The relationship between educational attainment and salary growth: Is higher education still worth it?

In India’s rapidly evolving job market, the age-old question persists: Does higher education guarantee high-flying success and financial prosperity in India?

One simple principle of career planning was that salary growth went with higher educational attainment. However, the changing nature of the economy today and the priorities of hiring organisations require that this relationship be reassessed.

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The education-salary connection

The relationship between education and salary in India remains very strong, especially at the beginning of one’s work life. One’s academic background can determine the first compensation package an entry-level candidate will get.

However, this correlation goes all the way up the corporate ladder, with one’s educational background continuing to strongly influence earning potential throughout one’s career.

Graduates from top institutions like Indian Institutes of Technology (IITs) or prestigious MBA programmes tend to secure positions at leading companies with significantly higher starting salaries compared to those from lesser-known colleges.

On top of that, the salary difference between graduates of top-tier universities and those initiating lower-tier institutions can be as high as 50%.

The difference in how employers perceive foreign degrees versus local degrees is less significant than it once was. However, foreign university degrees still carry more weight in specific sectors like management consulting, private equity, venture capital, and financial services.

Changing dynamics for students

However, it’s important to note that the landscape is evolving. While the correlation between education and salary has always been significant, we now see a gradual shift.

The market increasingly recognises that advanced academics don’t necessarily prepare you for the job – they just help you get it. Once in a role, other factors come into play.

Soft skills, leadership capabilities, and the ability to learn on the job are gaining more weight in determining career progression and salary growth.

This shift is particularly evident in technical fields like engineering, technology, operations, and sales, where quality experience invariably takes precedence over the level of education.

For those seeking more insights into compensation across various sectors, industry salary guides can be invaluable resources. These reports often provide detailed breakdowns of remuneration trends, offering a more nuanced picture of the education-salary relationship in specific fields.

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Traditional and alternative educational routes

Among the qualifications in the country, engineering, MBA, law, and medical degrees remain the most sought-after. Rising demand can also be seen in the areas of chartered accountants and specialists in artificial intelligence.

Interestingly, there are paths into high-earning careers that do diverge from traditional routes. For instance, in the startup world, an entrepreneurial journey is one in which success can come more from soft skills, work ethic, and sales skills than from earning an education.

In technology, we see pathways to lucrative careers where technical skills and professional experience can sometimes trump degrees. Colleges are crucial in providing both traditional and alternative educational pathways, catering to diverse career aspirations.

The impact of online education on higher education

Besides traditional education, the growth of online education has had a significant impact on salary prospects. The higher education department in the government has even taken note of this trend, encouraging the development and adoption of online courses.

Online education also contributes to the sustainability of lifelong learning and career development. It has democratised access to knowledge, allowing anyone to upskill themselves at any time and from anywhere in the world.

This flexibility has been a game-changer, enabling people across all age groups to pursue education not just for career advancement but also due to personal interest.

Online platforms have enabled individuals to acquire specialised skills to boost their value in the job market. While these may not always translate directly into higher salaries, they enhance career prospects and open new opportunities.

Related: Lost a job? Your guide to upskilling after retrenchment

Is higher education still worth it?

Given these trends, the question remains: is higher education still worth it? My answer is a resounding yes but with some caveats.

Higher education is not just about the degree – it’s about the overall experience and the doors it opens. Attending a top institution puts you in an environment with like-minded individuals. It gives you access to valuable networks that can significantly impact your career trajectory.

Having a clear vision for one’s educational and career goals is essential to maximise the benefits of higher education. However, it’s crucial to approach higher education strategically. Consider the following factors:

1. Choose your field of study carefully, aligning it with market demands and your personal interests.
2. Look beyond the degree – focus on developing soft skills, leadership abilities, and practical knowledge.
3. Be prepared to continuously upskill yourself throughout your career, leveraging online education platforms.
4. Remember that while a prestigious degree can give you a head start, your job performance will be the ultimate success factor in the long run.

So, while the employment landscape is changing, higher education remains a valuable investment in India. It provides a strong foundation for career growth and opens doors to opportunities that might stay closed.

It is not the single determinant of the success sphere anymore, though. The dynamics of the present-day job market testify that a strong educational base, continuous development of skills, and on-the-job performance work in coordination to optimise earning and growth prospects.

Explore more salary insights

Get a comprehensive view of salaries across various industries and roles with our 2024 Page Insights Salary Guide, which features the average salary of roles in India's dynamic job market, or use our Salary Comparison Tool to see how your compensation compares to industry standards.

A variation of this article was also published on Upstox.com.

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