New report shows: Salary premiums for PhD:s decreasing

A PhD is less profitable now than it was 20 years ago. The salary premium for PhD:s has decreased in both the private and public sector – meanwhile employers are requesting more knowledge and expertise, a new report by Saco shows.

A PhD is less profitable now than it was 20 years ago, according to a new report.

The average salary for a qualified doctor compared to that of a person with a first-cycle degree has decreased 22 percent since the year 2001. The decrease is evident in both the private and public sector, but the biggest difference can be found in the municipalities, where the so called salary premium has decreased by 52 percent.

Håkan Regnér is chief economist at Saco and the author of this report. He sees the result as a warning sign for all employers.
“This is a troubling signal. All employers who read this report should take a moment to really think about how this could come to be, he says.”

Håkan Regnér

Chief economist, Saco

While the salary premium has fallen, the percentage of PhD:s in the workforce has increased from 1,0 to 1,6 between 2001 and 2022.

Håkan Regnér says that there is a widespread need for highly educated people in society.
“I don’t think there are any employers in Sweden who would say no to more knowledge and expertise. On the contrary, they seem to be putting pressure on the public sector to educate even more people. It’s strange that they then wouldn’t pay for the knowledge that they’re requesting.”

The report does not identify any reason for the decreasing salary premium, but the increasing number of qualified doctors and changes to the demands of the workforce in both the private and public sector are mentioned as possible culprits.
“As for the employers, I think wages and working conditions are the most important factors that need changing. Especially for the higher education sector, they should be at the forefront on this matter. This could also impact the status of the PhD, if the premium keeps decreasing it might make people question whether it’s even worth going through with.”

Karin Åmossa, Head of Policy and International Affairs at SULF, agrees with Håkan Regnér in a written comment about the report:
“Our society needs highly qualified competence in order to conquer the challenges of both today and tomorrow. That is the very foundation of a knowledge based society. In order to meet that need, employers have to value the knowledge and expertise that qualified doctors possess.”

The results of the report show that women with a PhD have a higher salary premium than men, despite earning on average 4 700 SEK less than men with PhD:s, according to SCB. It is therefore more profitable for a woman to get a PhD, despite them still earning less than their male colleagues.
“It feels sad to say it, but within the group of women with a PhD there is a larger share of low-wage individuals than for their male counterparts. Men with first-cycle degrees have a much bigger chance of advancing in their careers than women. That is where the difference is made, it’s a long term structural problem,” says Håkan Regnér.

Since 2001, the share of female qualified doctors has increased from 28 to 44 percent. Håkan Regnér believes that women could become a majority within the group, especially seeing as they already make up for more than 60 percent of all students within the higher education sector.

Another demographic that has increased is foreign-born people, which has gone from 21 to 37 percent.
“It’s amazing to see that Sweden is of interest to foreign-born academics. It’s difficult to pin down exactly why that is, but after speaking to the universities it seems that foreign-born people are often more qualified for the available positions,” says Håkan Regnér.

But the decreasing salary premiums pose a threat also in this regard.
“We want the foreign-born PhD:S to stay and work in Sweden, but most of them move out of the country a few years after they graduate,” says Håkan Regnér.

Would you say that it’s worth it to start a postgraduate degree today, given the results of the report?
“I do believe so, yes. PhD:s still earn more than those who have a first-cycle degree, even if the difference is smaller today than it was 20 years ago. Salaries are of course an important factor, but I think there are other values that matter more to a lot of people, for example amongst teachers who are doctoral candidates, where continual lifelong learning is crucial,” says Håkan Regnér.

He adds:
“It’s also easy to forget the difference that a single PhD can make in a workplace. They are essential to ensure that society keeps on developing forward.”

The report in numbers

  • The percentage of people in the workforce with a PhD has increased from 1,0 to 1,6 percent during the 2000’s.
  • The share of female qualified doctors has increased from 28 to 44 percent. The share of foreign-born people has increased from 21 to 37 percent.
  • In 2022, 44 percent of all qualified doctors worked in the state sector, 41 percent in the private sector, 13 percent in the regions and 3 percent in the municipalities.
  • The salary premium for a qualified doctor varies between the sectors – it is highest in the regions and lowest in the municipalities.
  • Women have a higher salary premium for a PhD than men in all sectors but one. In the state sector there is almost no difference between the sexes.
  • The salary premium for both women and men with PhD:s is lower in the year 2022, compared to 2001.
  • Read the full report here.

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