Patterns of Pay 2012 presents summary analyses from the 2012 Annual Survey of Hours and Earnings (ASHE), and compares these to estimates from 2011 and, where relevant, with the 1997 to 2011 back series.
In April 2012 median gross weekly earnings were £506 (for full-time UK employees on adult rates whose earnings were not affected by absence), up 1.5% from £498 in April 2011.
Between April 1997 (the first year for which ASHE data are available) and April 2012 median full-time gross weekly earnings increased by 57.8%. Adjusting for inflation, using the Consumer Prices Index, the increase over this period was 14.8% in real terms.
Between 2011 and 2012 gross weekly earnings for full-time employees in the bottom decile grew by 2.0% to £282, compared with growth of 0.1% in the top decile to £999.
For the 2011/12 tax year median gross annual earnings for full-time employees on adult rates who had been in the same job for at least 12 months (including those whose pay was affected by absence) were £26,500. For men, median gross annual earnings were £28,700 while the comparable figure for women was £23,100.
In April 2012 median hourly earnings (excluding overtime) for full-time employees were £12.76, up 1.6% from £12.56 in 2011. Women’s hourly earnings were £12.00 and men’s hourly earnings were £13.27.
The stronger growth in women’s hourly earnings (excluding overtime) compared with men’s (up 2.2% compared with 1.1%) meant that the gender pay gap for full-time employees narrowed to 9.6% in 2012, from 10.5% in 2011.
The Annual Survey of Hours and Earnings (ASHE) is based on a sample of employee jobs drawn from HM Revenue and Customs (HMRC) Pay As You Earn (PAYE) records. ASHE is the Office for National Statistics (ONS)’s most detailed and comprehensive source of information on:
levels of earnings (for both full-time and part-time employees and for gender);
make-up of total earnings (split between basic pay and other components); and
distribution of earnings (the extent to which earnings are dispersed around the median).
ASHE focuses on estimates of the median rather than the mean. The median is the value below which 50% of employees fall. The median is preferred to the mean for earnings as it is less affected by extreme values and the skewed distribution of earnings data. However, estimates of the mean are still available in the annually published results.
More details on the methodology for the survey can be found on the ONS website.
The first few sections of this article present summary analyses on overall medians, the make-up of earnings, the distribution of earnings and gender pay differences for the provisional 2012 ASHE, comparing the analyses with the revised 2011 estimates (and, where relevant, with the 1997 to 2011 back series). While these estimates are of interest, they can hide wide variations between different industries, occupations, regions and age groups. The concluding sections of the article give summary analyses of each of these breakdowns and the corresponding gender pay differences.
Weekly and hourly figures in this article relate to employees on adult rates whose earnings for the survey pay period were not affected by absence. Annual figures relate to employees on adult rates who had been in the same job for at least 12 months, including those whose pay was affected by absence. In all cases figures are presented in terms of gross pay. Gross pay includes pay before deductions for PAYE, National Insurance, pension schemes, student loan repayments and voluntary deductions. It includes basic, overtime, shift premium, bonus or incentive pay (relating to work carried out in the pay period) and any other pay but excludes expenses and the value of salary sacrifice schemes.
The full suite of results tables from the 2012 ASHE and from all previous years back to 1997 can be found on the ONS website.
Between April 1997 (the first year for which ASHE data are available) and April 2012 median full-time gross weekly earnings increased by 57.8%, from £321 to £506. Up until 2008 the annual increase in weekly earnings was fairly steady, averaging at around 4% each year. However, since the start of the economic downturn earnings growth has slowed, with weekly earnings increasing by 3.6% overall between 2009 and 2012.
The Consumer Prices Index (CPI) is the main UK domestic measure of consumer price inflation for macroeconomic purposes. Adjusting for inflation using the CPI, real weekly earnings for full-time employees increased by 14.8% between 1997 and 2012, peaking at £547 (in 2012 prices) in April 2008. Since then real weekly earnings decreased by 7.6%, so that in April 2012 they were lower than the level seen in 2003 (see Figure 1).
An article containing further information on real earnings growth over the last 25 years can be found on the ONS website.
Median gross weekly earnings for full-time employees in April 2012 were £506 (see Figure 2). At £546, median gross weekly earnings for men increased by 1.4% over the year. This was compared with a 1.9% rise for women to £449. Between 1997 and 2012 median gross weekly earnings for women working full-time increased significantly more than for men (69.1% for women compared with 52.9% for men).
Median gross annual earnings of full-time employees on adult rates who had been in the same job for at least a year (including those whose pay was affected by absence) were £26,500 for the 2011/12 tax year. For men, median gross annual earnings were £28,700, up 1.2% from the previous year, while the figure for women was £23,100, up 2.0%.
Median hourly earnings (excluding overtime) of full-time employees were £12.76 in April 2012, an increase of 1.6% since April 2011. Female employees working full-time saw an increase of 2.2% in hourly earnings, compared with 1.1% for men.
