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Graduate salaries in the UK

October 2018

What is the average UK starting salary for graduates? This is a relatively simple question, but the answer is much more complicated - not least because it varies by region, industry, and gender

Graduate salary data is very difficult to track accurately and raises many questions, including:

  • How many hours are graduates working a week?
  • What currency are they being paid in?
  • What other company benefits are they getting?
  • Which exchange rate do you use?
  • Which average do you use?

However, due to its importance in the decision making of employers, students and graduates, salary can still be a useful metric.

What is the average graduate starting salary?

The Institute of Student Employers (ISE) reports the median average graduate starting salary in the UK as £28,250. But they look primarily at big businesses and graduate schemes, so this figure is likely to be too high.

The Destinations of Leavers from Higher Education (DLHE) data reports £22,399 as the mean salary with outliers excluded. However, this is an optional category in DLHE so may not tell the whole story.

In reality, neither of these numbers is particularly helpful in setting graduate salaries or informing graduates of what they should expect to earn. The averages are too general and hide key influences such as industry and region.

How does salary vary by region?

Unsurprisingly, the DLHE data shows that London is the region with the highest salaries. However, the gap between London and Wales (the region with the lowest starting salary) is £4,358 a year or roughly £84 a week. Is this really sufficient to account for the difference in cost of living?

Scotland is joint second place in this list as it benefits from strong engineering, IT and business sectors - all of which offer high starting salaries.

RegionAverage starting salary
South East£22,400
East of England£22,100
West Midlands£21,585
South West£21,454
East Midlands£21,421
North East£21,170
Yorkshire and The Humber£20,855
North West£20,841
Northern Ireland£20,709

Where is the most affordable graduate destination?

Having a high salary does not mean you're getting a lot for your money. Taking a lower salary elsewhere could lead to greater purchasing power.

To put salary data into context we can analyse which areas of the UK provide the greatest cost of living to salary ratio.

Looking at the most popular graduate locations, we can use house prices as a proxy for cost of living and get the following results:

Most affordable
LocationRatio of average house price to average salary
Least affordable
LocationRatio of average house price to average salary

The average UK ratio of house price to salary is 9.8.

To put this into perspective, if you live in Oxford earning an average salary then in order to buy a house you will need to work more than three times as long as somebody living in Hull.

Which are the best-paying industries?

The ISE and DLHE disagree about which industries pay the most and what they pay. Comparing them is not straightforward, though, as there are differences in how industries are grouped. Investment banking, for example, does not have its own category in DLHE. Despite this, we can still see overlap with financial services, engineering, IT, and energy appearing on both.

ISE data
IndustryAverage graduate starting salary
Investment bank or fund managers£32,900
Banking or financial services£31,244
IT and telecommunications£31,017
Consulting or business services£27,000
Energy, water or utilities£26,818
Engineering or industrial£27,219
Construction/built environment£27,100
Public sector£17,374
Transport or logistics£26,367
DLHE data
IndustryAverage graduate starting salary
Extraction of crude petroleum and natural gas£34,980
Manufacture of coke and refined petroleum products£26,476
Manufacture of motor vehicles, trailers and semi-trailers£28,446
Manufacture of other transport equipment£28,626
Financial service activities, except insurance and pension funding£27,647
Information service activities£25,175
Manufacture of tobacco products£25,207
Civil engineering£25,619
Veterinary activities£25,777
Construction of buildings£24,841
Computer programming and consultancy£25,075

A more detailed overview of average salaries for various occupations can be found by browsing job profiles on Prospects.

Over time we have seen wholescale changes in the labour market. For example, 40% of jobs today are in roles that did not exist 50 years ago. Yet, many of the industries on these lists are those that have been practised for centuries and have traditionally been well paid.

Is there a gender pay gap?

Considering salary data in isolation is not sufficient to comment on why gender salary disparities occur. However, they certainly exist. According to DLHE in 2017:

  • the average starting salary for females was £21,535
  • the average starting salary for males was £23,668.

This amounts to a difference of £2,133 a year.

How much more do graduates earn than non-graduates?

Statistics from the Department of Education show that the median annual salary for graduates over their lifetime is £33,000. The corresponding figure for non-graduates is only £23,000.

If we assume that graduates enter work at 21 and non-graduates at 18, with both retiring when they turn 65, this amounts to a lifetime earnings gap of £371,000.

The same report also suggests that postgraduates earn on average £6,000 a year more than their undergraduate counterparts.

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