For many young researchers, the PhD graduation marks the end of an era of standardized salaries. They now have to negotiate their salary when entering the industry or moving to a non-university research organization. Below are some tips on how to approach these negotiations. An Austrian-German perspective.
By Christian Bettstetter. Published in May 2016.
Doctoral students in electrical and computer engineering often ask me what salary to expect in the industry after graduation. “From 45.000 € to 75.000 € gross per year in Austria or Germany” could be an answer, but this is a vague statement that does not help much. In fact, there is no general answer to this question, as the salary depends on many factors, such as personal profile, position, company type, the current situation in the job market, and company location. Let me thus redefine the above question and give some hints for negotiating a salary and other factors to consider. These hints are from an Austrian-German perspective, but many of them are of general validity.
“What salary should I propose?”
Many companies do not give room for salary negotiations but have their fixed rates for university graduates. Sometimes, however, the human resources department asks applicants about their salary expectations. If this happens, you should be well prepared: have a clear idea about your expectations and give a reasonable, transparent, and understandable argumentation.
Different argumentations are possible. One of them is the following:
- Find the standard salary for a junior Postdoc position in your country, at your university, or by the national science foundation. In Austria, this is a gross salary of 50.267 € in 2016; teaching is paid extra; and invention reports are typically compensated with a few hundred Euros.
- Argue that you would get a gross salary of S if you stayed at the university, where S is about 53.000 € in our Austrian example.
- Argue that you expect M % more in the industry compared to academia, where M is recommended to be between 10 and 20 %.
- Ask for an annual performance bonus B based on personal goals to be discussed with your boss.
Your salary suggestion to the company is thus S + M % + B with a brief explanation. Beware of the fact that this line of argumentation works well in some countries but might be inappropriate in others, e.g., in those with low university salaries.
Besides this, you might want to consider the following additional monetary aspects in order to tune your calculations, but do not overemphasize them as an entrant:
- Compare the living and housing expenses of the two locations in question.
- Compare the benefits in terms of social insurance and pension plan.
- Compare the availability and costs of social services, such as kindergartens and schools if you have a family.
- Compare net salaries (after tax and social insurance) when moving to a different country.
- Ask for reimbursement of relocation costs.
- Do not request salary benefits that are anyway regulated by the law, such as inflation-based salary dynamics and travel cost reimbursement in some countries. This requires that you inform yourself well about the regulations in the country of employment.
“Is my salary good?”
So let’s assume you get an offer with an annual gross salary of 60.000 €. Is this a good salary in that country or not? You can ask public databases: According to an income pyramid by a tax consultant, this salary will put you in the top 10 % in Austria. That’s good, isn’t it?
Is it an excellent salary? No. “But why not? I studied for ten years, got a bachelor, a master, a PhD; I published five journal articles and spent six months at MIT. I’m an expert on the job they offer. Why don’t they pay more?” Relax! For most people in the industry, you are a freshman with no “real” work experience. You will need training, have to socialize and integrate, gain experience, and prove your skills and knowledge. The company first has to invest in you. It will take some time — maybe several years — before you become profitable.
Let me give an example: With an annual gross salary of 60.000 €, the salary cost for an Austrian company is at least 78.500 € in 2016. If you add the costs for your office space, hardware and software, management and administrative overheads of at least 30 %, you will cost about 100.000 € at minimum per year. This is about 450 € per day in Austria, not considering days of absence due to sickness or other reasons. Are you worth more than 450 € per day? If yes, fine, then you have an argument to ask for a higher salary. Or start your own company.
“Is salary important?”
A hackneyed statement is that “salary is not so important.” Some people may agree and others not — it basically depends on your personal situation, lifestyle, and attitude. But one thing should be clear: Never choose your job based solely on monetary aspects! Choose it mainly based on the job description and, even more important, based on your personal impression during the job interview — the impression you get about your future colleagues and boss. Are you on the same wavelength? Do you fit into the team? Do you enrich the team? Do they enrich you? Will you be able to develop further in this job? Will you learn something new?
Besides job issues, be sure that you want to live in that city: compare the quality of living, including climate, political system, leisure and cultural activities, safety, transport, acceptance of human rights and minorities, distance to friends and family. Ask yourself how well these issues match your current wishes and plans for the future, maybe including family planning.
The decision in favor or against a certain job offer is a very individual decision, which will affect your future in many ways. I hope the above is of use in your decision-making process.
Update from late 2019: The figures mentioned in this article are from early 2016. During the last four years, there has been strong competition in Austria and Germany for the best people in engineering and computer science, which has led to a significant rise in the industry’s salaries for PhD graduates, according to my experience with doctoral graduates from my group.
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