Engineering salaries are climbing faster than the skills behind them. Employers now pay more to hire people they have yet to train, and more again to stop their best people leaving. The engineers who stayed put are the ones being left behind.
Why are engineering salaries rising so quickly?
The shortage is genuine. Fewer people are coming through apprenticeships and technical courses than there are engineering roles to fill, and experienced engineers know exactly how much that is worth. A good candidate often holds several offers at once, and the employer with the biggest number wins. Businesses respond by paying above the going rate to secure anyone capable.
The other pressure comes from the bottom. Rises in the National Minimum Wage and National Living Wage have lifted the floor for entry-level roles. Employers who want to keep a sensible gap between a trainee and an experienced engineer have to lift everything above the floor as well. The whole scale creeps upwards, and the middle takes most of the strain.
Put those two forces together and pay rises faster than skill can grow. It takes years to build an engineer. It takes one bidding round to price one.
Do counter offers keep engineers in the business?
Sometimes, and only for a while. A counter offer fixes the money problem on the day someone resigns. It rarely fixes whatever made them start looking in the first place. Most engineers who hand in their notice have been unsettled for months, usually about workload, progression or feeling overlooked.
There is a knock-on effect in the team too. Colleagues notice that the quickest route to a pay rise is a job interview elsewhere. Counter offers have their place, but they work best when they come with a real change to the role and an honest conversation about where the person is heading.
What happens when a new starter earns more than the person training them?
Trust drops, and it drops fast. Salary compression is the term for what happens when new hires arrive on the same pay as people with years of service, or more. It rarely stays quiet. Pay comes out in conversation, on job adverts and through recruiters who work on both sides of the move.
The experienced engineer does the maths and reaches a simple conclusion. Loyalty is worth less on the open market than a job change. Then they act on it, sometimes within weeks of finding out.
The business ends up paying the higher rate anyway. It hires a replacement at today's market price, pays a recruitment fee and loses everything the departing engineer knew about its clients and processes. That bill is almost always bigger than the pay adjustment would have been. The cheapest moment to close a pay gap is before anyone spots it.
Is the engineering career ladder broken?
In many businesses, yes. A career ladder only works if each rung pays visibly more than the one below and asks for visibly more skill. When entry-level salaries rise to meet the market and senior pay lags behind, the rungs squash together.
A junior engineer with two years behind them can end up sitting only a small step below a colleague with ten. The difference in ability is still wide. The difference in pay no longer reflects it. Engineers notice this quickly, and they ask a fair question about why they should take on a senior role's responsibility for a marginal increase.
Some stop chasing promotion and look for their next step outside the company. Others stay and stop stretching. Neither outcome helps the business, and both are avoidable. Pay should follow skill, and when it stops doing that, the ladder stops working.
How can employers fix it without overpaying?
Start with your own pay bands. Many businesses have not reviewed them since before the market moved, so the first job is to see where new starters and long-serving engineers sit against each other. The picture is often uncomfortable.
Next, review salaries on a set cycle and do it before anyone resigns. A rise given in the normal course of the year costs less and means more than one extracted by a competing offer.
Then tie each grade to specific skills, qualifications and responsibilities. When progression has clear criteria, you can explain why one engineer earns more than another, and staff can see what it takes to move up.
Finally, invest in training. Growing your own engineers through apprenticeships and structured development costs less than buying finished ones at market price. None of this removes the shortage. It does stop you paying a premium for people who leave and a discount for those who stay.
If you are reviewing your pay structure or finding it hard to hire at sensible rates, talk to our engineering recruitment team.