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Guide to Earnings

Released: 14 November 2012 Download PDF

Abstract

Estimates of earnings and pay generally cover three main areas: basic pay, overtime and bonuses. Earnings exclude non-standard ways of being paid as a member of staff (for example, share offers in the company, benefits in kind, and compensation for expenses incurred for travelling and subsistence while carrying out the employer's business).

More detail

Estimates of earnings and pay generally cover three main areas: basic pay, overtime and bonuses. Earnings exclude non-standard ways of being paid as a member of staff (for example, share offers in the company, benefits in kind, and compensation for expenses incurred for travelling and subsistence while carrying out the employer's business).

Earnings statistics can be classified into two categories:

  • structural statistics, and

  • short-term indicators

Structural statistics tend to be more detailed and are used to analyse trends in earnings over long periods. The Annual Survey of Hours and Earnings (ASHE), and before it the New Earnings Survey, is the recommended source of employees' pay level. Data are published on an annual basis for the UK, and also broken down by industry, occupation, region, small area, gender and full-time/part-time status. ASHE data are published annually in November, using data from the previous April. AWE estimates appear monthly in the Labour Market Statistics Releases.

Average Weekly Earnings (AWE)

For estimates of short-term pay or earnings growth, the Average Weekly Earnings (AWE) (147 Kb Pdf) statistic is the source recommended by the Office for National Statistics (ONS), providing estimates of monthly and annual change for the main industrial sectors.

Average Weekly Earnings was accredited a National Statistic in November 2009, and replaced the Average Earnings Index (AEI) as the lead measure of short-term earnings growth in January 2010. It measures the changes in average weekly earnings of employees. The AWE is based solely on the Monthly Wages and Salary Survey (MWSS), which covers employees working in businesses with 20 or more employees in all industrial sectors in Great Britain (an adjustment is made for smaller businesses).

As well as tracking changes in earnings, AWE makes an explicit estimate of earnings in pounds. Separate estimates are made of bonus and arrears pay. AWE uses employment weights that are recalculated every month. This means that AWE reflects the composition of the workforce at any given time, and that changes between months capture shifts in the workforce as well as changes in earnings within industries. These are both advantages over the former AEI measure, and two of the main reasons for the switch between the measures.

AWE is used to produce figures for the economy as a whole, and by sector and industry. The AWE uses the number of employees on an employer's payroll as its denominator, so changes in the number of paid hours worked (assuming the pay rate per hour stays the same) will show as an increase or decrease in average earnings as appropriate.

Average Earnings Index (AEI)

The Average Earnings Index (AEI) was a well-established National Statistic, which until January 2010 was the lead measure of short-term earnings growth. It has now been replaced by the Average Weekly Earnings (AWE) measure.

Annual Survey of Hours and Earnings (ASHE)

In terms of structural statistics, the Annual Survey of Hours and Earnings (ASHE) (189.4 Kb Pdf) is the main measure.  ASHE measures the average level and distribution of earnings and paid hours for employee jobs. Estimates are presented by a number of breakdowns including gender, occupation, industry and region.

The survey is a sample survey of employee jobs, although information is collected from employers. It is based on a one per cent random sample of jobs on the HM Revenue and Customs Pay As You Earn (HMRC PAYE) register. It covers all employee jobs in all industries and occupations across the whole of the UK. It has a reference date in April, asking about individuals who are employees at that time. This reference date changes each year depending on when Easter falls.

Index of Labour Costs Per Hour (ILCH)

The Index of Labour Costs per Hour (ILCH) (273.2 Kb Pdf) is published quarterly and is available for both the UK and Great Britain. This is also an experimental statistic, developed to meet the European Union Regulation EC 450/2003.

It is a more widely defined measure than AWE, going beyond wages and salaries to include non-wage costs such as employer National Insurance and pension contributions, sickness, maternity and paternity payments and benefits in kind, that are not considered by the other indicators. However, in terms of movements in the index, the inclusion of non-wage costs has a relatively small impact since they account for a small and relatively stable proportion of total pay.

The main difference in movements between the ILCH and the AWE is that the ILCH gives estimates per hour actually worked, whereas the AWE gives earnings per employee.

Background notes

  1. Enquiries relating to labour market statistics should be directed to Richard Clegg, Labour Market Division, Office for National Statistics.

    Phone +44 (0)1633 455400

    Email labour.market@ons.gsi.gov.uk

  2. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Supporting information

Further information

Interpreting Labour Market Statistics - The purpose of this article is to help users of labour market statistics interpret the statistics and highlight some common misunderstandings.
Content from the Office for National Statistics.
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