Between 1997 and 2012 there was a slight fall in the mean total paid hours worked per week by full-time employees (39.1 hours in 2012 compared with 40.0 hours in 1997). In April 2012 full-time men worked 40.1 paid hours per week and full-time women worked 37.4 paid hours per week.
Part-time employees work 30 hours or less per week or, for those in teaching professions, less than 25 hours per week. They earned a median hourly rate (excluding overtime) of £8.01 in April 2012, an increase of 0.2% over the year. For men the increase was 1.0% over the year to £7.72, while for women the increase was 1.2% to £8.12. From 1998 to 2012, female employee hourly rates remained above the levels for male employees (see Figure 3) with little change to the pay gap during this period, apart from a slight widening in recent years.
There was a slight increase in the ratio of part-time to full-time median hourly earnings (excluding overtime) between 1997 and 2012. In April 2012 median hourly earnings for part-time workers were 62.8% of those for full-time workers (compared with 60.6% in 1997). For men, part-time earnings were 58.2% of full-time earnings (compared with 56.8% in 1997) and for women the comparable figures were 67.7% in 2012 and 68.4% in 1997 (see Figure 4).
The proportion of male employees in the total workforce who worked part-time rose from 4.2% to 6.3% between 1997 and 2012. However, this figure is still well below the proportion of female employees working part-time, which nevertheless fell from 21.2% to 20.6% of the total workforce over the same period. (Note that these figures are based on Labour Force Survey estimates of the composition of the employee workforce for the period April to June of each year).
Median hourly pay for female employees working part-time is higher than that of male employees, partly due to a higher proportion of females working part-time throughout their careers. Figure 5 shows the distribution of part-time employees by gender and by age in 2012. This shows that a higher proportion of females work part-time in the higher income age groups (aged 30 to 39, 40 to 49 and 50 to 59). The proportion of males working part-time is higher in the younger age groups as well as the 60 and over age group.
ASHE splits gross weekly earnings into four components: overtime payments, payments by results / incentive payments (such as bonuses etc.), premium payments for shift work, and the residual - which includes basic pay and allowances. The first three additional payments vary quite considerably by type of worker.
The proportion of additional payments of mean gross weekly earnings for male employees working full-time was higher than that of their female counterparts over the period 1997 to 2012. In 2012 male employees earned £40 additional payments, which accounted for 6.1% of their total pay, whereas women’s additional payments (£16) accounted for just 3.1% of their total pay.
In April 2012 mean overtime payments for full-time employees were £16.50 per week, the same as in 2011. Mean payments by results / incentive payments decreased from £8.40 in 2011 to £7.90 in 2012. This was the lowest level since the introduction of this measurement in 2000.
Mean shift premium payments were £6.40 in 2012, up from £6.30 in 2011. From 2000 to 2009 shift premium payments fluctuated between £5.40 and £6.10, but they’ve increased slightly in recent years.
Figure 6 displays the distribution of gross weekly earnings among full-time employees for the years 1997 to 2012. The median level of gross full-time earnings in April 2012 (£506 per week) was lower than the mean (£607), since the latter is boosted by the relatively few people at the top end of the distribution with extremely high earnings. For 2012, at the bottom of the distribution, a tenth of full-time employees earned less than £282 per week, whereas at the other end of the scale a tenth earned more than £999 per week. The ratio of the highest to the lowest decile for gross weekly earnings, which was 3.5 in April 2012, gives a measure of the distribution of weekly pay. This ratio has been very stable since 1997, when it was also 3.5.
In the year to April 2012 gross weekly earnings of full-time employees in the bottom decile of the distribution grew faster than those in the top decile (an increase of 2.0% against 0.1% respectively). This was the smallest year-on-year percentage increase for the top decile since the ASHE series began in 1997. Between 1998, the year before the introduction of the national minimum wage, and 2012, the top decile increased by 57.2% against a bottom decile increase of 56.1%.
Figure 7 shows the patterns of growth in the top and bottom deciles of gross weekly earnings for full-time employees and for CPI since 1997. In 2012, as in 2011, earnings growth was outstripped by growth in the CPI, which was 3.0%. This was the third consecutive year that the CPI had increased above the growth rate in both the top and bottom deciles of the earnings distribution, and only the third year that this had happened since 1997-1998 (the start of the ASHE series).
In 2009 ONS reviewed the way it presented gender pay statistics. The review concluded that there was no single measure which adequately dealt with the complex issue of the differences in men’s and women’s pay. ONS now highlights the following measures:
Female full-time employees’ median pay compared with male full-time employees’ median pay.
Female part-time employees’ median pay compared with male part-time employees’ median pay.
All female employees’ median pay compared with all male employees’ median pay.
ONS prefers to use hourly earnings (excluding overtime) and focuses on estimates of the median. Including overtime can skew the results because men work relatively more overtime than women.
