As a consultant who assists small and medium-sized businesses across the UK, I‘m often asked what constitutes a “good salary” by clients making hiring and compensation decisions. With salaries varying widely between industries, locations, experience levels, and roles, it can be tricky to benchmark.
In this article, I’ll share the insights I provide clients on UK salary expectations, along with data, analysis, and examples from my own consulting experience. Whether you’re an employer determining pay rates or an employee evaluating job offers, an in-depth understanding of the UK salary landscape is invaluable.
Average UK Salaries: An Overview
The median full-time salary across the UK is £31,285 according to 2021 data from the Office for National Statistics (ONS). However, this figure only provides surface-level insight. Let‘s analyze key factors driving UK salaries:
Salaries range widely depending on where in the UK you work. Here are average salaries by region for full-time employees:
- London: £39,259
- South East England: £33,064
- Northern Ireland: £31,168
- Scotland: £31,448
- East of England: £30,595
As you can see, salaries steadily decline the further you move from London and the South East, which have the highest concentration of high-paying jobs.
However, to determine if a salary is “good”, you have to balance it against location-specific costs of living. The chart below compares average London salaries versus other UK regions:
|North East England
While London pays nearly £11k more on average, housing expenses alone can be 50-60% higher than other regions, eroding much of this premium. Carefully researching your local cost of living is crucial.
One of the biggest factors in salary potential is years of experience. According to recruitment firm Reed, the average UK salaries by experience are:
- Entry-level (up to 2 years): £19,500
- Mid-level (2-5 years): £24,500
- Experienced (5-10 years): £32,500
- Highly Experienced (over 10 years): £39,500
I often remind clients that talent fresh out of university or training simply won‘t command the same compensation as seasoned professionals. Match pay to experience levels when structuring your compensation budgets.
As an entrepreneurship consultant, I regularly analyze average industry salaries to advise clients on competitive compensation.
The highest paying sectors based on ONS data include:
- Financial services – £40,560
- Information/communication – £40,840
- Manufacturing – £35,106
- Professional, scientific & technical – £37,706
Client case study: When a boutique consulting firm I worked with was struggling to recruit data scientists, I researched salaries at tech giants like Google and discovered they paid nearly 50% more for analytics roles. I advised the client to realign pay for their data experts, which proved vital to attracting talent.
Understanding industry-specific salary norms is crucial when structuring your compensation packages as a business owner.
Key Salary Factors for Employers
From years of consulting small business clients on compensation best practices, here are the key factors I emphasize:
Benchmark Similar Roles
Avoid setting pay arbitrarily. Conduct diligent research on comparable roles at competitors when determining salaries. Resources like Glassdoor and Reed provide excellent industry salary data.
Balance Experience & Education
Factor both experience level and qualifications when setting pay. For example, while you may pay a premium for an MBA graduate, someone with 5-10 years’ experience may command a similar salary.
Evaluate Specialized Skills
For roles requiring niche technical abilities like software development or financial modeling, certifications and specialized skills training warrant higher pay. Don’t underestimate their value.
Consider Company Size
As a small business, you may not match the salaries at a multi-national corporation. Set pay competitively for your size and revenue levels. Candidates understand this salary differential.
Analyze Local Cost of Living
While you may pay less than London salaries, ensure wages are livable for your geographic region. Analyze costs for housing, food, transportation, utilities, etc.
Negotiating Your Worth as an Employee
Now that we’ve explored considerations for employers, what about determining your own worth as a candidate? Here are my top strategies:
Use resources like PayScale, Glassdoor and ONS data to benchmark typical pay for your role, experience level and location. Understanding your earning potential is crucial.
Demonstrate Your Value
Quantify your unique contributions that justify a higher salary – key projects delivered, customer wins generated, operational efficiencies driven, etc.
Consider Benefits & Perks
If the base salary can’t be budged, negotiate on bonuses, equity, retirement plans, extra vacation, WFH flexibility, tuition reimbursement, etc. Compensation encompasses more than just take-home pay.
Practice Your Pitch
Rehearse how you‘ll convey your experience, skills, and salary research to come off confident yet conversational in the negotiation. The delivery matters just as much as the content.
Salary Insights for Small Business Owners
Based on my experience advising UK small business clients on smart compensation strategies, here are my top three recommendations:
1. Benchmark continuously
Regularly research the job market to keep pay competitive as conditions evolve. Sign up for pay report alerts from sources like the ONS and recruitment sites.
2. Analyze local living costs
While nationwide salary averages provide a baseline, look at costs like housing, transportation and taxes that impact real income locally when setting pay.
3. Follow labor regulations
Stay constantly updated on minimum wage, living wage, and pay reporting requirements to avoid fines and reputational damage. Being legal is table stakes.
Determining a “good” salary in the UK requires balancing myriad factors: location, role, experience, industry, company size, skills, and more. By leveraging the insights provided, both employers and employees can make more informed compensation decisions aligned to the current landscape.
As your small business strategist, I‘m always available to provide personalized guidance on structuring your pay rates to attract and retain top talent across the UK. Please reach out if you need assistance navigating this crucial but ever-changing dimension of owning and operating a successful company.