I would like to think I'm still young as of the time of writing this, I'm 30 years old and have been working as an Engineer since 2013 after leaving University at 23. Like many people my age I have experienced two severe downturns in my industry and have been on consultation twice. During these times I have wondered if I had done the right thing, work in the right place. I was thinking about what advice I would give myself if I could do it all over again, how should I behave, what choices I could have made better and how I should have behaved. I was fortunate in that I have survived both cuts and have now worked for nearly 8 years in an industry that rewards well and provides a reasonable level of challange to make my life interesting. The following is from my perspective, perhaps a large dose of cynicism has made me think this way, but I have often found that we seem to leave school and university, coddled, with a state supplied pair of rose tinted sunglasses.

Pay and Reward

The problem with pay and reward is when you are learning at school and even more so at university this aspect of work is clouded in politically and morally charged views about what exactly is fair. While many of the opinions you may come across regarding wealth inequality are important topics of debate they only tell a part of the full story. You would have probably been told things like: it's not fair that person x earns 10 times more person y who works harder; or, if you work hard, or do a really technically or scientifically complex job, you will be paid lots and lots of money. This would indicate that you should be payed based on:

• How qualified you are
• How good you are
• How Experienced you are

The reality is that the concept of what is fair in a corporate setting, depending in what country you work, is broadly from a capitolist mindset. That is, you are paid however little a fraction of the amount of money you generate the company they can get away with paying you. When viewed this way, you may see that your value, in addition to above, primarily comes down to:

• How rare your skillset is
• How much you make for the company
• What they can pay someone else
• What they are paying people above you

The process of applying for a job is a negotiation and you should go in with the attitude that you are on equal footing with them. The company you apply to may well offer you far less than other people if they think you will accept it. Therefore you must try and gather as much information as you can on what the market rate is and how valuable you think you are.

Your Value and What you probably haven't been taught

Your value is as much about what a company is willing to spend on you as it is of as how much you are willing to do that job for. For this you need to understand how to measure a pay offer, or more accurately a compensation package, from a company. I can only speak from a experience of the British job market, so in summary a staff package from a British company might include:

• A base salary (Taxed)
• Bonus and share awards (Taxed)
• Pension (Not Taxed)
• Holidays
• Health and Dental Insurance (Taxed)
• Death in service and Illness Cover
• Share plans (Often very tax efficient methods of saving)
• Meal allowances (Often not taxed)
• Maternity Leave (Above Statutory)
• Paternity Leave
• Sabaticals (Unpaid)
• Sick Leave

Most people are blinded to the other things on offer by the base salary and bonus payments. The best way to evaluate the above is to see it from a lifelong income. Take two offers:

1. Company A

• Base salary - £55,000
• Bonus - 10% target
• Holiday - 25 days + 8 Public Holidays
• Pension 2% company contribution - matched up to 8% with NI relief

2. Company B

• Base Salary - £50,000
• Bonus - 10% target
• Holiday - 25 days + 6 flex days + 8 Public Holidays
• Pension - Company 10% + Match up to 5%
• Share Incentive Scheme

With company A you would clearly get more in your bank account every month but lets break it down in terms of money (assuming 2020 income tax and NI in England)

• Base Salary - £55,000
• Bonus (After Tax and NI) - £3,243
• Pension (assume you pay in 8%) - Company  £1,100 + £4,400 - You £4,400
• Take Home Pay After Tax - £41,182
• Total Money You have gained (addition to pension and take home pay) - £51,082

Company B offers more benefits but a lower base salary

• Base Salary - £50,000
• Bonus (After Tax and NI) - £3,757
• Pension (assume you pay in 5%) - Company £5,000 + £2,500 - You £2,500
• Share Incentive Scheme (You buy 1 share company provides 2, tax free after 5 years limited to 2% of your base salary up to £1,800) - Company £2,000 - You £1,000
• Take home pay after tax before shares - £38,369
• Take home pay after tax and receiving shares (assuming no change in value after 5 years with company) - £41,369
• Total Money You Gain per Year - £51,369

As you can see if you stay with company B for a long period you will begin to earn more than company A. If you also consider the holiday provision of an extra 6 days you are earning £23.04 per hour when you aren't drawing your shares opposed to £24.08 in Company A, not all that bad if you like time off!

Though this isn't the full story, what if company B were in London and A in Leeds? Your expenditure will be far higher in London but your oppourtunities for networking may be higher. Maybe your family is there or you just wan't to live there. Elsewhere you would have more spare money to save, you'd be able to buy a house sooner, start a family sooner, in effect better off. If you are really indifferent, then perhaps you may find more remote locations may pay better to attract people. People in London would normally receive a higher salary than elsewhere due to these living costs but, certainly as of now, often these increases are barely cover the additional living and commuting costs to make it worth living there for if you have no other ties to the city.

Contracting, Self-Employment and Limited Companies

Generally there are two kinds of contractor you will come across. The first will be an employee working for a company with their own contract of employment who is in effect rented out to another company or individual to perform a task. This is very common amongst accounting and engineering firms where smaller companies may only need an accountant or engineer part of the year and are ok trusting another company to provide them with competant labour. If you work for one you may never set foot in their office outside of an interview, or even then they may only act as middle-men providing your CV to other companies who in effect employ you via the agency (don't yield with these people, they are recruiters who skim part of  the money to pay for you as commission so often try and lower your cut as much as possible). The contract you will have will be identicle to any other job being employed with a company and would only have a different company name as your employer.

