7. Earnings Analysis
Overview of Graduate Earnings
- The average salary for all graduates in 2020 was €37,104, while younger graduates reported an average salary of €32,596.
- The gender salary gap in 2020 stood at €4,740 for all graduates and €3,106 for younger graduates. When like-for-like students are compared, the gender pay gap reduced by approximately 50%.
- Affluent graduates earned €4,868 more than those from disadvantaged areas. When like-for-like graduates are compared, the gap reduced to €1,504.
- Average salaries were highest for ICT graduates at €42,562, while Arts & Humanities graduates reported the lowest salaries (€27,951).
- Graduates working in the Transport and Storage sector had the highest reported average earnings (€42,015).
- Graduates with over 500 Leaving Certificate Points are shown to have the highest salaries nine months after graduation.
- The gender pay gap widened by €586 between 2017 and 2018 for all graduates, whilst remaining broadly stable between 2018 and 2020. The gender pay gap for younger graduates contracted marginally in 2020, reducing by €62.
- The average ICT graduate salaries rose by €3,166, or 8%, between 2018 and 2020.
- Graduates working in the Transportation and storage sector experienced double digit growth in earnings in 2018 and 2020.
About Graduate Earnings
This chapter focuses on graduates that reported their main activity as working in full-time employment nine months post-graduation. Excluding working graduates where salary information is not provided, the sample size for section one of this analysis is 13,668 (class of 2020). This sample is further reduced to isolate earnings for younger graduates only, which are defined in this analysis as graduates younger than 30 years of age (10,136). Results outlined below are therefore split into ‘All Graduates’ and ‘Younger Graduates’, and these can be compared by selecting the available filters in the charts provided. Finally, results provided in this chapter are weighted to account for differing response rates by institute, NFQ level and mode of study.
Results in section one of this chapter reflect mean predicted salaries by key characteristics before and after controls are used. ‘Before controls’ equates to raw mean salary, without accounting for any differences in characteristics between groups. ‘After controls’ equates to model predicted mean salary after all controls are used in an effort to explain the variation in earnings. The key characteristics explored are earnings by gender, socio-economic background (based on Census small area deprivation index scores derived from student home address data), ISCED broad field of study, NACE sector of employment, NFQ level, Leaving Certificate points and region of employment.*
The second section of this chapter explores developments in mean reported earnings over time. Average earnings are analysed across various student characteristics for the class of 2017, 2018 and 2020. Pooling these three years of data provides a sample of 41,990 graduates. Results are provided for gender, ISCED broad filed of study, NFQ level, NACE sector of employment and region of employment.
The gender earnings gap was €4,740 for the class of 2020.
On average, male graduates earned €39,611 compared to €34,871 for females. As such, the gender salary gap stood at €4,740 for the class of 2020 nine months after graduation. Younger graduates experienced a smaller gender salary gap at just over €3,100. Controlling for factors likely to influence graduate earnings, the gender pay gap is predicted to reduce by almost 50% for all and younger graduates. For example, when comparing like-for-like graduates, predicted earnings for males reduced to €38,372 while the predicted salary for females increases to €35,981. This reduces the salary gap to €2,391. Similarly, the gender pay reduces to just over €1,500 for younger graduates, when controls are applied.
Affluent graduates reported the highest salaries (€38,165), while those from disadvantaged areas reported the lowest (€33,297).
Before controls are applied, the gap in earnings between those from affluent and disadvantaged areas was just under €5,000. For younger graduates the gap is less than €2,750. When like-for-like students are compared however, the predicted gap in earnings by socio-economic background reduces significantly. After controls are applied, the gap is reduced to €1,504 for all graduates and €1,040 for young graduates. There is very little variation in earnings between those from marginally above and marginally average, as measured by the small census area deprivation index scores.
ICT graduates were the highest paid nine months after graduation (€42,562).
ICT graduate salaries were almost €5,500 higher than average (€37,104) in 2020. Other fields of study with above average reported earnings were Engineering, Manufacturing & Construction (€40,845) and Education (€40,324). On the other hand, Arts & Humanities graduates earned the lowest salaries nine months after graduation (€27,951). When like-for-like graduates are compared, Education graduates are predicted to earn the highest salaries whilst Arts and Humanities earn the lowest, albeit the variance in predicted average earnings across different fields of study is significantly lower.
For younger graduates, ICT remains the highest earning field of study, followed by Engineering, Manufacturing and Construction. While younger Education graduates still report above average salaries, they are overtaken by those from the Natural Sciences, Mathematics & Statistics and Health & Welfare fields of study. However, after controlling for the set of earnings determinants, and like-for-like graduates are compared, younger graduates from the Education field are predicted to have the highest earnings nine months after graduation.
