Determinants of students’ salaries in the professional training year

Our new article in Teaching in Higher Education discusses the determinants of students’ salaries in work placements. The contribution of work placement programmes in higher education to students’ professional development and preparation for the graduate labour market is important for educators, policymakers and researchers.

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Work placement programmes (WPP) are opportunities offered to students to gain a year-long professional experience while studying towards their degrees (also known as industrial placement programmes or sandwich programmes). Nowadays, such programmes are popular in the UK, and universities vigorously advertise them to attract the most hard-working and ambitious students. WPP can provide a ‘win-win’ outcome. Many students value these programmes because not only they can show a more competitive CV and cover letter when applying for graduate jobs, but they can also develop soft skills (e.g. communication and teamwork skills) that will help them in the recruitment process. At the same time, employers value these skills as they suggest quicker employee integration in their companies’ operations and culture and a more productive workforce.

WPP have also become more appealing in the UK for other reasons. Firstly, during the past decade, the cost of a three-year degree has increased dramatically. Tuition fees rose in 2012 and students’ maintenance grants were replaced with loans in 2016. Consequently, many students leave university with an average debt of £50,000 (approximately £27,000 is for tuition fees alone). Secondly, the number of students entering higher education has increased substantially. For example, degree qualifications in the UK have increased by 25% between 2006/07 and 2015/16. This outcome leads to a more saturated graduate job market in terms of qualifications, intensifying competition among students to stand out.

While degree classification is one way to stand out, its role in securing a graduate job appears to be diminishing lately. In 2009/10, 14% of students achieved a first-class degree classification, a share that has doubled in less than 10 years, being at 28% in 2017/18 and 2018/19. Finally, the latest pandemic-induced crisis will further exacerbate issues in the labour market. The employment of young people has been particularly adversely hit by this crisis adding even more pressure to an already competitive job market.

We argue that universities can help students navigate through this rapidly changing environment. Our research, based on a comprehensive data set from a UK higher education institution, shows that first-year academic performance, among other factors, is strongly and positively correlated with placement earnings. The association is strongest for high-paying (earning more than £29,000) placements. Evidently, placements do not only help students boost their professional profiles and competencies, but they are also a source of financial support helping them alleviate the degree debt burden. Additionally, placements may have a ‘foot-in-the-door’ effect.

Even though there is no adequate research on this aspect of placements, preliminary analysis suggests that this can be another channel through which students may benefit from placements. Indicatively, statistics based on our 2016/17 and 2017/18 samples show that, on average, 40% of economics placement students receive an offer (conditional or unconditional) from their employers. While it would be naïve to overemphasise and generalise this result, it is suggestive of a positive placement mechanism at play. Students who are offered a guaranteed route towards graduate employment face less uncertainty and stress, while this can motivate them to work harder to acquire their degree.

These results are promising, both for universities with well-established placement programmes which they can develop further, as well as institutions that aspire to create such programmes. However, our message does not stop here. Our results also relate to the structure of an undergraduate degree in the UK. It is common among UK higher education institutions to attach no weight to first-year academic performance with regard to degree classification. Our study shows that educators might need to seriously rethink this. To the extent that placements and their returns impinge on professional progression and future financial stability, first-year academic achievement counts. Attaching some weight to first-year performance, even a small one, would send a clear message to students that early commitment to their studies is crucial to both academic and professional progression. Additionally, universities should invest more in employability and career services integrating them into the first-year curriculum.

More generally, universities should take more seriously their role as a stepping stone to professional development. If they don’t, students may become more vocal in demanding value for their degree debts.

Panagiotis Arsenis and Miguel Flores (University of Surrey)

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