Transcript – Earnings by qualification
This is a podcast from the Office for National Statistics covering earnings by qualification.
Firstly we will look at the average pay for employees aged 22 to 64 in the UK depending on the highest qualification they obtain. Throughout the podcast we will refer to the most commonly known qualifications such as A-level, GCSE, degree etc, but when we refer to these they also include qualifications that would classed as an equivalent, for example GCSE would include NVQs to level 2 or A-level include Scottish highers.
So in the final quarter of 2010 here is the average pay and we can see that earnings tends to increase as the average qualification increases, which is something that would be expected. For those with no formal qualifications the average was £6.93 per hour and for those with a minimum of a degree it stood at £16.10 per hour, so they earn 2.3 times higher than those with no qualifications.
Looking back to 1993, the earliest point an equivalent estimate is available, again earnings increased as the qualification level increased, although those with a degree earned 2.5 times higher than those with no qualifications.
Now we will look at how on average pay differs between the different qualification levels, using GCSE level to compare with. The GCSE level is those that have obtained a GCSE between A* and C.
Firstly starting off with 1993, for the qualifications below GCSE A* to C and those above, those with no qualifications or other qualifications earned less than those educated to around the GCSE level. For those who went on to obtain qualifications beyond GCSE they earned more. In the final quarter of 1993, those with no qualifications earned 21 per cent less, while those holding a minimum of a degree earned 95 per cent more.
Now plotting the situation in the final quarter of 2010 we can see that the gaps to GCSE have reduced. There is a marginal fall for those with no qualifications, a fall for those with other qualifications and also for those educated to around A-level, further education or having a minimum of a degree they don’t earn as much.
In 2010 those holding a minimum of a degree earned 85 per cent more, those educated to around the further education earned 45 per cent more. Around the A-level qualification they earned 15 per cent more, with 7 per cent less earnings for those with other qualifications and 20 per cent less for those with no qualifications.
We will now look at the distribution of pay for those educated to a minimum of a degree. To do this you put everyone who has this level of qualification in order, in terms of their hourly earnings. We can then bring up this line and start it at £0 and finish it at £40. What we find is that in 2010, 10 per cent of people earned up to £7.47, 25 per cent of people with a minimum of a degree earned up to £11.00. 50 per cent earned up £16.10 which gives us the midpoint and average for the group, 75 per cent earned up to £22.35 and 90 per cent earned up to £30.37.
Comparing those educated to around the GCSE level, where average pay was around £8.68, we actually find that 15 per cent of people with a degree earn up to this amount, and for those educated to around A-level, with an average of £10.00, that 20 per cent of people with a minimum of a degree earn up to this amount. Therefore 1 in 5 graduates earn less than the average for those educated to around the A-level standard.
We will now consider the type of job individuals carry out depending on their qualification level. The skill level is split into 4 groups, from low skill through to high skill.
Firstly looking at everyone in employment, around 28 per cent are in jobs known as high-skill, which are typically jobs such as those in managerial positions, engineers and accountants.
Around 29 per cent are in jobs known as upper-middle skill which include jobs such as electricians, plumbers and police officers. Around a third or 33 per cent are in jobs such as lower-middle skill which include those in retail, secretarial roles or machine operatives and finally 10 per cent are in low-skill jobs, which include cleaners, waiters and waitresses.
Considering those educated to a minimum of a degree, the majority or 57 per cent are in the high skill jobs, which is to be expected as these jobs usually require a degree or extensive work experience.
At the other end of the scale and those with no qualifications, the majority are in the bottom two skill groups, with 31 per cent in low skill jobs and 40 per cent in lower-middle skilled jobs.
Finally looking at those educated to around A-level and GCSE, for those to A-level the majority are in the two middle groups, with around 1 in 2, or 49 per cent of those educated to around the GCSE level in the lower-middle skill groups.
Finally we will look at everyone in the UK aged 22 to 64 regardless of if they have a job and the percentage with each qualification and how this has changed since 1993.
In 1993, 12 per cent of people in the UK had a minimum of a degree, while the majority had no formal qualification. This was mainly driven by people aged 50 to 64 in 1993 who because of the education system at the time when they were younger, they were less likely to obtain a formal qualification.
Now looking at 2010, the percentage of people having a minimum of a degree has more than doubled, to 25 per cent, while there was a large fall in the percentage with no qualification to 11 per cent, partly explained by the older people not having qualifications in 1993 now in the 65 and over age bracket.
Another interesting thing to note is that while the percentage of people with a minimum of a degree has more than doubled, the percentage of them working in the highest skilled jobs in the country has fallen. In 1993 around 68 per cent of people with a degree worked in the highest skilled jobs, falling to 57 per cent by final quarter of 2010.