Traditionally self employment was used by consultants and tradespeople as a good way of managing taxes for their business. For instance a job where you are expected to provide your own tools or equipment and transport could eat up a significant proportion of your income until you reclaimed that income from the tax man. In a professional context (by professional I mean degree educated) people are using self employment as a method of providing their services with the benefits of this arrangement providing more flexibility and more efficient tax. This comes at the cost of many of the perks and security of direct employment. Typically the individual would set up a limited company much like any tradesperson (think how many vans belonging to plumbers and electricians with a company name like J. James L.T.D. on the side). They would become the director of this limited company and would enjoy all the (now shrinking) benefits of being a director. For income their company would bill a company needing their professional services for their hours under a service contract rather than employment contract. This has the benefit for the company wanting to have something worked as they are no longer responsible for paying for national insurance (social security), income tax, pension, holidays or sickness pay for the individual. The contracts are literally an agreement between companies and as such can be terminated with no reason whatsoever and with very short notice. On the other hand the person who is the director of the limited company has the benefit of being far more in control of their pay packet and perks. They can also terminate their contract at very short notice making them far more mobile. As they are paid by the hour they can work more or less time as they wish thought the service contract will often limit the number of hours they are willing to pay for a day for example. Being directors they have several means of avoiding tax by paying themselves through other means rather than a salary. Some will use tax avoidance schemes to avoid or significantly reduce tax they have to pay. While this arrangement is very beneficial to high income professions such as engineering, medicine, law and accounting, it's now often being used (rightly or wrongly) by smaller companies who do not wish to have the commitment of fulltime staff (think Uber and Deliveroo). The main thing to consider with this type of employment is while you can reap the benefits of income options available to you, you are entirely responsible for everything that you would be used to a company doing for you. The company paying for your service:

• Can pay you (more accurately your company) less with little notice.
• Can terminate your services often within a week with no reason (this could be based on discrimination and could be difficult and expensive to prove given the company could just say they don't need you anymore)
• Do not have to pay you when you don't work (doesn't matter if you are sick, having children, stuck abroad or late for work)

I think what you need to conclude from this is to know what you want and to know what you are being offered as an all round oppourtunity. If you can't find work, or the work is no good, is it good somewhere else? What if you have a partner? Can they also find work? Two £30k salaries are better in almost every dimension than one £60k one, not least when you factor in tax and income security, and that's also assuming that your partner is happy not to have a career! Is the work interesting? Is it boring but gives you plenty of time to persue other interests? Are you going to be stressed all the time or not stimulated enough? Really this is completely down to the individual. Perhaps next time when the fat cat banker drives up in his Ferarri, think, would working 80-100+ hours per week in an imensly boring and stressful job with no time for anything else make it worth it for you? Personally, as unpopular as this would sound, I'd say they deserve the money but it's not for me!

Negotiating

Always remember when negotiating a salary that there's shouldn't be anything personal in the interaction. Western democracy was built on people negotiating to create situations where both parties benefit. If a company doesn't want to pay you want, there could several (possibly more likely) reasons other than factors related to you.

Treat negotiation like a card game, like a card game you hold cards, which represent the minimum conditions you would accept, that only you know, likewise with your opponent (the company) does too. Like a card game if someones hand is empty they've probably lost. Unlike normal a card game it should be neither sides objective to empty the hand of the other. Like any game, always act in good faith less they will never play with you again. Most importantly, if you are not happy, walk away. Remember that the rules are the same on both sides and the behaviour from both sides should reflect this. For example, if you tell them the salary you want (this must be higher than what you will work for) they will counter offer. If the counter offer is rubbish, then you are probably better of helping them save face by politely rejecting it and walking away. Arguing over it makes you look petty, and puts the company in an awkward position if they can't afford that salary for you or would piss off the rest of their work force if they gave you it.

Take a scenario that I experienced, I was approached by a company asking me if I want to work for them (I wasn't looking for work). I'm always open to offers so agreed to interview. They couldn't really tell me what work they wanted me to do, I guess this was because I was being interviewed only by HR and not Engineering. In any case they decided that they liked me and made be an offer. Lets just say the offer was kindof lacklustre and was less than what I earnt as a graduate. I rejected it. In my mind they couldn't afford me or had a very warped idea of what the value of an engineer is for them. They then asked what I was expecting. Now bear in mind they were in a more expensive part of the country to live in and wanted to pay me less. So I was honest with them, I said to even meet the kind of lifestyle I have in my current job I would want to be paid a little more than I currently made, factored in for the extra cost of rent etc. Their response was to get angry and tell me I'm full of myself and not worth what I wanted. Lets just say I will avoid interviewing with them again, even if they wanted to offer what I wanted. This is an example of bad faith on the companies part, I was negotiating from a much stronger position than them and they wanted me to leave my job for them. Their reaction to my position was unprofessional and rude. The thing is people do react like that in the opposite circumstances and unsuprisingly they aren't employed...

Conclusion

Assuming you've even made it to a position where you have a stable income in a skilled or professional job, deciding if you are getting screwed over is difficult. Unions came into existance afterall to ensure that their workers for getting fair conditions when their employer was likely the only one in town of any importance. As there was no competition within the local area for their trade it made sense to have a union to unify the demands of the individuals within the company to prevent the company from taking advantage of monopolising the local employment oppourtunities. With the decline in union membership in the working class professions, and the lack of unions at all in the skilled or professional positions we are more and more being expected to value ourselves. It's easy to compare to someone else and resent that they earn more, it's even easier to justify to ourselves that we are doing the same job at the same level so we should be getting the same. I hope by what I've written you will see why companys won't see it that way. I hope you may even see some degree as to why things being the way they are is fair. The one thing you can be sure of is that it's more than likely than not, that you will be payed differently from your collegues and, in reality, it's none of your or their business.