Credit Cards

Should You Consider Accepting a Job You're Overqualified For?

Searching for a new job is stressful, especially if you're currently unemployed. Is it worth taking an opportunity that you're overqualified for, that offers lower pay, just to start earning a salary again?

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Whether you're disillusioned with your current company or out of a job completely, searching for a new position can feel stressful and exhausting. As days, weeks, or even months pass, you may start questioning your prospects, and feel tempted to consider roles below your level of experience, with lower corresponding salaries. In fact, earning a salary, no matter the amount, is better than nothing–right? In reality, this isn't quite true; accepting a lower-paying job that you're overqualified for may be a short-term fix, but can be very expensive in the long run.

Taking a Salary Cut Can Lead to a Big Loss in Long-Term Earnings

Accepting a lower-level position will almost always mean taking a pay cut. It's a generally known fact that salaries vary according to differentials in years of experience and educational qualifications. Data collected in recent salary reports by Michael Page and Robert Half shows that such variations apply both within individual career paths and across different industries. In fact, taking one step down in seniority can mean a loss of S$1,000's in monthly income, which can add up to overwhelming discrepancies across a full 1-year period.

Taking a position below the tier you're qualified for can lead to a substantially lower salary, regardless of the industry you're in

Even more, taking a pay cut can slow your long-term salary growth substantially. According to research by Robert Walters, 23% of professionals expect a raise of more than 10% in 2019, but less than 10% of hiring managers expect to award raises of this size. This discrepancy shows employees tend to be over-optimistic, but also reveals just how slow salary growth can be. Given that 10% of a smaller base is smaller than 10% of a larger base, incremental increases–even at this rate–will be much slower after accepting a pay cut. This slowed rate can add up to a substantial loss of potential earnings over time.

Incremental annual raises can be quite small in Singapore, leading to slow salary growth over time

Experience Won't Necessarily Lead to Faster Promotion

Having years of extra experience or educational credentials beyond expectations may boost job performance, but won't necessarily lead to faster promotion. In fact, according to SEEK Asia's Job Promotions Report, Singaporeans rated fairness of promotion as 3.23 on a scale of 7 for outcome and 2.64 out of 7 for process–some of the lowest ratings in Southeast Asia. Singapore also has the longest average time to promotion in the region–an incredible 3.8 years. In other words, accepting a lower position just to avoid a few months of unemployment can actually set you back for years.

The Cost of Waiting Isn't as Expensive As You Think

If you're still employed, there's very little to lose by simply waiting for a job offer commensurate with your qualifications. If you're unemployed, however, you may feel a bit more pressured to accept the first opportunity you come by. This could actually be quite detrimental, especially if doing so involves a pay cut–as discussed, discrepancies in salary can add up quickly and promotions can take time.

Waiting for the right match may very well be the best option–even if it means forgoing income for a brief time. By forgoing a junior position which offers lower pay, you are "giving up" the amount of money you could be earning at that position, for the duration of time you remain unemployed. However, when you accept a position that matches your experience, the pay will likely be higher, potentially eclipsing the "loss" you incurred by remaining employed for a bit longer. In the long run, your total gains may actually be higher if you wait for a position that better fits your qualifications.

The cost of forgoing a junior position may be eclipsed by the gains of waiting for an experience-commensurate position, based on annual salary

Make Your Search Less Stressful by Managing Your Finances

As mentioned, time spent unemployed can be incredibly challenging, especially if you're supporting a household. While it's easy just to point out reasons why job searchers should wait for a compatible position, it can be a lot harder to actually get through that "in between" time, during which bills must be paid and food must be put on the table. Fortunately, there are a few financial measures to combat these challenges.

One option is to consider applying for a personal loan or personal line of credit, to extend your resources in the interim. Another option is to consider applying for a no-fee credit card. While this may seem unconventional, many such cards come with cash bonuses and other perks, while also offering rebates on essentials. Finally, if it makes sense with your long-term plans, you may want to consider making a withdrawal from your savings account. However, take care–some banks will lower your interest rate for making withdrawals, and dipping below a minimum balance requirement may incur a fall below fee.

Carrie Arndt

Carrie is a Senior Analyst at ValueChampion, specialising in credit cards in Singapore. She previously led consumer studies worldwide as a Senior Research Executive at MMR Research.

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