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Employees earn 62% more in real terms than in 1986

Released: 07 November 2012 Download PDF

In April 2011 the average full-time employee in the UK earned around £12.62 per hour excluding overtime, a cash increase of 226 per cent 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 per cent 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 per cent having the biggest increase between 1986 and 2011, at 117 per cent. The top 10 per cent saw an increase of 81 per cent, while the bottom 10 per cent had a 47 per cent increase. However, those at the very bottom did better, with the bottom 1 per cent having a 70 per cent increase. Indeed, 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 per cent having a real increase of 51 per cent, compared with an increase of 30 per cent for the top 1 per cent.

Looking at the effects of the economic downturn, the report finds that everyone right across the scale experienced drops in real earnings over the period 2007-2011, with wage growth failing to keep pace with price rises. By contrast, in a four-year period covering the recession of the early 90s, 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 those in the lowest. The least inequality was in Wales, where the highest earners had wages seven times higher than the lowest.

The top 10 per cent of earners in the UK earned at least £26.75 an hour in 2011. Of these, 36 per cent worked in London, showing that over one in three of the highest paid jobs are in the capital.

A podcast giving more background on this analysis in available on the ONS Youtube channel at http://www.youtube.com/watch?v=XRTnnCvZMXg

Background notes

  1. There is a summary report at http://www.ons.gov.uk/ons/rel/lmac/earnings-in-the-uk-over-the-past-25-years/2012/rpt-earnings-in-the-uk-over-the-past-25-years.html
  2. For 1986 to 2003 the analysis uses the New Earnings Survey (NES), unweighted from 1986 to 1997 and weighted from 1997 to 2003. From 2004 onwards it uses the Annual Survey of Hours and Earnings (ASHE) where it replaced NES.
  3. The figures given for average pay and growth in average real pay relate to the medians.
  4. Follow us on www.twitter.com/statisticsONS and on the ONS Youtube channel at www.youtube.com/user/onsstats
  5. Details of the policy governing the release of new data are available from the media relations office.
  6. National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference. © Crown copyright 2012.

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