Stagnant salaries

The latest SSP/Computer Weekly quarterly survey of job advertisements makes grim reading unless you are system developer....

The latest SSP/Computer Weekly quarterly survey of job advertisements makes grim reading unless you are system developer. Nicholas Enticknap reports on the winners and losers in the IT professional jobs market.

Now is not a good time to be looking for a new job. The number of job ads for IT professionals was down by more than a half in January to March than in the same period last year and between October and December 2001. And the salaries on offer over the first three months of 2002 averaged just 1.2% higher than a year ago, barely above the headline inflation rate for February. So new jobs are hard to find and not worth the effort of moving if pay is your motive. Keeping your head down to avoid redundancy is the order of the day.

There are special factors underlying these figures, which are drawn from the SSP/Computer Weekly Quarterly Survey of Appointments Data and Trends. Recruitment in the IT industry fell by very much more than that in user companies over the first three months of this year. IT companies tend to pay more than users, so when they have fewer vacancies average pay levels drop. This IT industry cutback has happened against the background of a four-year long global downturn.

Taking a longer view, the salary picture at least does not look so gloomy. Compared to five years ago (the first quarter of 1997), salaries offered are typically up 25%, more than double the headline inflation rate of 12% over the same period. Over a 10-year period, the pattern is much the same: salaries are on average up 57%, compared to inflation of 28%.

Returning to 2002, system developer is the most popular single job title out of the 65 analysed by SSP with nearly 25,000 positions offered on the Web in the first quarter. The job description typically requires two to three years' relevant experience. There were a further 8,000 jobs for senior staff with at least three years' experience, and 1,200 more for positions also requiring team leadership skills. The average salary offered to a systems developer without seniority in the first quarter was £34,772: seniority typically adds 20% to that, and team leadership responsibilities 40%. That £34,772 is an average across all types of employer in all parts of the UK using every type of platform. It conceals wide variations. The biggest single factor affecting salary is the job's location. System developer salaries offered ranged from just over £28,000 in north-east England to nearly £44,000 in central London.

The type of employer makes a difference. The finance sector pays best: these companies offered salaries of just under £40,000 in the first quarter. This generosity is partly because many of these organisations are based in central London, which pays 26% above the national average. At the other end of the scale, engineering firms offered system developers an average of just under £31,000, 11% below the national average. In this sector there is a much smaller regional variation, with top whack of just under £35,000 in central London and a low offer of less than £29,000 in the north-east. Platform type and skills in demand can also make a difference. Java developers were offered an average of £36,000 over the quarter, while jobs requiring HTML skills attracted salaries of only £31,000.

That average system developer salary of £34,772 is just £16 a year up on the average offered in 2001. But compared to the first quarter of 1997, it is up 22%, from £28,408. The term systems developer was unknown a decade ago, but analyst/programmers were common. They were offered £29,708 in the first quarter of this year. That is 2% up on 2001, 23% up on five years ago, and 65% up on the £18,000 of 1992.

Top of the tree for salaries are IT directors, who were typically offered just over £80,000 in the first quarter. There is a very wide range here, with the top positions attracting offers of £120,000, while for others the salary was "just" £60,000.

That is about what management/system consultants can expect to get, with the average here being just under £64,000. These positions are mainly advertised by software houses, and the salaries on offer have fallen 10% since last year, when the average was over £70,000. Salaries for consultants rose dramatically in the late 1990s at the time of the Y2K boom, and are now sinking back to a more realistic level. The average today is just 4% up on five years ago, when the boom was well under way, but is a fairly typical 65% up on the £39,000 of 1992.

Of other major job titles, a systems analyst can today expect to get a little over £30,000, a programmer £25,000 to £26,000, a PC support analyst about £22,500, a software engineer some £31,000, a database administrator about £37,000, and an operator along the lines of £22,000. There is little change in any of these figures from a year ago. The range is from -1% (support analyst, database administrator and operator) to +3% (systems analyst).

Compared to five years ago, PC support analysts have seen the least movement, with a below inflation rise of 5%. The other major job positions have seen salaries on offer increase by amounts ranging from 19% (systems analyst) to 31% (operator). Over a 10-year period all job positions have seen rises above the inflation rate, ranging from 30% (support analyst) to 66% (operator). So salaries have typically risen by double the inflation rate over the 10 years, and the current stagnation is untypical. It reflects the lack of activity in the IT job market, which has been depressed since the Y2K boom came to an end in the middle of 1998.

