Limpeh on starting salaries for young graduates

Good grief. Aiyoh. Alamak. I thought I was just cutting & pasting a Facebook comment that I found interesting in my post about the Jobsbank website but I had no idea I was opening up such a huge can of worms here. Even as I am typing this, the debate is still raging on in the comments section of my last post about the Jobsbank.gov.sg website. As a follow up, I have decided to try to be a lot more constructive in this post and try to offer some helpful tips to young people out there who are looking for work on the issue of starting pay and how it is so hard for young graduates to find a well paid job these days.

I have been there before, when I graduated, I didn't have any help from my parents to figure out how to get a job. Look my parents worked as teachers all their lives and they knew little about the world beyond the school's front gate. There was a lot of trial and error on my part to figure it all out and I did so in a country halfway around the world from Singapore. So believe me when I say, I have been there and I empathize. In my previous post about the Jobsbank website, quite a few people accused me of being unsympathetic to young people who cannot find a well-paid job and some even thought that I sided with unscrupulous employers who suppressed wages for profit. So what should you do if you're a young person looking for work today? Well allow me to share a few bullet points with you on this issue today.

Do you know what your skills are worth in the labour market?

1. There is an opportunity cost to saying no.

A lot of young Singaporeans turn their noses up at a job with a low pay because they feel they deserve more, they may think, "well the pay is shit, I can't live on that" and not even bother applying. Whilst it is always your right to shy away from a job you don't like for whatever reason, do bear in mind that there is always an opportunity cost to saying no. Consider this: if you keep turning down jobs for one reason or another, that would lead to a prolonged period of unemployment which will look rather bad on your CV. You may think that you're sparing yourself the indignity of exploitation, but you're then suffering the indignity of long-term unemployment. Gatekeepers can easily spot a long period of unemployment on your CV and will ask, "what were you doing at that time?" You can always find an excuse for a few months - but the longer that gap, the harder it will be to cover up.

If you have rich parents who can support you whilst you're unemployed, fair enough - but if your parents are not exactly wealthy, then it really isn't fair or morally justified to expect them to pay your bills simply because you refuse to accept a job below a certain salary. Your decision to become financially dependent on your parents will deprive them on the opportunity to spend that money on themselves - that is another opportunity cost that you have to consider. Even if your parents are still working, surely they should be putting money aside for their retirement or spending that money on pampering themselves, going on nice holidays rather than supporting their unemployed adult children.

There is an opportunity cost to saying no.

2. What you earn today may not be what you earn in a year or two.

Just because you accept a job with a lower pay today doesn't mean that you will be stuck with that salary forever. In most companies, there are opportunities to negotiate a pay rise and there are performance related bonuses. Sometimes there are also commissions to be earned as well as overtime pay, not to mention business expenses. Of course, you are unlikely to simply waltz into a company and expect to enjoy all of these perks from day one - no, most of the time you'll be expected to earn these privileges over time. Once you've proven your worth to the company, then they will reward you for your good performance and use all these incentives to keep you happy. Conversely, if you're crap at your job, you'll probably be threatened with dismissal - it is a carrot & stick combination that ensures that you deliver what you're paid to do.

This is why companies can sometimes hold back when it comes to starting salaries - this is to allow them to bump it up and offer rewards should you perform well. If a company fails to reward staff who are performing well, they are most likely to lose them to their competitors - so it is quite rare for companies to ignore loyal staff who are performing well. Every job you take is a stepping stone - even if the pay isn't great, you still will gain experience and skills in your job and that would be the basis for you to ask for a higher salary in the future. If you choose to remain unemployed, then you're denying yourself vital work experience that will severely impact on the salary you can command.

Work experience is vital in negotiating a higher salary.

3. The 'training period' when you are still learning.

Whenever you start a new job, you will spend some time being trained for the things you need to do. If you're doing a fairly simple menial task, the training could take a few hours. If you're doing something quite complex, this could take several weeks, even months. Let me give you an example: my friend Joshua started work as a journalist with a British newspaper last year and at first, he was just assisting far more senior journalists with their research and proof-reading their articles, fact checking for them and they were not going to let him write his own stories. It was a long process of proving himself before finally he was trusted to go out there, find his own story and submit his article to the editor for the newspaper. This is because this newspaper has very strict quality control in terms of what they print - they were not going to let some rookie journalist just go out there and write anything he liked.

Thus his training process was so long drawn out it was a year before he got to where he is today, he can now effectively operate independently and deliver quality articles that are of the newspaper's standards. In Joshua's first few months, he was not delivering much value to the newspaper as he was still learning and under training - so his pay was low then. But now, he has arrived at the point where he is indeed adding a lot of value to the newspaper - hence he has received a big pay rise earlier this year, reflecting that new status upon the completion of his training.

Joshua went through rigorous training for his job.