As discussed in the previous section, women are more likely to work part-time than men. In addition, full-time jobs tend to be higher paid than part-time jobs. Consequently, women are more likely to receive lower hourly rates of pay than men. This means that the gender pay gap, which is the difference between men’s and women’s hourly earnings as a percentage of men’s earnings, is ‘positive’ overall (i.e. for all full-time and part-time employees combined).
In April 2012 the gender pay difference for all employees (full-time and part-time) based on median hourly earnings (excluding overtime) was 19.7%, down from 20.2% in 2011. This was a narrowing of around eight percentage points (from 27.5%) since 1997.
For full-time employees median hourly earnings (excluding overtime) in April 2012 were £12.00 for women (up 2.2% on 2011) and £13.27 for men (up 1.1%). This resulted in the gender pay gap narrowing in 2012 to 9.6%, down from 10.5% in 2011 (see Figure 8). The gender pay gap therefore fell by around eight percentage points (from 17.4%) for full-time employees in the 15 years since 1997.
For part-time employees men’s median hourly earnings (excluding overtime) were £7.72, up 1.0% since 2011, compared with women’s hourly earnings of £8.12, an increase of 1.2%. The higher rate of pay for women than men resulted in a ‘negative’ gender pay difference for part-time employees, which widened to -5.2% in 2012 from -5.1% in 2011.
Although ONS’s headline estimates of gender pay differences are based on median hourly earnings, mean hourly earnings provide a useful supplementary measure. The differences between median and mean gender pay gaps reflect the extent to which high earners skew the earnings distribution.
The gender pay difference for mean full-time hourly earnings (excluding overtime) is wider than that for median earnings but, nevertheless, fell from 20.7% to 14.9% between 1997 and 2012 (see Figure 9). Men’s mean hourly earnings were £16.50 in April 2012, up 0.4% from £16.43 in 2011. Women’s mean hourly earnings increased by 1.7% from £13.82 in 2011 to £14.05 in 2012.
In contrast with the median measure, mean hourly earnings for part-time employees were lower for women than for men. This is because there are a larger number of men than women who are working part-time with high earnings, which skews the distribution and increases the mean relative to the median. Even so, the gender pay gap based on mean hourly earnings decreased from 9.9% per cent in April 2011 to 7.9% in April 2012, the narrowest gap since the ASHE series was introduced in 1997.
The gender pay difference based on the mean for all employees (full-time and part-time) also decreased in 2012, to 18.6% from 19.6% in the previous year.
Although median and mean hourly pay provide a useful comparison of men’s and women’s earnings, they do not reveal differences in rates of pay for comparable jobs. This is because such measures do not highlight the different employment characteristics of men and women, such as the proportion of each gender in different occupations and their length of time in service.
ASHE breakdowns by public and private sector are produced according to the legal status of the employers. The private sector is comprised of businesses whose legal status is defined as 'Company', 'Sole Proprietor' or 'Partnership' and the public sector is comprised of those defined as 'Public Corporation', 'Central Government' or 'Local Authority'.
Median full-time gross weekly earnings for public sector employees have been higher than for private sector employees every year since the start of the ASHE series in 1997 (see Figure 10). The difference between private and public sector median earnings for full-time employees had been fairly constant up until the mid-2000s but has widened slightly in recent years. Private sector median gross weekly earnings were £479 in April 2012, up 1.5% from 2011. Public sector earnings were £565, up 1.6%. Public sector mean gross weekly earnings (£634) were also higher than those of the private sector (£599).
Differences in gross weekly earnings do not reveal differences in rates of pay for comparable jobs. This is due to differences in the composition of the public and private sectors. For example, many of the lowest paid occupations, such as bar and restaurant staff, hairdressers, elementary sales occupations and cashiers, exist primarily in the private sector, while there are a larger proportion of graduate-level and professional occupations in the public sector.
Between 2008 and 2009 Lloyds Banking Group, the Royal Bank of Scotland Group (RBS) and Northern Rock were reclassified from the private sector to the public sector. This changed the distribution of earnings in the public and private sectors, and so it is interesting to look at what would be the effect on the annual increases in these sectors if these banks had not moved to the public sector. If median earnings for 2011 and 2012 are recalculated with Lloyds Banking Group, RBS and Northern Rock (for 2011 only, as it moved back to the private sector in 2012) reclassified as private sector then the annual increase in weekly earnings between April 2011 and 2012 for the public sector becomes 1.7% (compared to 1.6%) and for the private sector it becomes 1.2% (compared to 1.5%).
There were changes in the composition of the public and private sectors between 2011 and 2012. For example, many of the new jobs created in the private sector were at the lower end of the earnings distribution. This affected private sector growth into 2012. Looking only at jobs in which the employee had been in post for at least one year (thereby removing the influence of the changes in the composition of the labour market), different growth rates in the public and private sectors are seen. For the public sector the annual increase in median full-time gross weekly earnings between April 2011 and April 2012 becomes 2.8% (compared to 1.6%) and for the private sector it becomes 3.8% (compared to 1.5%).