Among professionals looking for jobs today, software engineers are best placed. Jobs on offer in the last quarter fell by a fifth, much less than the 52% of the market as a whole. This relative increase in demand for software engineers has been a steady trend for over a year, and as a result they now account for one in 10 of all jobs advertised, compared to 6% at this time last year. Demand for software engineers with communications expertise is actually up 75% over the past year. This is in contrast to networking specialists, who have suffered one of the biggest falls in recruitment, 70% over the year. They now account for only 3% of all jobs, down from 5% a year ago and 10% over 2000 as a whole.

This reflects the loss of enthusiasm for Internet-based developments. Specialist communications companies retrenched accordingly, cutting advertising by nearly two-thirds. Web specialists suffered the biggest decline of any job category, with the jobs on offer down 84% to less than 1,000, compared to more than 5,000 a year ago.

Regionally, the best place to be for choice was in the north. Jobs fell by just 22% in the north-west, by 31% in the north-east and by 28% in Scotland and Northern Ireland. In London, in contrast, the number of vacancies was less than half what it was a year ago. This time jobs in the capital accounted for less than 30% of the total, compared to 39% at this time last year.

There was an increase in jobs on the Web in four industry sectors. Utilities posted more than treble the number of jobs of a year ago, while engineering companies were looking for more than twice as many IT professionals and the public sector for nearly twice as many. All these sectors have been slow to move to Web-based advertising. The public sector is lagging the most: it accounts for only 1% of Web-based jobs, but for nearly a quarter of jobs advertised in the press - more than the entire IT industry combined.

Paper-based advertising now accounts for only 2% of all jobs. Advertisements in the magazines were down by 80% on a year ago, but by only 13% on the fourth quarter. That is perhaps a sign that the migration to Web-based advertising is now complete. Ads on the Web were down by a half both on the first quarter and on the fourth quarter of 2001.

There has been little change in the skills most in demand. C++, SQL and Unix remain the top three, though the last two have swapped places. Apart from SQL, which is in 16th place in the engineering sector, all three skills feature in the top 10 for every industry sector. C++ is most in demand in software houses, the media, the utilities and the public sector. It is also second only to C in electronics and communications firms.

Unix is number one in the finance sector. Some advertisers specify expertise in a particular brand of Unix. Sun's Solaris was the most popular, featuring in 17th place overall for the quarter. IBM AIX was 47th and HP's HP-UX 84th. Linux was 31st. Though in second place overall, SQL is does not top of any individual sector league table, but is the most popular skill among users in total. Oracle, fifth overall, was one of only two other skills to top any industry sector league table: it was number one among retail and distribution companies.

The other was the surprise package of the quarter, SAP. Demand ran at almost five times the level of a year ago - it was then 76th, and was still only 61st in the fourth quarter, but has rocketed up to 13th overall this time. It was the most popular skill of all in the manufacturing sector, and was also in the top 10 in the finance and utilities sectors.

SAP was one of only three skills in the top 20 to show more demand than a year ago. Interest in embedded applications continues to rise steadily entering the top 10 this time. Growth over the year was 35%.

The third upward mover was the Unified Modelling Language (UML) development environment, whose advance this time is only slightly less spectacular than that of SAP. In 63rd place a year ago and 45th place last time, it was up to its highest ever position of 20th in the first quarter after featuring in more than double the number of ads on a year ago. Enthusiasm for UML is greatest in engineering companies.

The league table generally maintains the trend shown throughout 2001, with Internet-related skills slowly losing ground to conventional client/server skills as companies re-evaluate their e-business strategies. Among Web-based skills that are falling from favour are Java, which has fallen four places to eighth, HTML down nine places to 16th, Javascript down 10 places to 25th, and Perl down 14 places to 34th. On the comms front, expertise in Cisco products is down 17 places to 30th. Bucking this trend slightly are XML (up two places to 14th), and Active Server Page (up four to 15th).

There is also a loss of enthusiasm for component-based development, particularly in the IT industry. The figure for the object architecture Corba symbolises this decline with a fall of 34 places in the table to 69th. A year ago it was 13th in the software houses table and 11th in the comms companies table: this time it has not featured in the top 35 of any industry sector table. Distributed Component Object Model and Enterprise Java Beans are also well down, 28 places to 52nd and 23 places to 56th respectively.

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