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Record low growth in average weekly earnings

The latest average weekly earnings figures

Average weekly earnings excluding bonus payments rose by 1.0% comparing December 2012 to February 2013 with the same period a year earlier. This is the smallest growth reported since records began in 2001. In cash terms, average weekly earnings excluding bonus payments were £443 in February 2013, before taxes and other deductions from gross pay; this is up from £440 a year earlier.

There continues to be a cut in the real value of pay, as inflation measured by the Consumer Prices Index was 2.8% between February 2012 and February 2013. The annual growth in weekly wages excluding bonuses has been continuously below inflation since late 2009.

Including bonus payments the average weekly wage rose by 0.8% comparing December 2012 – February 2013 with the same period a year earlier. At £464 in February 2013, wages including bonus payments were virtually unchanged compared with February 2012.

Wages rise in manufacturing and services but fall in construction

Looking at the main sectors of the economy in December 2012 – February 2013, workers in the service sector also experienced record low growth in earnings (excluding bonuses), as they rose by just 1.0% on a year earlier. Earnings growth excluding bonuses was relatively strong in the manufacturing sector at 2.2% on the year but construction sector earnings continued to fall, by 1.1% on the year.

The manufacturing sector had the largest weekly wage at £528, with construction at £523 and services at £427. However, it is important to note that even though wages are lower in the service sector, people tend to work more hours per week in construction and manufacturing.

Earnings measures money paid to employees in return for work done, before tax and other deductions from pay. The estimates relate to Great Britain and include salaries but not unearned income, benefits in kind or arrears of pay. As well as pay settlements, the estimates reflect bonuses (where included), changes in the number of paid hours worked and the impact of employees paid at different rates joining and leaving individual businesses. The estimates also reflect changes in the overall structure of the workforce; for example, fewer low paid jobs in the economy would have an upward effect on the earnings growth rate.

Welcome to the latest on the UK Labour Market.

Focusing firstly on unemployment, between December 2012 and February 2013 there were 2.56 million people aged 16 or over who were out of work but seeking and available to work, a rise of 70,000 compared with the previous three months. Looking at the unemployment rate, 7.9% of the labour force aged 16 and over could not find a job.

If we now look at this chart that shows the unemployment rate from 1971 onwards, to put the 7.9% into a historical context we can see the highest rate was 11.9% following the 1980s recession and the lowest rate was 3.4% in the 1970s.

Turning our attention to employment, there were 29.7 million people aged 16 and over in work, a marginal fall of 2,000 on the previous three months and 71.4% of people aged 16 to 64 were employed.

Looking at those not in the labour force, known as the economically inactive, 8.95 million people aged between 16 and 64 were either not looking for work or not available to work, a fall of 57,000. The four most common reasons for being out of the labour force are: looking after the family or home, studying, being sick or disabled or having taken early retirement.

A fall in the number “not in the labour force” means that more people are engaging with the labour market. Some may find jobs while others may start looking for work and therefore become classed as unemployed. So the fall in the number of economically inactive people is partly driving the increase in unemployment.

A major cause behind the fall in the number of economically inactive people is a fall of 45,000 in the number of women who state they are looking after the family or home. The number of women reporting this situation is now at a record low of 2.06 million.

In March 2013, 1.53 million people aged 18 and over were claiming Jobseeker’s Allowance, which is a benefit related to looking for work, a fall of 7,000 on February 2013. Of those claiming Jobseeker’s Allowance, two thirds were men.

Now if we go back to employment, and look in a little more detail, this month at earnings, we can see that in February 2013 the average level of weekly wages excluding bonuses was £443 and these wages grew by just 1.0% when comparing the most recent figures with a year earlier.

Using this chart, we can compare the historical growth in wages (the dark green line) with inflation (the light green line). We can see that since the end of 2009 even though wages have been rising, prices have been rising at a faster rate. This chart also shows us that the annual growth in weekly earnings excluding bonuses is at its lowest level since 2001, when records began.

Looking at earnings across the three main industries of employment, the average weekly wage excluding bonuses in the manufacturing sector was £528 which is higher than the £523 per week in construction and £427 per week in services. While workers in services and manufacturing were both experiencing positive annual growth in weekly wages, workers in the construction industry were experiencing falling wages. 

That was the latest on the UK labour market.

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Categories: Labour Market, People in Work, Earnings
Content from the Office for National Statistics.
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