The highest earning detailed fields of study nine months after graduation were, Dental studies (€57,795), Education science (€52,198), Education not further defined or elsewhere classified (€48,481), Transport services (€47,325) and Pharmacy (€46,737). Note: detailed fields of study where the number of responses were less than 25 were excluded.
Transportation and Storage is the highest paid sector for all graduates nine months after graduation.
Graduates employed in the Transportation and Storage sector were the highest paid according to these data, with an average salary of €42,015. Those working in Industry and Construction also report average annual salaries above €40,000. At the other end of the scale, graduates working in the Accommodation and food services and Wholesale and retail trade sectors earned the least nine months after graduation. Comparing like-for-like graduates reduces the predicted variance between the highest and and lowest paid sectors, however the ordering remains broadly unchanged.
Focusing on younger graduates only, the sector with the highest average salary nine months after graduation was Information and Communication (€35,442), followed by Industry (€35,028). The two lowest paid sectors is unchanged for younger graduates working in Wholesale and retail (€25,557) and Accommodation and food services (€24,977).
Masters and PhD graduates earn more on average than undergraduate graduates at NFQ levels 6, 7, & 8.
PhD graduates (Level 10) earned the most nine months after graduation at €50,017. Masters (Level 9) and Diploma (Level 7) graduates also earned above the average at €42,791 and €39,454, respectively. Undergraduates (Level 8) meanwhile earned the least, which was driven primarily by the composition of their student population. For example, the average age of Level 8 graduates (in this sample) was 25, compared to 35 and 32 for PhD and Diploma graduates, respectively. Looking separately at earnings across gender, there is a strong positive relationship between the two variables, which may go some way to explaining this difference. Additionally, a higher proportion of Level 7 graduates study subjects that are typically associated with higher salaries, while the opposite is true for Level 8 graduates. For example, Level 8 graduates had a relatively high proportion of Arts and Humanities graduates (8%) compared to Level 7 graduates (2%). On the other hand, the proportion of all Level 7 graduates studying Engineering (41%) is significantly higher than those graduating with a Level 8 qualification (12%).
Before controls were applied, the salary premium for PhD and Masters graduates, compared to undergraduate graduates, was €17,437 and €10,211 respectively. When like-for like graduates are compared, the premia falls to €9,789 for PhD graduates, and €3,222 for those with a Masters degree. For younger graduates, the salary premium attached to a Masters degree is €1,568 and €8,634 for PhD graduates, when controls are applied.
Graduates that achieved over 500 points in the Leaving Certificate reported the highest salaries nine months after graduation.
On average, graduates with 555+ Leaving Certificate Points report the highest average salaries nine months after graduation (€36,642). This also holds true when like-for-like graduates are compared (€35,360). At the other end of the scale, graduates that achieved less than 255 points had the lowest earnings nine months after graduation, and again, this is true when like for like students are compared. The strong positive relationship between Leaving Certificate Points and graduate earnings implies that performance in the Leaving Certificate is a strong predictor of early labour market earnings.
At €38,297, graduates working in Dublin had the highest salaries nine months after graduation.
Graduates working in the Dublin region had the highest average salary nine months after graduation (€38,297). Graduates working in the Border region had the lowest average salary at €33,018. Comparing like-for-like graduates, those working in the Border region are expected to earn €34,386, marginally below those working in the West (€34,971). Focusing on younger graduates, a similar picture emerges; graduates working in Dublin have the highest salaries on average, whilst those in the Border region of the lowest.
Developments in Graduate Earnings (2017 - 2020)
This section analyses key developments in graduate earnings over time. The purpose is to examine whether specific graduate subgroups have been affected – in terms of earnings – by the Covid-19 pandemic. Research by the Central Bank of Ireland (2021) shows that sectors such as accommodation and food services, arts and entertainment, and administrative and support services were most affected in terms of reduced employment during the pandemic, while developments in earnings played a larger role for earners higher up the income distribution. Presently, little remains known about the impact of the pandemic on graduate earnings in Ireland. While we cannot attribute changes in earnings in this section solely to the pandemic, it is useful for policy makers to see which graduates were most resilient/exposed to changes in earnings when entering the labour market in 2020.
Average earnings rose by 2% for both males and females in 2020, when compared to 2018.
At 2%, the rate of growth in graduate salaries was broadly consistent for males and females between 2018 and 2020. Consequently, the gender pay gap remained largely unchanged over the period, up €127. Between 2017 and 2018 however, the rate of growth in graduate salaries for males outstripped that of females; the average graduate salary for males increased by 7%, compared to 6% for females. This resulted in a widening of the gender salary gap from €4,027 in 2017 to €4,613 in 2018, an increase of €586.
