Graduates' pay premium has fallen, says ONS

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Employees with a degree earned 85% more last year than those educated to around GCSE level but the gap has narrowed, statistics show.

The margin stood at 95% in 1993 when there were fewer graduates, the figures from the Office for National Statistics (ONS) show.

And one in five graduates at the end of 2010 earned less than the average for those educated to A-level standard.

There has been a fall in the proportion of workers with no qualifications.

In 1993, some 25% of those aged between 22 and 64 had no formal qualifications, compared with 11% in 2010.

The ONS said this change was down to the number of people aged over 50 in 1993 who had not stayed on to sit exams when they were at school. By 2010, most of these people had retired.

Over the same period, the proportion of people in the 22 to 64 age bracket with a degree rose from 12% to 25%.

Pay levels

The ONS statistics show that the pay difference had also narrowed when comparing those who completed higher education short of degree level with those with GCSEs or their equivalent.

Median average hourly pay

  • No qualifications: £6.93
  • Less than C grade GCSEs: £8.07
  • GCSE or equivalent: £8.68
  • A-levels or equivalent: £10
  • Higher education qualifications: £12.60
  • Degree: £16.10

Source: ONS. Figures for final quarter of 2010.

Those with a higher education award earned 45% more than their less qualified counterparts in 2010, down from 54% in 1993.

Those with A-levels or equivalents earned 15% more than those with GCSEs in 2010, down from 18% in 1993.

In the final three months of 2010, the median average hourly pay for employees educated up to GCSE level was £8.68.

This rose for those with A-levels to £10 an hour, for those with higher education qualifications it was £12.60, and for those with a minimum of a degree, median pay stood at £16.10 an hour.

Those with no qualifications earned about £6.93 an hour and, for those with qualifications below C grade at GCSE, the median stood at £8.07.

Reacting to the figures, TUC general secretary Brendan Barber said: "The recession has hit graduate opportunities badly, the misuse of unpaid graduate interns has become widespread, and the living standards of even those with good qualifications has been squeezed as a small number of super-rich have taken an unfair share of the gains of growth.

"It would be a big mistake to conclude that the UK is producing too many graduates.

"Any sound economic future for our country in a globalised world will require a highly-educated and highly-trained workforce, working to their full capacity, rather than forced into jobs that do not require graduate skills."

A spokeswoman for the Department for Business said: "A degree remains a good investment in your future. Our studies show that graduates earn, on average, around £100,000 more across their working lives, as well as other benefits such as greater rates of employment and improved health status."

Nicola Dandridge, chief executive of Universities UK, which represents the institutions, said: "UK graduates are still in a better position to succeed and remain highly valued by employers, here and overseas."

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