Intelligence: Employment and earnings
Are things looking up?
Earnings have fallen – but unemployment has fallen by more. Could we be at a turning point? The Employment & Earnings Survey 2013 sifts the winners and losers.
This year’s annual RIBA / The Fees Bureau Employment & Earnings Survey reveals two changes since last year. Average earnings are down, while employment activity is up.
So we have lower rates of unemployment, and indeed lower rates of under-employment, compared to the previous three years. The downside of having more architects in work appears to be a reduction in average pay. The profession’s average earnings are lower by 3 per cent – and with inflation at 2 per cent this is effectively a pay cut of 5 per cent.
It may well be simple supply and demand; more architects are in work (mainly due to more setting up on their own) but this appears to be holding down average earnings. This is supported by the fact that the largest fall in earnings is recorded by sole principals – precisely the group which includes the majority of new self starters. These two trends mirror what we are seeing in the wider economy; the number of people in employment is rising while pay is flat.
In architecture, there has been a rise in employment across the board. Indeed, the number of architects working full-time is the highest since 2007 and this year’s is the first increase since 2005. The proportion of architects working full-time has risen from 84 to 87 per cent among male architects and from 63 to 69 per cent among females; overall, the proportion of architects in full-time employment has increased from 80 to 83 per cent since last year. The rate of reported unemployment has fallen dramatically, halving from around 4 per cent in 2009, 2010 and 2011, to less than 2 per cent now. Taken with those who are not working ‘for other reasons’, the total proportion of architects not in employment has fallen from 7 per cent two years ago to 4 per cent this.
Also lower this year is the level of under-employment, where architects believe they are working significantly below capacity. The proportion overall is 14 per cent, down from 18 per cent last year. But under-employment is more than double the overall average for sole principals. Among principals in partnership, 16 per cent believe they are under-employed, while the rate is lower among salaried staff: 6 per cent among private practice salaried, 3 per cent among central government architects and no local authority architects.
On the earnings front, it is sole principals who have fared by far the worst in 2013. Their average earnings have already been falling each year for some time (from £40,000 in 2009, to £35,000 in 2010 and 2011, and further to £32,500 last year). Their average earnings have fallen 8 per cent to a new low of £30,000, on top of last year’s fall of 7 per cent. Last year, the lowest earning quarter of sole principals earned less than £20,000. That figure has fallen this year to £18,500, which means about 1,000 sole principal architects are working full-time and earning less than £18,500 a year.
We’ve commented in previous surveys on just how low average earnings have become for this group. But we’ve also pointed out that there are a third more sole principals now than three years ago, suggesting average earnings are lower because they have been pushed down by new entrants. What we also see this year is a stubbornly high rate of under-employment among sole principals. While this has fallen for other architects, the figure remains at 29 per cent for this group. This suggests there is not enough work to go round for the growing number of architects who have set up as sole principals.
Something different is happening for principals in partnership. These architects, who are partners and directors in small, medium and large practices, have also seen a boost in their number. Indeed, this is the largest single employment group of architects. But unlike sole principals, rather than falling in recent years their average earnings have stayed flat. Partners and directors in practices have earned around £50,000 in each of the last four years. It appears that architects who set up new practices in partnership with others have been able to maintain their earnings at the same level as those in established practices. There has been no diminution of earnings as numbers have increased.
Principals in partnership record average earnings of £50,000 in this year’s survey. This varies by practice size, with a wide range all the way from £30,000 in a two person practice to £75,000 in practices with more than 50 staff. In medium sized practices, with between 10 and 30 staff, principals’ earnings average between £50,000 and £60,000.
Salaried architects (including associates) have seen a small drop (1.3 per cent) in average earnings, to £38,000. This is the same average as recorded in 2010 and 2011; like the earnings of partners and directors in the practices in which they work, salaries have been flat. But unlike their principals, salaried architects’ average earnings vary little by practice size, ranging from an average £36,000 in a three to five person practice, to £39,000 in one with more than 50 staff.
For the 1,600 public sector architects, salaries have continued to fall in 2013. Average pay for architects working in local authorities is 1.0 per cent less than last year; while for central government architects the drop has been a touch more (1.4 per cent). But over the last four years, salaries earned by architects working for local authorities have fallen by more than those for architects working for central government. The only substantial rise in earnings this year is recorded by architects in private in-house organisations, although this rise should be considered with caution as last year’s figure was unusually low and indeed this year’s rise merely re-establishes the level recorded two years ago.
So overall, this year’s survey results show that average earnings are at best static, with continued downward pressure on the earnings of sole principals. The mythical ‘average architect’ will have seen earnings fall by 3 per cent – or 5 per cent including inflation. While significant, this is less than the after-inflation falls recorded in 2010 and 2011.
Looking carefully into the data, this survey suggests there may actually be grounds for cautious optimism – the worst could be over. There are two main reasons for this: first is that the number of architects in full-time work has increased by 4 per cent this year. Although this has had a negative effect on earnings, average pay has fallen by less: 3 per cent. This suggests that, in total, there is more money being earned by the profession. Secondly, in private practices outside sole principals, despite the savage beating to workloads and fee revenue, earnings for those in employment have not fallen but, rather, remained stable. This is not just in the last year, but over the last four. That’s some achievement given the harsh climate in which architects have found themselves operating. One more piece of data suggests optimism; early results from our latest Quarterly Workload Survey shows that architects are more optimistic than they have been for a long time. Asked in July and August whether they felt future workloads would fall, remain stable or rise, the ‘balance’ figure – the difference between those predicting more work and those predicting less – has exceeded +25 for the first time since 2007. To put this in context, the ‘balance’ statistic for the previous quarter was +2; and that was the first positive figure for three and a half years.
We will release full results later this month. But as a whole, this evidence suggests we may well be at a ‘turning point’ for the profession’s workloads, revenues and earnings. •
Aziz Mirza is lead researcher at The Fees Bureau
The last few years have been particularly tough for a number of architects and maintaining a job in many instances has been more important than a salary increase.
However, 2013 has seen a far more promising environment with the number of available jobs dramatically up on 2012. Advertisements on ribaappointments.com for the year to July have increased by 58% compared to the same period last year and in recent months have been even more pronounced (incredibly, July 2013 was up 114% compared to July 2012). Encouragingly, the number of jobs being advertised is increasing across the UK but the main area of growth is still London, which appears to be particularly buoyant in the high end residential sector.
The RIBA Future Trends Survey has seen positive figures for a while (see left) but firms have remained cautious about hiring new staff until absolutely necessary, apparently using temporary staff as a stop gap. The last couple of months appear to have been the tipping point though and more jobs are finally becoming available: architectural staff who have spent the last few years waiting for an improvement are considering moving. However, already being in a job means they are far more keen to negotiate a salary increase or better career progression before accepting a new role, and I expect average salaries to start increasing in the coming months. We are also seeing quite a few people who suffered pay cuts during the recession haven’t had salary rises again since construction has picked and are therefore keen to move.
After near constant commentary on the lack of jobs for the last few years it seems strange to start saying this, but in the last couple of months a few skills shortages are emerging for good Part 2s with strong Revit experience and project architects who have worked on luxury residential schemes in central London. With a misbalance of skills to jobs salaries might start improving to attract the top talent.
Paul Chappell, RIBA Appointments
The annual RIBA/The Fees Bureau Architects Employment & Earnings Survey is conducted among the UK’s RIBA members via an online questionnaire in April and May 2013. Thanks to the 1,600 architects who responded.
Buy the full report from The Fees Bureau at feesbureau.co.uk or call 01243 555302. RIBA members can see summary statistics from the survey on The Fees Bureau website.