Gender pay differences vary between the public and private sectors, depending on whether the employee is in full-time or part-time employment (see Figure 11). For full-time employees the gender pay gap (based on median hourly earnings excluding overtime) in the public sector was 9.9% in April 2012. The comparable figure for the private sector was 18.3%. For part-time employees, the gender pay differences in the public and private sectors were 17.9% and -1.6% respectively (meaning that, on average, part-time men earn more than women in the public sector but slightly less in the private sector). Gender pay differences for all employees (regardless of whether they are full-time or part-time) were 18.5% in the public sector and 26.3% in the private sector.
Based on the Standard Industrial Classification (SIC) 2007, median gross weekly earnings for full-time employees in April 2012 were highest in the mining and quarrying sector at £728 (see Figure 12). This was £50 per week more than the second highest, the information and communication sector, and £88 per week more than the third, financial and insurance activities. Weekly earnings in the mining and quarrying sector are boosted by longer paid hours worked by employees relative to other sectors. The mining and quarrying sector is small (there were approximately 56 thousand employee jobs in this sector in the UK in 2012), but has a relatively high concentration of well paid jobs.
The accommodation and food service activities sector had the lowest gross weekly earnings in April 2012. At £310, full-time employees’ median earnings were some £80 per week lower than the second lowest paid sector, agriculture, forestry and fishing.
The highest median full-time gross annual earnings in the 2011/12 tax year were, again, in the mining and quarrying sector, at £37,300. The lowest, at £16,200, were in the accommodation and food services sector. The picture changes, however, when we consider mean gross annual earnings, rather than median. On this measure, the highest-earning sector was the financial and insurance activities sector, with mean annual earnings of £56,700. The next highest sector was mining and quarrying at £47,000. The difference between median and mean earnings reflects the skewed nature of the earnings distribution, with high earners in these sectors exerting a disproportionate pull on mean figures.
In April 2012 the information and communication sector had the highest median hourly earnings (excluding overtime) for full-time employees (£17.88), followed by financial and insurance activities (£17.60). At the bottom of the scale, median hourly earnings (excluding overtime) for the accommodation and food service activities sector were £7.43.
The broad industrial groupings described above can hide substantial variation within the sectors. ASHE, however, allows more detailed industrial analyses. For example, it is possible to identify the highest and lowest paid industry divisions (two-digit SIC 2007). Such analyses reveal that, in April 2012, the third highest paid division, manufacture of tobacco products, comes from manufacturing, the tenth highest earning sector as a whole. At the other end of the distribution, manufacture of wearing apparel (which is also in the manufacturing sector) was the fourth lowest paid division.
For full-time employees, the largest gender pay difference (based on median hourly earnings excluding overtime) was for the financial and insurance activities sector at 36.7%. For part-time employees the gender pay difference varies considerably between the sectors. For example, even though the overall gender pay difference is 'negative' (women earn more than men), many of the broad industrial sectors have 'positive' gender pay differences, the largest of which in April 2012 was in the education sector, at 39.3%.
ASHE 2012 data by occupation are coded to Standard Occupation Classification (SOC) 2010, which was introduced in 2011. Before then SOC 2000 was used.
In 2012 the major occupation group (as defined within SOC 2010) with the highest median gross weekly earnings for full-time employees was managers, directors and senior officials at £738 (see Figure 13). Sales and customer service occupations were the lowest paid major group at £323 per week for full-time employees.
Between April 2011 and 2012 the highest percentage increase in median gross weekly earnings was in the managers, directors and senior officials group (+1.9%). There were decreases in caring, leisure and other service occupations (-0.2%) and process, plant and machine operatives (-0.2%). Using the mean, the largest increase (+1.3%) was for elementary occupations, while the only decrease was for caring, leisure and other service occupations (-0.4%).
In the 2011/12 tax year the highest median gross annual earnings for full-time employees were in the managers, directors and senior officials group (£38,700) and professional occupations (£36,000). The lowest annual earnings were in sales and customer service occupations, at £16,900.
For full-time median hourly earnings (excluding overtime) the highest earning occupations in 2012 were, again, managers, directors and senior officials (at £19.16 per hour) and professionals (£18.94). However, unlike for weekly and annual earnings, the lowest median hourly earnings were seen in elementary occupations (£7.95).
In April 2012 the highest paid unit group occupation (four-digit SOC 2010) for full-time employees was aircraft pilots and flight engineers, with median gross weekly earnings of £1,559. This represents an increase of 12.8% on the 2011 figure (although note that at the four-digit level the sample sizes are low for some occupations so the figures can be quite volatile). The next highest paid occupation was chief executives and senior officials, with median gross weekly earnings of £1,547 per week. At £245 per week, leisure and theme park attendants were the lowest paid of all full-time employees on adult rates of pay, followed by hairdressers and barbers at £246.
