Graduates among the worst hit by wage cuts
Even f irms such as PayPal have a lower rate for Irish employees
STUDENTS graduating this month from third-level colleges face the lowest wages for first-time jobs over the past ten years.
Many will count themselves lucky to earn €380 a week, according to detailed research conducted by economists at the Central Bank.
Graduate salaries have been falling since 2007 with the average starting salary down from €27,000 to just under €24,000 according to a study of the annual Higher Education Authority ( HEA) ‘ What do Graduates do?’ survey of college graduates’ first jobs and earnings.
The Central Bank study is called ‘On the Slide: Salary Scales for New Graduates’ and looked only at those leaving universities with an honours or level 8 degree and did not include students from technology
‘Humanities wages have fallen by 19%’
institutes. Among the biggest earnings fall were those with degrees in humanities, arts and social sciences with a decline of 19% to €19,798 compared with an average pay deal of €24,445 just before the economic bubble burst in 2007.
Earnings for those qualifying in science and agriculture were down by 13% from €27,174 to €23,647 and 15% from €28,880 to €24,422, respectively. The smallest fall in earnings was experienced by commerce and business studies students with a fall of just 5% from an average of €25,118 to €23,860.
Not surprisingly, the biggest earnings hit was taken by the small numbers joining the job market with degrees in architecture, with a drop in average starter incomes from €31,500 during the property bubble to €21,448. Pay has fallen by 31% since 2007, according to the Central Bank’s top economists, Thomas Conefrey and Richard Smith.
While graduates in medicine are usually guaranteed a job as a hospi- tal ‘intern’ for one year, their starting salaries have been hit by the public service pay cuts. The starting wage has fallen to €27,120 from €30,371 in 2007.
Elizabeth Ahern-Flynn, who graduated this week, explained, ‘I am one of the more fortunate ones. Beginning medicine in the Royal College of Surgeons in 2009 I knew I had a job waiting for me at the end.’ However, many medical students feel forced emigrate within a year or two of graduating.
Even those with good degrees in technology and computer science are in for a surprise if they land a plumb job with the big multinationals like FaceBook, PayPal or Google. Many of these firms pay lower rates in Ireland than they do to high-flying graduates in Texas or California, even when you convert their US dollar pay packages.
One silver lining for students is that 17 out of every 20 jobs created last year went to third-level graduates. The study notes that ‘of the 58,000 increase in employment in the year to September 2013, 50,000 was accounted for by thirdlevel graduates.’
But this high proportion may mean that the graduate earnings drop will have a knock-on impact on wider earnings as a new floor of less than €20,000 – under €400 a week – becomes standard in starter jobs. While the number of graduates landing jobs has slowly increasing since 2009, their average earnings have remained either flat or fell a little further with an average fall-back of 12%.
Less qualified people are being offered ‘internships’ for six months with no salary unless they qualify for JobBridge, which provides €50 a week on top of social protection benefits.
‘Knock-on impact on all earnings’
The researchers noted that ‘the available data suggests that the reduction in graduate pay in Ireland appears to be larger than that experienced elsewhere.’
Using €25,000 as a cut-off level they found that, back in 2004, 45% of fresh graduates were earning that amount, increasing to around two-thirds of graduates in 2007, but that has dramatically fallen over the past six years due to ‘significant downward flexibility in graduate salaries’.
Graduate earnings stalled in Britain and France as the recession hit in 2009 but they did not decline as dramatically as in Ireland, the researcher noted.