Reasons for Widening Salary Gap Between University and Non-university Graduates

Mr Edward Chia Bing Hui asked the Minister for Education (a) what is the Ministry’s analysis of the reasons for the widening salary gap between university and non-university graduates; and (b) what are the plans to address this issue.

Based on data from the Graduate Employment Surveys, while starting salaries have risen for all groups of graduates, the difference in median starting salaries between university and polytechnic graduates has increased by $200 between 2016 and 2021. Over the same period, the difference in starting salaries between university and the Institute of Technical Education (ITE) graduates increased by $300.

Differences in graduates’ salaries can be a result of various factors such as the relative demand and supply of manpower, as well as differences in productivity, between jobs and sectors that different groups of graduates enter into. For example, digitalisation and COVID-19 have accelerated the growth of manpower demand and hence wages in the ICT sector, which has attracted an increasing proportion of degree holders.

While some differences are understandable, it is important that we ensure these differences do not widen significantly over individuals’ lifetimes. Singaporeans must feel that there are opportunities to progress over their career regardless of differences in starting points.

Strong partnerships across different stakeholders are needed to address this issue. ITE and the polytechnics are working with MOE and other Government agencies, industry associations, leading employers and unions in key sectors to encourage more companies to better recognise the skills and competencies of our non-university graduates, provide them with quality internship training and access to jobs with good starting salaries and career prospects, and invest in their upskilling and career progression.

For example, the Infocomm Media Development Authority (IMDA) set up the TechSkills Accelerator for ITE and polytechnics (TIP) Alliance in 2022 comprising leading global and local companies, to drive the shift in hiring practices in the tech industry from one that is qualification-based to skills-based. Companies in the TIP Alliance commit to delivering structured, end-to-end pathways to support ITE and polytechnic graduates to enter tech roles, acquire training and certification on the job, and progress in their careers in tech. Similarly, the Ministry of Trade and Industry has introduced the Accelerated Pathways for Technicians and Assistant Engineers (Manufacturing), or APT(M), grant to support manufacturing companies in hiring and training ITE graduates for critical Technician and Assistant Engineer roles, and providing them with career, skills progression and competitive salaries.

While our institutions continue to prepare our students well for the workforce and provide opportunities for continual upskilling throughout their careers, companies and employers must also play their part. This includes enterprise transformation to raise productivity, and committing to hire, train and reward workers fairly based on skills and competencies, rather than relying purely on their starting qualifications. Consumers must also be prepared to pay more for goods and services, to raise the wages of those who provide them.