With median gross hourly earnings (excluding overtime) of £37.14 in 2012, medical practitioners were the highest paid part-time employees for whom estimates were available, followed by senior professionals of educational establishments (£36.77). The lowest paid were bar staff (£6.08), waiters and waitresses (£6.08) and tyre, exhaust and windscreen fitters (£6.08). £6.08 was the national minimum wage for those aged 21 and over in April 2012.
Figure 14 shows the median gender pay differences for 2012 broken down by the SOC 2010 major occupation groups for full-time employees. In April 2012 the median gender pay gap for full-time employees was narrowest for sales and customer service occupations (4.9%) and widest for process, plant and machine operatives (21.9%).
For part-time employees there are large variations in the gender pay gap. In April 2012 the median gender pay gap was widest for managers, directors and senior officials (20.3%), wider even than for full-time employees in the same occupation group. The gender pay differences for administrative and secretarial occupations (-2.9%), elementary occupations (-0.4%) and caring, leisure and other service occupations (-0.3%) were 'negative', meaning that part-time women earned more than part-time men in these occupations.
For all employees, regardless of whether they work on a full-time or part-time basis, the gender pay difference was 'positive' for all major occupation groups. The gap was widest for skilled trades occupations (27.6%) and narrowest for caring, leisure and other service occupations (6.7%).
At £653, London topped the regional list for median full-time gross weekly earnings in April 2012. Employees here earned over one hundred pounds more than the next highest, the South East (£537) and nearly one hundred and fifty pounds more than the median for the whole of the UK (£506). London’s high levels of pay are largely due to the fact that a high proportion of its labour force is employed in high-paying industries and occupations, and also because many employees are entitled to allowances for working in the capital. Wales (£453) was at the bottom of the regional list, with the North East (£455) and Northern Ireland (£460) completing the bottom three.
Between 1997 and 2012 Scotland saw the largest increase in median gross weekly earnings, with an overall rise of 65.2%. The largest increase since April 2011 was seen in Northern Ireland, where weekly earnings rose by 3.3%.
From 1997 to 2012 similar patterns were observed for median gross annual pay and median hourly pay (excluding overtime), with London consistently topping the list followed by the South East. The North East, Wales and Northern Ireland have generally had the lowest pay levels across the regions over the last 15 years. However, for median hourly earnings (excluding overtime), the East Midlands has also regularly featured in the bottom three; in April 2012 it was third lowest (at £11.48 per hour), behind Northern Ireland (£11.39) and Wales (£11.41).
It should be noted that earnings comparisons take no account of variations in prices for goods and services between regions and therefore do not necessarily indicate differences in the standard of living. Neither do they take account of differences in the regional composition of the workforce, meaning that like-for-like comparisons may not be appropriate. For example, a region might have a lower level of median earnings than another if it has a higher proportion of employees in industries or occupations with relatively low earnings.
For the UK as a whole, the gender pay gap for median full-time hourly earnings (excluding overtime) was 9.6% in April 2012. However, there were variations in the pay gap between the different regions. The largest gender pay gap was 15.0% in the South East region. The smallest gender pay gap was in Northern Ireland, at 0.3%. All other regions had a gender pay gap of over 8%. The small gender pay gap in Northern Ireland is, in part, due to a higher proportion of public sector jobs here than in the rest of the UK. There are more women employed in this sector than men and these jobs tend to be higher paid than in the private sector.
Over the period 1997 to 2012 the gender pay gap narrowed in every region. The largest fall was in Northern Ireland (from 16.5% to 0.3%) and the smallest was in London (15.1% to 12.0%). Figure 15 illustrates changes in the gender pay gap for the four home countries.
Median gross weekly earnings for full-time employees climb steadily with age, reaching a maximum in the 40-49 age group (£573 in April 2012), and declining thereafter. Women’s earnings peak earlier than those of men, reaching a high in the 30-39 age group (£527 in 2012). This pattern is seen every year over the period 1997 to 2012. In April 2012 men’s full-time earnings reached their highest of £622 for those aged 40 to 49 (see Figure 16).
The largest increase in full-time median gross weekly earnings between April 2011 and April 2012 were recorded for employees aged 60 and over, at 2.4%. Increases were seen for all age groups except for employees aged 16 to 17, where there was a 0.5% decrease.
Figure 17 shows median gender pay differences by age group based on full-time hourly earnings (excluding overtime). With the exception of the 16-17 age group (which was artificially high due to the small sample size in that group), the pay gap was relatively small for the younger age groups in 2012, ranging from +5.7% for 18 to 21 year-olds to -2.9% for 22 to 29 year-olds (which means that women’s hourly earnings were higher than men’s in this group). The gap then increased dramatically for the 40 to 49 age group (15.3%), peaked for the 50 to 59 year-olds (18.4%) and decreased somewhat for those aged 60 and over. The wider gap seen for the 40 to 59 age group may reflect some women taking time out of the labour market in their thirties and forties in order to have children, thereby missing pay increases and opportunities for promotion that might otherwise have been available.
