Salaries for university graduates down 11% over last decade

The wages of workers with higher education have fallen by an average of 11% over the last decade and have retreated by 3% for those with secondary education, reveals the report “State of the Nation: Education, Employment and Skills in Portugal”, by the José Neves Foundation.

The 2022 edition of the report will be presented today through the digital platform and social networks of the José Neves Foundation (FJN) and will have as speakers the former prime minister and former president of the European Commission Durão Barroso, neuroscientist António Damásio, singer Alanis Morissette, manager António Horta Osório, among others.

According to the study, between 2011 and 2019 the average salary of the Portuguese increased only for workers with basic education, by around 5%, mainly due to the increase in the national minimum wage and through collective bargaining.

On the other hand, workers with higher and secondary education have registered, on average, real losses in wages of 11% and 3% respectively in the last decade.

In the case of the youngest qualified workers, salary falls were even more accentuated, with university graduates registering average salary drops of 15 per cent, while masters’ degree graduates saw their salaries fall 12 per cent and PhDs 22 per cent, the report highlights.

According to the document, the wage gains of the most skilled workers versus those with lower levels of education are considerable, but the differential has narrowed.

“In 2019 a degree resulted, on average, in a wage gain of 50% compared to secondary education,” the report states, while for masters’ degrees the gain is 59%.

The wage premiums are also seen in young adults (aged 25 to 34) and it is the master’s degrees that confer a higher wage return, with gains of 43% compared to secondary education and 15% compared to undergraduate degrees.

“A higher level of education increases the probability of being employed and of reaching the two highest income levels,” the report also states.

People with higher education are 16% more likely to be employed and 50% more likely to be in the top 40% of income earners than those with secondary education.

For those with secondary education and primary education, these percentages are 10% and 29% respectively.

The effect of education on the probability of being employed is, however, less strong in the younger generations than among the older ones, “suggesting that the massification of higher education has made a higher education degree less distinctive and a lesser guarantee of success in the labour market than in previous generations”, reads the report.

While for generations born in the 1950s, an additional year of schooling increased wages by 9.1 per cent, for generations born in the 90s, this figure fell by almost half (4.8 per cent), meaning “a higher level of education continues to pay off, but less than in the past”, the study concludes.

The report states that Portugal remains one of the European Union countries with the lowest incomes, pointing out that in 2019, the average annual net income (in purchasing power parity) was €13,727, the seventh lowest in the EU.

The Portuguese with primary and secondary education had an average income of €10,976 and €13,612 respectively (the 10th lowest among the 27 member countries), the report indicates, adding that for workers with higher education the average income did not exceed €19,755, the eighth lowest in the EU.

The average income of Portuguese workers with higher education in 2019 was lower than that of workers with secondary education in 13 EU countries (Italy, Cyprus, Ireland, Finland, France, Malta, Belgium, the Netherlands, Sweden, Denmark, Germany, Austria, Luxembourg) and that of lower-skilled workers in five EU countries (Finland, Austria, the Netherlands, Denmark and Luxembourg).

Also productivity “is increasingly lower compared to the European average” and “not even the increase in the qualifications of the younger generations has reversed this trend,” the document states.

According to the analysis, in 2019 Portugal was the sixth country with the lowest productivity, equivalent to 66% of EU workers, compared to 70% between 2006 and 2010.

According to the report, companies’ investment in training their workers can increase productivity by 5%, but only 16% of Portuguese companies do so.

“Young people are increasingly qualified, but the qualifications of workers under the age of 35 only contribute to productivity gains when young people represent more than 40% of all workers in companies,” the document stresses.

According to the report, “if young people represent between 10% and 40% there are no productivity improvements and if they are less than 10% the effect on productivity can be negative”.

“The qualifications of managers weigh almost as much for productivity as those of workers, but despite increasing, Portugal still has the highest percentage of employers who have not finished secondary education,” the study advances, adding that, in 2021, this was the case for 47.5% of employers, almost three times the European average which stood at 16.4%.