"Why Take Out Loans to Study?"... UK Minimum Wage Hike Raises Concerns in Finance and Legal Sectors

UK Government Considers 4% Minimum Wage Hike
FT: "Could Match Starting Salaries for University Graduates in Professional Services"

As the United Kingdom considers raising its minimum wage, there are growing assessments that it could soon match the starting salaries in the financial sector. On November 3 (local time), Yonhap News Agency cited the Financial Times (FT), reporting that "Chancellor Rachel Reeves may include a plan to raise the minimum wage for workers aged 21 and over by 4% to 12.70 pounds (approximately 23,900 won) per hour in the fiscal plan and budget to be announced at the end of this month." The report further stated, "Concerns have been raised that the minimum wage could reach a level comparable to the starting salaries of university graduates in professional services."

A photo to help understand the article showing white-collar workers commuting in London, England. Photo by Reuters and Yonhap News Agency

If the government’s proposal goes ahead and the minimum wage is increased, a worker putting in 40 hours per week would earn an annual salary of between 25,376 and 26,416 pounds (approximately 47.7 million to 49.65 million won). This is similar to the starting salaries of university graduates in finance and law.

According to the Institute for Student Employers, the annual salaries for university graduates in finance and professional services range from a minimum of 25,726 pounds (about 48.35 million won), a median of 33,000 pounds (about 62.02 million won), to a maximum of 65,000 pounds (about 122.17 million won). In addition, according to the legal recruitment site 'Chambers Student,' the starting salary for graduates at some small law firms in 2025 is either lower than or similar to the annual salary calculated based on the proposed minimum hourly wage of 12.70 pounds.

For these reasons, the industry is concerned about the potential impact of the minimum wage increase on future employment and human resources management. Brett Dixon, Vice President of the Law Society of England and Wales, pointed out, "If newly qualified lawyers at small law firms are paid only slightly more than the minimum wage, university graduates may lose interest in entering the legal profession." A CEO of a financial institution told the FT, "If young people can earn the same amount as the minimum wage, why would they take out student loans of 45,000 pounds to study? This could undermine social mobility."

A flag is flying atop Lancaster House in the United Kingdom. Photo by AP Yonhap News Agency

In the financial sector, there is a trend of restricting long working hours for new employees or reviewing non-salary welfare benefits to ensure that entry-level wages do not fall below the minimum hourly wage. On this point, the chairman of a listed company included in the Financial Times Stock Exchange (FTSE) 100 Index told the FT, "If the minimum wage rises further, the increased burden of employer National Insurance contributions and the trend of strengthening labor rights for new employees will add to existing pressures, making the recruitment of young entry-level staff a 'high-risk business.'" The FT pointed out, "While regulators recommend raising starting salaries for new employees in the finance and accounting sectors, in reality, salaries for lower positions have stagnated while those for senior positions have increased."

There are also differing opinions regarding the career paths of professionals. Will Holt, Managing Director of the Institute of Chartered Accountants in England and Wales, said, "In the long term, it may be more advantageous to choose a job with structured training rather than one that offers a high salary from the start." In contrast, James O'Dowd, CEO of the recruitment agency Patrick Morgan, argued, "In mid-sized professional sectors such as audit and consulting, rising labor costs will rapidly accelerate automation and overseas outsourcing, which will likely result in a significant reduction in job opportunities overall."

This content was produced with the assistance of AI translation services.