Gender pay differences for part-time employees and all employees (regardless of whether they work on a full-time or part-time basis) show a similar pattern to the full-time pay gap, with relatively small differences for younger age groups and high differences for older age groups (although the differences are not as large for part-time employees).
Each month ONS also collects information on earnings from the Monthly Wages and Salaries Survey, used to construct the Average Weekly Earnings (AWE) indicator. This survey asks 9,000 employers to provide information about total pay and numbers of employees, but does not collect more detailed information on the occupational and demographic characteristics of their employees. The AWE is ONS's lead measure of changes in the level of earnings, having replaced the Average Earnings Index (AEI) in the Labour Market Statistical Bulletin from January 2010 onwards.
The AWE and ASHE are not directly comparable on all measures of earnings (for example, despite ASHE providing a more accurate estimate of gross pay, AWE tends to capture bonus payments better). The closest measure that can be derived and compared for these surveys is for mean gross weekly pay for Great Britain. These figures tend to be higher for ASHE than the equivalent AWE figures. In April 2012 the ASHE estimate of mean gross weekly pay for all employees (regardless of whether they were full-time or part-time) was £492, up 0.7% on the previous year. The comparable estimate from the AWE, total pay (which includes bonuses but excludes arrears of pay), was £471, up 2.3% from April 2011. For the private sector, the ASHE estimate of mean gross weekly pay for all employees was £486, while the AWE estimate was £468. For the public sector, the estimates were £515 for ASHE and £481 for AWE (although note that there are slight differences in the definitions of the public and private sectors between the two sources).
In April 2012 the number of UK jobs paid below the national minimum wage was 287,000, accounting for 1.1% of all jobs in the labour market.
There were three rates for the national minimum wage in April 2012: one for those aged between 16 and 17 (£3.68 per hour), one for those aged between 18 and 20 (£4.98 per hour) and one for those aged 21 and over (£6.08 per hour).
The number of jobs paid below the national minimum wage (and the proportion within each age group) was:
18,000 jobs (6.5%) held by those aged 16 to 17;
58,000 jobs (5.2%) held by those aged 18 to 20; and
211,000 jobs (0.9%) held by those aged 21 and over.
In 2012 people in part-time work were almost twice as likely as people in full-time work to be paid less than the minimum wage, with 1.7% of part-time jobs and 0.9% of full-time jobs falling below the minimum wage. Jobs held by women were more likely to fall below the minimum wage than jobs held by men (1.3% compared with 0.9%). This is primarily due to the greater number of women in part-time jobs.
It is important to note that these estimates do not measure non-compliance with the national minimum wage legislation. ASHE does not indicate whether individuals fall into a category that is exempt from the legislation, such as apprentices or new trainees.
ASHE is based on a sample of employee jobs taken from HMRC PAYE records. Information on earnings and paid hours is obtained in confidence from employers. ASHE does not cover the self-employed nor does it cover employees not paid during the reference period. In 2012 the information related to the pay period which included 18 April. The 2012 ASHE is based on approximately 182 thousand returns.
ASHE replaced the New Earnings Survey (NES) as ONS’s main source of information on the distribution of earnings in 2004. Articles describing the ASHE methodology and the impact of its introduction on 1997 to 2003 data can be found on the ASHE page of the ‘guidance and methodology’ area on the ONS website. The main differences between ASHE and NES are:
ASHE results are weighted to the number of jobs given by the Labour Force Survey (LFS).
ASHE imputes for item non-response.
The coverage of employees for ASHE is greater than that of NES.
For ASHE the median replaces the mean as the headline statistic. The median is the value below which 50% of employees fall. It is preferred over the mean for earnings data as it is less influenced by extreme values and because of the skewed distribution of earnings.
Changes in 2004
Since 2004, supplementary survey information has been collected to improve coverage and make the survey more representative. This includes employees who have either changed or started new jobs between sample selection from HMRC records and the survey reference period in April. 2004 results are also available excluding the supplementary information so as to be comparable with the back series for 1997 to 2003, which was generated by imputing and weighting data from NES.
Changes in 2005
A new questionnaire was introduced for the 2005 survey. The changes on the questionnaire were:
the exclusion of incentive payments paid outside the pay period; and
the inclusion of pay for other reasons.
Details on the impact of introducing the new questionnaire can be found on the ASHE page of the ‘guidance and methodology’ area on the ONS website.
Changes to the wording and definitions meant that some of the information requested from respondents differed from that supplied in previous surveys. The introduction of the pay ‘for other reasons’ question resulted in the inclusion of earnings information which may not have been collected in the past. Results for 2004 including supplementary information were reworked to allow for this missing pay. More details on the methodology involved in estimating pay for other reasons can be found on the ASHE page of the ‘guidance and methodology’ area on the ONS website.
