male graduates aged 21-40 have higher weekly earnings than their female counterparts across all the broad occupational categories studied here, earning on average 26.7% more.
• With the exception of sales and customer service, the difference in male and female graduates’ earnings is the smallest for administrative & secretarial occupations at 5.4%.

Graduate earnings by type of employer and gender

Table 7 shows the weekly earnings of full-time graduate employees aged 21-40 by type of employer and gender. The types of employer used are based on the Government Standard Industrial Classification of Economic Activities 1992. The others category includes private households with employed persons, and extra-territorial organisations and bodies. See examples of types of employer for more details.

Note that due to the small sample sizes, agriculture, hunting, forestry & fishing, electricity, gas & water, hotels & restaurants, and the others categories are not included in the analysis for the discussion below.

• Male full-time graduate employees aged 21-40 have higher weekly earnings than their female counterparts across all industries, ranging from 42.4% for financial intermediation to 6.8% for education.
• Male graduates working in financial intermediation have the highest average weekly earnings at £772, whilst female graduates in real estate, renting & business activities earn the most at an average of £550 per week.
• Male graduates working in the education sector have the lowest average weekly earnings across all types of employer at £471, whilst female graduates employed in public administration & defence have the lowest average weekly earnings of £422.

Graduate earnings by private and public sectors

Table 8 gives the weekly earnings of full-time graduate employees by private and public sectors and age, whilst Tables 9a and 9b and Figure 5 show the weekly earnings by gender. For definitions of private and public sectors, see public and private sector classifications in the Labour Force Survey.

• With the exception of female graduates aged 51-60, graduates in the private sector have higher earnings than those employed in the public sector, earning on average 16.8% more.
• Graduate weekly earnings in the private sector increase sharply between age 21 and 40 and generally flatten out thereafter, whereas earnings in the public sector tend to rise more slowly but steadily across all age groups.
• In the private sector, male graduates' earnings peak at age 41-45, whereas females' average earnings reach their highest at age 36-40.
• For both genders, although the difference in weekly earnings between the two sectors is only small at 9.6% at age 21-25, this rises to 34.5% at age 31-35.
• At age 21-25, male graduates employed in the private sector earn on average 16.5% more than their counterparts in the public sector, but the corresponding figure for females at the same age is a mere 1.5%.
• Across all ages, the difference in weekly earnings between the private and public sectors is much larger for male graduates at 14.5%, than for female graduates at 4.5%.

Graduate earnings by private and public sectors and region of place of work

Table 10 gives the weekly earnings of full-time graduate employees aged 21-40 by private and public sectors and region of place of work.

• In the private sector, graduates aged 21-40 working in London have the highest average weekly earnings at £717. This is followed by those working in the South East (£598) and East of England (£593).
• In the public sector, graduates aged 21-40 working in London have the highest weekly earnings at £535, followed by East of England (£487) and South West (£477).
• The differences in weekly earnings between the two sectors are the highest in London (34%) and the South East (30%), and smallest in Wales (1.5%) and the East Midlands (1.7%).