Should location affect engineering salaries?

As countless organisations have now proved, it is possible to adapt and undergo digital transformation to enable many roles, and even certain roles previously considered possible only in a face-to-face environment, to be successfully fulfilled from any location.

As remote working has become the norm for millions of workers in light of the pandemic, questions surrounding the relevance of geographical pay differences have unsurprisingly surfaced.

Where jobs can be realised from anywhere in the country, or even anywhere in the world, are differences in pay because of where you’re based becoming as unethical as, for instance, gender pay differences?

It’s these kinds of questions that led me to think about our own industry. As Operations Director for our Engineering business, I recognise that the majority of our workers have in fact been in the minority throughout the crisis – the nature of their roles means they haven’t been able to work remotely at all. For many, it’s been business as usual.

So, I wanted to explore, in an industry where remote working isn’t ever likely to be an option for most - even amid a pandemic - should location ever have a bearing on engineering salaries?

What are engineers earning?

Within our business, we regularly carry out salary surveys to identify any similarities and variances in pay rates across different categories. These include, but are not limited to location, years of experience, sectors, and disciplines.

We recently collated information to provide insight on four main disciplines: electrical maintenance engineers, mechanical design engineers, project engineers and quality engineers.

As may be expected, there were some slight variations in rates of pay between the different disciplines, with project engineers earning an average of £2k-£5k more than the other engineering specialisms. Electrical engineers appeared to receive salaries that were generally at the lower end of the four. But the most obvious and greatest inconsistencies in salary were due to the region in which the engineers were based.

Perhaps expectedly, and as is common across most sectors and industries, those based in London, regardless of their specialism, were enjoying the best rates of pay. In our business currently, we see higher salaries not just in London, but also on the South Coast. But however, there’s an argument to suggest that these southern locations are generally where a lot of the required skillsets are based, and costs of living are higher in both.

Electrical maintenance engineers based in the Northwest further stood out as receiving some of the top salaries, as did quality engineers in the East of England.

Consistently displaying some of the lowest rates across all disciplines were those engineers in regions including the West Midlands, East Midlands, Wales, and the Southwest.

What’s the average cost of living in the UK?

Data released by the Office of National Statistics (ONS) for the financial year ending 2019, showed that the average cost of living in the UK was £592 per week¹ for a single person. (Stats do not include mortgage interest payments or council tax.) Whilst another source, Numbeo, calculates the average cost of living for a family of four as £2,270.48 per month, again this is exclusive of rent.

Further research also carried out by the ONS on regional variances confirms that the highest costs of living relate to London. Prices in the capital are on average 7% higher³ than the rest of the UK for certain goods and services. This figure however does not relate to food and non-alcoholic beverages, where, according to the ONS, there is little difference in price between each of the country’s regions.

Costs do vary significantly though when considering expenditure relating to recreation & culture or restaurants & hotels. The same piece of research highlights that those costs are on average 14.8% and 13% higher respectively when comparing the same goods and services against the remainder of the UK.

In contrast, Wales’ costs for recreation & culture and restaurants & hotels are revealed as being around 1.5% lower than the UK average³.

Which regions have the most disposable income?

When looking at disposable income, the ONS illustrates in an additional report that regions such as the Northeast, Yorkshire and Wales have some of the lowest percentages of disposable income⁴.

Both East and West Midlands, along with the Northwest follow closely as having considerably less disposable income available to them than areas featuring highly on the list such as the Southwest and Scotland. And, even London, which despite offering relatively high rates of pay, and topping the list when it comes to the cost of living, manages to take first place for the most disposable income too.

In conclusion

When considering data from the ONS and our own engineering salary survey, it appears that engineers in some locations could be losing out. Areas costing the most to live in, do normally offer the higher salaries, but the amounts of available disposable income do not always align.

In an era where remote working is at an all-time high for many industries, could we see the gap between salaries in differing regions closing? And should this aligning of pay rates also be applicable to the engineering industry, despite remote working not always being a viable option for many?

It’s important to remember though, that the term ‘engineering’ is broad. Working remotely is more commonly seen amongst engineers working in research, development, or sales, whereas service and repair professionals will always need to work ‘on site’ and in person, regardless of their seniority.

What I’m seeing in our business at the moment is three types of roles we’re recruiting for – those relocating or looking for a career move, those who are office based and those who want to work in a hybrid role.

We recruit for each quite differently and asking if there’s a need for a role to be office/site based has become a key part of the information gathering process for building an accurate job specification.

With this in mind, I’d argue it’s personal skills that are more pertinent to someone’s salary, rather than the location in which they’re based.

Should engineering salaries be the same regardless of geographical location? Or should an individual’s skill set be the predominant factor in any salary differences? It’s a hot topic in our industry currently, so let me know your thoughts.

Sources 

1. https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/april2018tomarch2019

    

2. https://www.numbeo.com/cost-of-living/country_result.jsp?country=United+Kingdom

    

3. https://www.ons.gov.uk/economy/inflationandpriceindices/articles/relativeregionalconsumerpricelevelsuk/2016

    

4. https://www.ons.gov.uk/economy/regionalaccounts/grossdisposablehouseholdincome/bulletins/regionalgrossdisposablehouseholdincomegdhi/1997to2018