In addition, the definition of incentive/bonus pay changed in 2005 to only include payments that were paid and earned in April. This brought the definition more in line with that used in the AEI (and subsequently AWE) and has resulted in greater consistency of ASHE results due to the fact that the data reported do not depend on the reference date of the questionnaire or when annual bonuses are paid, as in previous years. Results for 2004 including supplementary information were reworked to exclude irregular bonus/incentive payments to make them consistent with results from 2005 onwards. Therefore ASHE results for 2004 to 2012 include incentive payments paid and earned in the pay period, but exclude payments made less often than every pay period. As a result of this change in definition, estimates for payments by results in the pay period are understated from 2004 onwards as incentive payments made in a later pay period than the pay period in which the work is carried out are not captured. However, the estimates are improved relative to previous years, when estimates were overstated due to the capture of some annual incentive payments in monthly or weekly pay periods.
The adjustments made to the 2004 data in order to produce estimates comparable with the 2005 data also had an impact on the gap between public and private sector earnings. The exclusion of incentive payments paid outside the pay period pulls down the private sector estimates more than the public sector estimates because private sector employees receive a higher proportion of incentive pay than public sector employees. Also, public sector employees receive greater proportions of pay for other reasons. Therefore, public sector estimates increased more than the private sector estimates when other pay was included.
Changes in 2006
In 2006 ASHE moved to the ONS standard for geographic areas, using Output Areas as the building block to higher level geographic breakdowns. Previously, ASHE geographies were created by matching returned postcode information against the Inter Departmental Business Register to give various levels of geographic information. The key points are that from 2006:
ASHE results for geographic areas are produced in line with the ONS standard and this allows further geographic analysis variables to be produced; and
the quality of geographic results has improved.
In addition, from 2006 the LFS moved from using seasonal quarters to calendar quarters. As ASHE uses LFS data in the calculation of aggregation weights, it was necessary to move from using data taken from the LFS spring quarter to LFS quarter 2 (April-June).
The inclusion of supplementary information since 2004, the introduction of a new questionnaire in 2005, and the move to using new ONS geographies and LFS calendar quarters in 2006 introduced a discontinuity into results from 2004. Therefore a consistent series which takes into account all of these changes has been produced going back to 2004. For 2004, results are also available that exclude supplementary information so as to allow comparisons with the back series generated by imputation and weighting of the 1997 to 2003 NES data.
Changes in 2007
In March 2007 ONS released information on its statistical work priorities over the period 2007-08. ONS announced that the sample size of the ASHE was to be reduced by 20%. ASHE results for 2007 and 2008 are based on approximately 145 thousand returns, down from 175,000 in 2006. The impact of this change was minimised by reducing the sample in an optimal way, with the largest sample reductions occurring in industries where earnings are least variable. The sample cut did not affect Northern Ireland; neither did it affect a number of organisations with an agreement to provide information electronically.
ONS also introduced a small number of methodological changes, which improved the quality of the results. These included changes to the sample design itself, as well as the introduction of an automatic occupation coding tool, ACTR.
The key benefits of moving to ACTR coding have been:
An improvement in the quality and consistency of ASHE results.
Out-of-date codes are updated annually.
ACTR provides ASHE and ONS with a standard tool for coding occupation.
The methodological changes made in 2007 have been applied to the 2006 ASHE so that from 2006 to 2011 results are available on the same basis. For 2006, results are also available on a continuous basis with 2004 and 2005.
Further information can be found on the ASHE page of the ‘guidance and methodology’ area on the ONS website.
Changes in 2008
In May 2008 the LFS was re-weighted to the latest (2007/08) population estimates. Previously LFS results were based on population totals published in 2003. The revised LFS figures were used for the 2007 (revised) and 2008 ASHE results. The impact of the new weights on the ASHE estimates for 2007 was small.
Changes in 2009
In 2009 the 1% sample of employees whose employers had registered PAYE schemes was restored, following the two years in which the sample size was reduced by 20%. ASHE results for 2009 were based on approximately 179 thousand returns, up from 146 thousand returns in 2008.
SIC 2007 replaced SIC 2003 as the classification used to present earnings statistics for ASHE. The first year available on the new basis is 2008. From 2009 onwards the figures are presented on the SIC 2007 basis only.
It is also important to note that ASHE includes breakdowns by public and private sector according to the legal status of the employers. Between 2008 and 2009 Lloyds Banking Group, the Royal Bank of Scotland Group and Northern Rock were reclassified from the private sector to the public sector. Interpretation of public / private sector movements is therefore more difficult between 2008 and 2009 than in previous years.
Changes in 2010
In 2010 the system underpinning the ASHE sample, HMRC’s PAYE system, was replaced. Where the previous system represented employers’ accounts, the new system reflects the PAYE pay and tax details of individuals. The introduction of this new PAYE system resulted in a discontinuity in the way that employments are created and recorded. The change had a minimal impact on the ASHE sample and the results for 2010.
The change in the survey’s sampling frame has extended the coverage of ASHE to all levels of earnings, and this extension has improved the quality of the estimates going forward.
