Commentary: Should fresh graduates negotiate starting pay?
As the economy and job market shift, young people may feel unsure about their future if they don’t have a good starting point. But it’s critical to be realistic about asking for higher starting pay, says Randstad’s Jaya Dass.
SINGAPORE: The average graduate’s salary has been on an upward trend for a few years now, from a median gross monthly salary of S$3,700 (US$2,780) in 2020 to S$4,200 in 2022.
While starting salaries have been something of a hot topic lately, are fresh graduates in Singapore really selling like hotcakes in this economy?
Yes, but only to a certain extent. Talent in emerging industries like blockchain, artificial intelligence and research and development are able to command a high salary because their niche skills are highly sought after and there is simply not enough supply in the market.
Other areas like business management and finance that create a fresh supply of graduates every year are slightly more competitive, since employers have the luxury to select the best candidates.
LISTEN - Heart of the Matter: Do university graduates deserve to be paid double that of ITE grads?
But given the growth in median incomes, and the fact that it is still a jobseeker’s market in hot sectors, should fresh graduates attempt negotiating a higher starting salary?
Of course, everyone wants a job that pays well. But there is a fine line that differentiates what is reasonable and what isn’t. To understand the formula behind your salary structure, you must first understand the factors that influence it.
THE GREAT SALARY ADJUSTMENT
Some sceptics might say that we’re overpaying fresh graduates, and they’re not entirely wrong. From 2020 to the first quarter of 2022, we saw many employers enter price wars to secure talent as they grew their workforce.
For instance, some technology firms almost doubled their workforce size during COVID-19 because they needed more hands on deck to meet the needs of a growing pool of digital users. Expansion was also much easier then because companies didn’t have to worry about having enough office space to accommodate everyone.
Unfortunately, as global markets suffered under inflationary pressures, retrenchment waves became rife as companies struggled to save costs. Attracting talent using enormous salaries proved to be a deeply unsustainable practice.
Many organisations are starting to adjust their salary and workforce structures to reflect the current supply and demand in the job market. We are also seeing the market average for some jobs being adjusted based on the existing talent supply and the complexity of these jobs.
WHY THE PRESSURE TO SECURE A HIGH STARTING SALARY?
Today’s graduates come equipped with a fresh set of technical and digital skills and are able to find work in up-and-coming fields. Not only do they have strong theoretical knowledge, many fresh graduates also have multiple internship experiences under their belts.
While young talent are more exposed to new and exciting opportunities, they also face different types of challenges.
For one, the rising cost of living is looming over their heads. As new income earners, young workers are highly motivated to get a head start towards financial independence. A high starting salary can help them save up for a new house or invest to grow their wealth.
The second reason could boil down to a pervasive rat race mentality. Without a guiding hand, youths can fall into the trap of comparing their success with their peers through salary - much like comparing grades in school.
Competition is a double-edged sword. When you’re ahead of the game, you’ll feel a sense of accomplishment and pride. When you’re not, intense competition can bring about intense stress.
As the costs of living continue to rise and job markets become increasingly competitive, young people may feel unsure about their ability to build a secure future if they don’t have a good starting point.
THERE’S MORE TO WORK THAN SALARY
It’s reasonable to have an expected salary in mind as you embark on your job search, but it’s critical to be realistic about asking for higher starting pay.
LISTEN - Work It: How to negotiate a salary increase
Fresh graduates may see greater success in securing better starting pay if they come from in-demand fields such as fintech or cybersecurity, or have more relevant internship experience. In order to avoid being lowballed, fresh graduates should consult job recruiters and school alumni who have entered the same professions to understand the latest salary benchmarks.
For fresh graduates who aren’t able to secure higher starting salaries, they should negotiate for a reasonable starting pay with additional benefits such as comprehensive wellness benefits or fast-tracked promotions that are pegged to measurable goals.
When you are invited for an interview, the employer already knows that you have the knowledge and skills to do the job. The whole point of the job interview is then to find out what you can bring to the table.
Employers want to hire someone who thinks outside the box. In other words, they want someone who is always curious to find the most efficient way possible to solve real business problems. This involves knowing how to play well with others and taking the initiative to conduct research and learn on the job.
Seeing as there are different expectations from both perspectives, graduates should seize opportunities to fill skills gaps at their new roles. An effective way to increase your pay is to carve out your niche at work and create value where you see a strong need for it. This can include creating your own role at work - even if it doesn’t exist yet.
Moreover, don’t blindly accept a job offer based only on its remuneration package. Some companies may try to conceal deep-seated issues within the company with a salary that is way above the market average. They may have problems retaining talent because of shoddy management or overwhelming workloads, and they might need to hire someone quickly before they start losing business.
No matter how reputable the organisation is, conduct research on the company you plan to work at. Independent reviews from former employees on online sites and your personal network can be informative. Consider speaking to industry veterans or recruiters who can give you intel about salary structures and promotion opportunities.
This way, you can learn more about the type of hybrid work, insurance and training benefits that the company offers. Other information like reporting structure and management direction will also be important as you find an employer that can meet your needs.
Your career goals will change as you grow older, so don’t let a number limit you. Find an employer who has the resources and support to help you realise your true potential now and in the future.
Jaya Dass is Managing Director of Permanent Recruitment in Asia Pacific at Randstad.
