Although 2022 saw some of the largest salary rises in a generation, 2023 has been far tougher and the architecture industry is facing another challenging period. At the beginning of the year, the impact from the mini-budget led to dramatic increases in interest rates which significantly altered the financial viability of many projects. The housing sector probably felt the impact the most and for firms specialised in this area, redundancies became unavoidable.
Then came the delays and uncertainty with the second staircase requirements, high rates of inflation affecting the price of construction and the ongoing undercutting of fees. The incredible rebound of work following Covid has now ground to a halt and the latest RIBA Future Workload Index stands at -8.
“Rightmove shows average rents in Q3 increased by 10% compared to the year before.”
Employees are also struggling with the rising cost of living, which has led to demands for substantial wage increases to maintain their living standards. According to the latest rental price tracker from Rightmove, average rents in Q3 increased by 10% compared to the previous year. In London the increase was even higher at 12.1%, highlighting the substantial financial burden employees are facing.
Whilst there were staff shortages last year, practices were compelled to offer higher salaries to attract the best staff. As redundancies have crept into the market this year, however, the job seeker/employer dynamic has shifted and it is no longer such a candidate market. Architectural studios have since been far more restrictive on their salary offers and made an increasing number of architects question how to make a career in architecture more affordable.
The AJ reported on the rising cost of architectural education last year and highlighted the significant debts students are taking on to fund their career. It will be interesting to see which trends emerge in the coming years to make these investments pay off. Qualifying via an apprenticeship at least means you can receive a salary during your studies. Will AI develop design efficiencies to make architecture more profitable? Moving client-side or working for a developer also historically pays significantly higher salaries. That said, for those who commit to architectural practice, encouragingly one of the biggest salary rises in 2023 was for Partners/Directors who on average gained an increase of 8.5% compared to just 1.4% last year.
Unfortunately, this was one of the only bright spots to our annual salary survey which received a record 2,250 responses during September and October. The results showed salaries of architectural staff in practice increased by an average of only 1.3% compared to the UK’s rate of inflation of 4.7%. In real terms, the architectural profession has taken another significant pay cut.
Recent Part 3s, who in 2022 saw some of the biggest increases, only rose by around 1.4% this year and senior architects even saw a slight decrease of 0.8%. The benefit of gaining your Part 3 has also reduced as recently qualified architects are now being paid around £4,200 more than Part 2s with the same number of years’ experience in practice. In 2022 this figure was £5,550.
“In real terms, the architectural profession has taken another significant pay cut.”
For those who decided to study via the apprenticeship route, we found Level 6 Architectural Apprentices were, on average, paid just under £24,000 which is almost identical to Part 1s who received a 3.2% increase. For Level 7 Architectural Apprentices, this rose to just under £27,000 but is quite a lot lower than Part 2s who, on average, are on around £31,000.
In terms of bonuses, these are remarkably similar to last year with on average 44% of architectural staff receiving a bonus. There is, however, still a large difference between the genders with around 48% of male staff receiving a bonus compared to just 39% for women.
The remote working arrangements brought in during Covid are starting to feel like history as practices often say productivity is far higher when everyone is back in the office. There are still studios offering 1-2 days/week working remotely but in general, most firms are encouraging staff back to the studio. The last part of our report therefore looks at the additional benefits offered by practices and how many are rebuilding the studio culture with social events, training and team building. For junior members of staff especially, this was a big loss during the pandemic when the mentorship and learning from senior colleagues was far more difficult whilst working remotely.
As we move into 2024, for many people we speak to, there is a sense that we are near the bottom and if there is a recession, it will be mild. Now inflation is dropping, it is predicted interest rates have peaked and by next summer there may even be some cuts which should revive the housing market. For many studios, perhaps due to the weak pound, international projects have increased significantly and balanced out the downturn in UK workload. Due to the scale of some of the projects in areas like Saudi Arabia, it is likely many studios will be busy for years to come. For smaller practices in London and the South East, the luxury residential market has not been as affected by higher interest rates and remained strong throughout the last few years. The commercial sector has also picked up recently and demand for mid-level architects with strong Revit has increased. Although there have been many redundancies over the last year, these have been very sector specific and skill shortages within the luxury residential, commercial fit out and international giga sectors will likely drive salary increases next year to attract the best staff.
Parag Prasad, Managing Director and Head Coach at The Business Growth, says:
“There is increasing inflationary pressure on wages which puts practice owners in a difficult position. If they can't keep up, good performers are going to be tempted to look elsewhere. Therefore, practices have got to look at the big issue of their fees and value proposition. If that's not addressed practice margins are going to get even smaller putting them in a highly precarious position.”
Stephen O’Reilly from Loud Marketing ads:
“I couldn’t agree more with Parag when he mentions value proposition: that’s the combination of all the benefits you bring to your clients and the reason why they chose to appoint you. It’s closely linked to brand positioning, which is about how you want to be perceived in relation to your competition. You should bring your strengths to the fore, whether that’s sector specialisms, unusual project experience or particular in-house skills. This helps to communicate benefits and draws the focus away from fees. We always recommend developing a value proposition and positioning statements when we work with our architecture clients. It’s important to be authentic, to have a clear point of view and present your practice in a creative and professional way. At a really basic level, you need to have a decent website and build from there. It’s worth noting that all of this helps retain good performers and recruit new talent.”
Please take a look at our full 2023 architectural salary report here and if you would like to discuss further, please do give us a call.
Paul Chappell, Director of 9B Careers
www.9Bcareers.com
+44 (0)20 8004 0369