Changes in 2011/12
In March 2012 the 2011 ASHE estimates were published on a SOC 2010 basis for the first time. Since the SOC forms part of the methodology by which ASHE data are weighted to produce estimates for the UK, this release marked the start of a new time series and therefore care should be taken when making comparisons with earlier years (which were based on SOC 2000).
The earnings information collected relates to gross pay before tax, National Insurance or other deductions, and generally excludes payments in kind. With the exception of annual earnings, the results are restricted to earnings relating to the survey pay period and so exclude payments of arrears from another period made during the survey period. Payments due as a result of a pay settlement but not yet paid at the time of the survey are also excluded.
For particular groups of employees, changes in median earnings between successive surveys may be affected by changes in the timing of pay settlements, in some cases reflecting more than one settlement and in other cases no settlement at all.
Most of the published ASHE analyses relate to full-time employees on adult rates whose earnings for the survey pay period were not affected by absence. They do not include the earnings of those who did not work a full week, and those whose earnings were reduced because of sickness, short-time working, etc. Also, they do not include the earnings of employees not on adult rates of pay, most of whom will be young people. More information on the earnings of young people and part-time employees is available in the detailed annual published ASHE results. Full-time employees are defined as those who work more than 30 paid hours per week or those in teaching professions who work more than 25 paid hours per week.
Factors contributing to earnings growth
The increase in average earnings from one year to the next reflects several factors:
Pay settlements implemented between the April survey dates.
Changes in the amount of paid overtime and other payments relative to basic pay.
The structural effects of changes in the composition of the ASHE sample and the employed labour force.
ASHE aims to provide high quality statistics on the structure of earnings for various industrial, geographical, occupational and age-related breakdowns. However, the quality of these statistics varies depending on various sources of error.
Sampling error results from differences between a target population and a sample of that population. Sampling error varies partly according to the sample size for any particular breakdown or 'domain'. Indications of the quality of ASHE estimates are provided in the form of coefficients of variation (cv). The coefficient of variation is the ratio of the standard error (se) of an estimate to the estimate, expressed as a percentage. Generally, if all other factors are constant, the smaller the cv the higher the quality of the estimate. Tables of cvs corresponding to estimates are published alongside the estimates themselves.
It should be noted that at low levels of disaggregation high coefficients of variation imply estimates of low quality. For example, for an estimate of £400 with a cv of 10%, the true value is likely to lie between £321.60 and £478.40. This range is given by the estimate +/- 1.96*se. Where these ranges for different estimates overlap, interpretation of differences between the relevant domains becomes more difficult.
In addition to sampling error, ASHE statistics are also subject to non-sampling errors. For example, there are known differences between the coverage of the ASHE sample and the target population (i.e. all employee jobs). Jobs that are not registered on PAYE schemes are not surveyed. These jobs are known to be different to the PAYE population in the sense that they typically have low levels of pay. Consequently, ASHE estimates of average pay are likely to be biased upwards with respect to the actual average pay of the employee population. Non-response bias may also affect ASHE estimates. This may happen if the jobs for which respondents do not provide information are different to the jobs for which respondents do provide information. For ASHE, this is likely to be a downward bias on earnings estimates since non-response is known to affect high-paying occupations more than low-paying occupations.
Finally, ASHE results tables do not account for differences in the composition of different 'slices' of the employee workforce. For example, figures for the public and private sectors include all jobs in those sectors and are not adjusted to account for differences in the age, qualifications or seniority of the employees or the nature of their jobs, all factors which may affect how much employees earn.
A summary quality report for ASHE can be found on the ONS website. This report provides further information about the general quality of the statistics presented in this article and the methods used to produce them.
In line with normal practice this article contains revised estimates from the previous year’s survey, in this case the 2011 results (which were first published on 23 November 2011). These take account of some corrections to the original 2011 data which were identified during the validation of the results for 2012, as well as late returns. Both the provisional 2012 ASHE estimates and the revised estimates for 2011 were published on 22 November 2012.
Other earnings information
The AWE indicator is based on the Monthly Wages and Salaries Survey of 9,000 employers and provides information on changes in mean earnings for broad industrial sectors. No information is available on occupation, paid hours worked, and other characteristics of the workforce.
The LFS collects information on the earnings and hours of about 15,000 households over each quarter. In addition it collects data on a wide range of personal characteristics, including education level and ethnic origin. This enables the preparation of statistics on levels and distribution of earnings similar to ASHE but with lower precision due to the much smaller sample size.
Further information on both of these data sources can be found on the ONS website.
National averages of earnings hide wide variations between different collective agreements, industries, occupations, regions and age groups. The published tables containing the detailed annual ASHE results for the UK include analyses of each of these and can be found on the ONS website.
Low pay estimates show the number of jobs paid below the national minimum wage in the UK. The estimates are produced using a methodology based solely on ASHE data. Further information on the low pay methodology can be found on the ASHE page of the ‘guidance and methodology’ area on the ONS website and detailed results can be found on the low pay release page.
Annual Survey of Hours and Earnings
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