- Gordon Smith
Insights from the State of Salaries report 2018
The UK is renowned for several things: the royal family, rain, tea – and being reserved when it comes to talking about money.
But it turns out that our reluctance to discuss finance is holding us back, at least in terms of the salaries we earn.
We (Hired) recently published our third ‘State of Salaries’ research report, which examines the earnings of technology workers across 13 cities using data from more than 10,000 participating companies and 69,000 job seekers.
The UK tech sector is undoubtedly booming, with recent reports stating it is growing twice as fast as the wider UK economy and that digital jobs are being created twice as fast as non-digital jobs.
However despite this, our latest report identifies the UK as one of the least lucrative places to be an employee in the tech sector, with only France faring worse. The average tech salary in the UK in 2017 amounted to $78k (£58k), in comparison to $129k for places like Los Angeles and New York.
And it seems this trend is set to continue. The average tech salary has dropped over 17% since 2015.
Obviously there’s more to working in tech than just the salary. Most employees in this sector will tell you that it’s exciting, fast-paced and full of interesting people.
But still, income discrepancy is a serious problem for the UK if we hope to retain our competitive advantage with the rest of the world. We want to attract the best talent possible in order to keep growing – and salaries are crucial in this.
Talking about how much we earn, or expect to earn, is a crucial piece of the puzzle. Accessing clear and transparent salary information is a way for a candidate to take control of the hiring process. They can make a decision about what to expect and what to ask for before they have even entered the room.
This is especially important as the report shows that millennial candidates – those aged between 20 and 34 – don’t understand their true value, asking for significantly lower salaries than what they’re ultimately offered. The trend for underselling continues until candidates reach their mid-30s. This is the point at which tech workers start to appreciate their true value. It’s also the point when they then begin to receive lower offers than requested.
However, age is not the only barrier. Ethnicity also has a serious impact on salary for UK tech workers. White candidates ask for and receive higher salaries than black or Hispanic candidates. On average, white candidates receive offers of £98k, whereas black candidates only receive offers of up to £94k. This is incredibly troubling. The tech sector is a vibrant, dynamic space – but it will only remain that way if we make sure to include everyone on fair and equal terms. At Hired we’re working hard to eliminate this inequality by facilitating the job search in a way that finds the perfect fit for that role, regardless of age or ethnicity.
But another important part of bridging salary inequality is having candid no-shame conversations about pay. Transparent communication is the only way to find out if you’re being paid in line with your peers – and to ask for more if you’re not. The more you know about salaries, the easier it is to work out what you deserve to earn based on your skills and experience. And when you’re armed with this information, you can ask for exactly what you’re worth without having to second-guess.
Another trend emerging clearly in the 2017 report is the impact of Brexit.
There has been a 7% decline in tech companies hiring candidates from outside the UK. As uncertainty reigns over the exact nature of the EU exit agreement, it seems tech companies find foreign employees too risky to take on. But this is the opposite of what we should be doing. To build the world’s best tech sector, we need to attract the best global talent.
Interestingly, tech companies who are looking to attract foreign talent are paying increased salaries. Workers from abroad who are willing to relocate to the UK make nearly £12K more than local UK candidates. But then again, this does make sense. Why would you work in the UK when with pay in this sector only grew 1.24% in the past 12 months – well below the 2.8% UK inflation rate, resulting in a real-terms drop in income?
The increased salary for non-UK citizens speaks to the fact that the tech sector in this country is insufficiently attractive for the best talent across the world – the exact thing we need to avoid if we want to be a sector that can compete on the world stage.
Solving this issue won’t be simple. Reporting on salaries, so that pay information is freely available, is definitely a step in the right direction. But we must commit to talking about how much we earn, and how much other people earn, at every stage of our careers. Total transparency should be our aim.
After all, the tech sector is one of the things that make the UK great, just as much as the rain or the tea. It would be a shame if we held ourselves back due to an out of date tradition that says we can’t talk about money.
Gordon Smith is country manager at Hired UK