In April 2011, the average full-time employee in the UK earned around £12.62 per hour excluding overtime, a cash increase of 226% since 1986 when the average wage was £3.87 per hour. After adjusting for price increases over that time, full-time employees were on average 62% better off in 2011 than in 1986.
However, the increase was not evenly spread across the scale. Generally the higher earners did better, with the top 1% having the biggest increase between 1986 and 2011, at 117%. The top 10% saw an increase of 81%, while the bottom 10% had a 47% increase. Those at the very bottom did better, with the bottom 1% having a 70% increase.
Over the period since 1998 – in other words, since the introduction of the National Minimum Wage – those at the very bottom end of the earnings distribution have done best, with the bottom 1% having a real increase of 51%, compared with an increase of 30% for the top 1%.
Looking at the effects of the economic downturn, the pay report finds that everyone right across the scale experienced drops in real earnings over the period from 2007 to 2011, with wage growth failing to keep pace with price rises. By contrast, in a four-year period covering the recession of the early 1990s, real wage growth was positive across the scale.
The report also looks at wage inequality – the ratio between the first and 99th percentile. Not surprisingly London, with many jobs in the financial sector, had the greatest wage inequality, with the top percentile being paid 16.2 times as much as those in the lowest percentile. The least inequality was in Wales, where the highest earners had wages seven times higher than the lowest. The top 10% of earners in the UK earned at least £26.75 an hour in 2011. Of these, 36% worked in London, showing that over one in three of the highest-paid jobs are in the capital.
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