Turning to younger graduates, females experienced a larger increase in salaries (+6%) between 2018 and 2020, compared to males (+5%). While the absolute change in wages by gender was relatively small (+€1,673 for females versus +€1,575 for ,males), the larger gains by females graduating in the class of 2020 lead to a modest reduction in the gander pay gap for younger graduates in 2020.
ICT graduates saw their salaries increase by 8% between 2018 and 2020.
Between 2018 and 2020, the average ICT graduate salary rose from €39,396 to €42,562, an increase of 8%. According to these data, ICT graduates reported the highest average salaries nine months after graduation in 2020 and 2018. Natural sciences, mathematics and statistics graduates also saw average earnings increase by 8%, an increase of over €2,500 over the same period.
Fields of study that experienced declines in earnings were Business administration and law (-6%) and Services (-5%). While Business administration and law graduates saw the largest decline between 2018 and 2020, these graduates experienced the largest increase in average earnings between 2017 and 2018 (+14%). As such, the class of 2020 Business, administration and law graduates reported higher earnings than the class of 2017. Services is the only field of study to report lower average earnings in 2020 than in 2017.
These data suggest that younger graduate salaries were more resilient in 2020, specifically Business, administration and law, and Services graduates. For example, younger Services graduate salaries rose by 2% between 2018 and 2020, in line with the overall average increase in earnings, and significantly higher than the decrease seen for all graduates in this sector, as outlined above. Similar results emerge when all and younger Business, administration and law graduate salaries are compared over the same period. This suggests that reduced earnings in certain fields of study were concentrated primarily in older graduates (>30 years of age).
Average salaries for Level 7 graduates rose by 10% between 2018 and 2020.
Level 7 graduates experienced the largest increase in earnings between 2018 and 2020, rising by 10%. Graduates with a Level 8 and Level 10 degree saw more modest increases over the same period at 4% and 3%, respectively. Those graduating with a Level 9 degree in 2020 meanwhile, reported 2% lower average salaries than the class of 2018, the only decrease across NFQ levels over the period.
Younger graduates from the class of 2020 experienced a rise in earnings across all NFQ levels. The largest of these increases was for Level 6 graduates (+11%), followed by Level 10 (+6%) and Level 7 (+6%) graduates.
Average salaries for graduates working in Transportation and storage increased by 12% between 2018 and 2020.
Transportation and storage graduates experienced significant growth in average salaries across all years, up 11% (y-o-y) in 2018 and 12% between 2018 and 2020. This reflects an increase of over €8,000 in the average salary for graduates working in this sector between 2017 and 2020. Other employment sectors that experienced large increases in average salaries between 2018 and 2020 include Construction (+5%), Industry (+4%) and ICT (+4%).
Agriculture and Public Administration graduate salaries experienced the largest decline in 2020, down 10% and 8%, respectively since 2018. Other sectors of employment with salary decreases included Wholesale and retail trade (-4%), Human health and social work (-1%) and Accommodation and food services (-1%). However, focusing only on younger graduates, average salaries only fell in two NACE sectors – Public administration and defence and Agriculture – while the percentage decrease was less pronounced. In line with results provided above, this suggests that salary decreases in certain employment sectors were concentrated in older graduates, while younger graduates were more resilient.
Graduates working in the Midlands experienced the largest increase in salaries between 2018 and 2020 (+6%).
Graduates that reported working in the Midlands in 2020 saw an increase in average of earnings of just over €2,000, or 6%, compared to the class of 2018. Other significant increases were seen in the Mid-West (+5%) and the South-West (+4%). On the other hand, 2020 graduates working in the Border and South-East region reported lower average earnings than those from the class of 2018 working in the same regions.
For younger graduates, the largest increases in 2020 were evident for those working in the Mid-West (+11%) and Mid-East (+10%) regions, while graduates in the Border saw their average earnings fall by 2% between 2020 and 2018. Whilst all and younger graduates working in the Border region experienced lower salaries in 2020 compared to 2018, average salaries in this region grew significantly between 2017 and 2018 (+16% for all and 21% for younger graduates).
The true impact of the pandemic on employment by region, and subsequently earnings by region, is not yet know from these data. Additional questions may be required in future surveys to better understand how working patterns have evolved in light of the Covid-19 pandemic. For example, region of employment (where an employee’s physical office is located) may be different from where a graduate actually conducts their work. This is particularly important given the sustained utilisation of working from home policies deployed since the onset of the pandemic. While the current scale of remote working may be a transitory phenomenon, understanding how these policies impact graduates warrants further investigation.
*Full list of controls included in the main earnings model: Gender, ISCED Broad Field of Study, Institute Type, NACE Sector of Employment, Employment Region, NFQ Level, Age, Employment Type, Contract Type, Occupational Group, Deprivation Index Score Group, Leaving Certificate Points.