Joshua has managed to successfully complete his training at his job, but you'll be surprised just how many people actually flunk out during the training process. I've been around long enough to see that for myself - there are many reasons why some people fail at this stage: there is a steep learning curve to climb with every job and sometimes, the person simply cannot learn fast enough or adapt to the new working conditions. And then there are some people try out a job and then decide, "you know what? Sorry, I've changed my mind. This isn't really for me, I'm not enjoying it, it wasn't quite what I hoped it would be. I think I wanna do something else with my life."

It happens more often than you think - but when that person quits, the company has effectively wasted a lot of time and money training that person (and they have to spend more time and money hiring and training a replacement). So until you get to that stage like Joshua where you have proven yourself, it is not uncommon for the company to pay you a substantially lower salary whilst you're still in that training stage. Sometimes, this is known as a trial period where you are waiting to be confirmed once you have completed your training. So don't freak out when you see the starting pay - that may be just for this 'trial' period and it could increase substantially after the training process is complete.

You are worth more to your employer after you complete your training.

4. There's no such thing as a free lunch but there's blood money.

What did you expect? Perhaps I am stating the obvious here, but it would be impossible to find a job where they offer you great money whilst asking very little in return - the salary always reflects what you have to do for the company. The more demanding the job in terms of the skills required, the more highly paid it will be. However, if you simply do not have the skill level of a brain surgeon, there's just no way you can expect the pay of a brain surgeon unless it's blood money. That's a term I would use to describe money to compensate certain poor working conditions.

Let me give you an example from Australia: the mining sector is booming in Australia and they are offering very attractive packages to young people who are willing to choose a career in mining. Unfortunately, there is a catch: you're highly unlikely to get a mining job in downtown Sydney or Melbourne where you can enjoy the vibrant city lifestyle. No, these mining jobs are usually way out in the middle of the Australian deserts, hundreds of miles from the nearest city. The money reflects the kind of sacrifices one would have to make when relocating to rural Australia, far away from one's friends and family and any semblance of civilization. Oh and did I mention that it can hit 50 degrees in the Australian outback and a mining engineer's job is unlikely to be office based? Now that's blood money for you!

I'd rather be working in Sydney than in the desert...

5. Always be pragmatic, do not be pessimistic.

I was disappointed by the way many Singaporeans bemoaned the fact that there are so many foreign workers in Singapore now from places like China and India; that these foreign workers are willing to work longer hours for less pay, thus depressing the pay for everyone. Whilst I recognize that this may be the case as Singapore's population continues to swell towards 6.9 million, what is the point of worrying or complaining about the situation like that? Allow me to quote Baz Lurhmann on this: "know that worrying is as effective as trying to solve an algebra equation by chewing bubble gum" Short of voting in an anti-immigration party who will kick out all the foreigners if they win the next election, these foreigners are here to stay and you can't turn back the clock to the 1980s and 1990s. This is all just pessimistic talk that does nothing to help the situation. I would much rather you think about far more practical ways to deal with the challenges of finding work in a very crowded labour market.

6. Accept a hard dose of reality.

I've saved this for the last as it's probably not what you want to hear. Let me be frank with you and state the obvious: the pay you can command depends on your skills and what you can offer your employer, it does not depend on things like how high the cost of living is in Singapore or what kind of lifestyle you wish to have. Please lah, get real. Your employer doesn't give a shit if you feel poorer than your friends who have much better paid jobs, he only cares about what value you are bringing to the company. This is why brain surgeons are paid more than waiters and the salaries of these people are ultimately determined by market forces: very few people can perform brain surgery and there is a demand for people who can perform brain surgery, hence brain surgeons are very well paid. If you wish to earn as much as a brain surgeon, then perhaps you should have gone to medical school - and if you don't have that kind of skill, then either go acquire those skills or accept that you simply cannot command that kind of salary today.

Do you have the right skills to get ahead in your career?

You may need to reevaluate what you think you deserve, what kind of lifestyle you wish to have and be more realistic about what kind of salary you can get in today's job market. Simply being in denial by refusing to apply for jobs (because you think the salary is too low) is cutting off your thumb to spite your hand - you do not solve anything by choosing to remain unemployed and the longer you remain unemployed, the more it harms your long-term prospects by leaving this gaping hole in your CV. You are probably always going to be better off gaining some practical work experience from a lower-paid job (or even an internship) in the meantime whilst keeping an eye out for something better. What is plan B then - being unemployed and expecting your parents to support you? Do you have any better suggestions?

So there you go, these are six points for you to think about whilst you're looking for work. Do you still think I am unsympathetic to young people looking for wok today? Are there other factors that young people should bear in mind when contemplating the issue of starting salaries? What can young people in this situation do to help themselves get a better starting salary? Do let me know your thoughts in the comments section below, many thanks for reading.