Employee earnings in the UK: 2020

Measures of employee earnings, using data from the Annual Survey for Hours and Earnings (ASHE).

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Contact:
Email Roger Smith

Release date:
3 November 2020

Next release:
To be announced

1. Other pages in this release

Commentary on topics covered in the Annual Survey of Hours and Earnings (ASHE) is split between three separate bulletins in 2020. Other commentary from the latest ASHE data can be found on the following pages:

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2. Main points: April 2020

  • Statistics in this bulletin (based on the Annual Survey for Hours and Earnings (ASHE) 2020) relate to the pay period that includes 22 April 2020, at which time approximately 8.8 million employees were furloughed under the Coronavirus Job Retention Scheme (CJRS); the estimates in this bulletin include furloughed employees and are based on actual payments made to the employee from company payrolls and the hours on which this pay was calculated, which in the case of furloughed employees are their usual hours.

  • Median weekly pay for full-time employees was £586 in April 2020, up 0.1% on a year earlier; pay fell in the private sector (negative 0.6%) but not in the public sector (positive 2.4%), following four years of higher pay growth in the private sector; this fall reflects the different job types across each sector and the extent they have been impacted because of the coronavirus (COVID-19) pandemic.

  • Across all jobs, median weekly earnings in April remained unchanged from a year earlier on a nominal basis; when adjusted for inflation, they fell 0.9% in real terms over the year.

  • The average number of hours paid across all jobs fell by 1.5% from 2019, a much smaller fall than the estimated change in hours actually worked (19%, based on the Labour Force Survey for Quarter 2 (Apr to June) 2020) where usual hours are not included.

  • While pay held up for most employees, there are groups of employees who fared less well, most notably younger employees, the lowest-paid part-time employees, and those working in accommodation and food services.

  • Employees aged 16 to 17 and 18 to 21 years were more impacted than other employees in terms of hours paid for, which fell 5.7% and 3.4% respectively compared with 2019.

  • In accommodation and food services, paid hours fell by 12% and weekly pay fell by 18.1% compared with 2019.

  • Younger workers and those working in accommodation and food services are more likely to be furloughed and were also less likely to have their pay topped up by their employer when compared with other furloughed employees.

  • Median annual pay for full-time employees was £31,461 for the tax year ending 5 April 2020, up 3.6% on the previous year; annual pay estimates are largely unaffected by the coronavirus (COVID-19) pandemic.

  • The analysis in this bulletin is based mainly on weekly pay, which is affected by both hourly rates of pay, and hours worked and paid for (and incidence of being furloughed in 2020); the accompanying Low and high paid jobs bulletin looks in more detail at the distribution of pay based on hourly rates and is of particular use when considering policy around the National Minimum Wage and National Living Wage rates.

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ASHE estimates for 2020 are subject to more uncertainty than usual as a result of the challenges we faced in collecting the data under government-imposed public health restrictions. More information is available in the Measuring the data section.

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3. Employee earnings and hours worked

Median weekly earnings among all employees were unchanged in April 2020 compared with a year earlier, as shown in Figure 1, and when adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH) were down 0.9% in real terms. The pattern of growth is similar among employees working full-time.

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The Annual Survey for Hours and Earnings (ASHE) is based on employer responses for a 1% sample of employee jobs, using HM Revenue and Customs Pay As You Earn (PAYE) records to identify individuals' current employer. Throughout this bulletin, the terms jobs and employees are used interchangeably.

Median pay among part-time employee jobs increased more (by 3.0% in nominal terms and 2.1% in real terms), a similar pattern to recent years. Part-time jobs tend to be paid less per hour and are more impacted by increases in National Minimum Wage rates, but other factors such as flexible working patterns can change employee job profiles from full-time to part-time, whilst retaining the higher hourly pay rates.

The estimates in Figure 1 provide an indication of the pay situation among the average employees. However, because many employees faced reduced working hours and pay in April 2020, a true understanding of pay requires more analysis by different types of employee, as provided in the rest of this bulletin and in more detail in the accompanying bulletin Low and high pay in the UK: 2020, which provides detail of pay change across the distribution of pay rates.

Figure 2 shows the relationship between growth in weekly earnings and growth in hourly earnings, in real terms (adjusted for inflation) for full-time employees.

Hourly earnings are normally calculated as the amount of pay made to the employee, divided by the hours of work that pay relates to. However, in April 2020, an estimated 8.8 million employees were furloughed under the Coronavirus Job Retention Scheme (CJRS) and at that time these employees were not allowed to work in their furloughed job. Their hourly earnings are thus calculated using the number of hours usually worked by the employee. This means that the hourly pay comparison between 2020 and other years in Figure 1 is a consistent one in that it relates to pay per hour that the employee is being paid for, but it should not be interpreted as reflecting pay for hours actually worked.

In 2020, full-time employees, on average, experienced an increase in hourly pay compared with 2019 (positive 0.7% in real terms). However, the weekly pay growth was lower at negative 0.9%. The reason for this is that some employees who were not furloughed were given less paid work than in 2019, as explored in Figure 3.

The pattern in 2020 was last seen in 2009 during the economic crisis, suggesting that employers are inclined to cut employee hours ahead of pay rates, in times of economic challenge.

Figure 3 compares, for each industry sector, the annual change in median weekly pay and number of hours paid for, with number of hours actually worked (source: actual hours worked published from the Labour Force Survey).

The effect that the CJRS had in April is clear. Employees being placed on the scheme prevented paid hours falling at the rate shown by the actual number of hours worked, as reported in the Labour Force Survey. A subsequent downward pressure on weekly earnings from a fall in hours was largely suppressed. For example, among all industry sectors actual hours worked fell by 20% from 2019 but paid hours fell by only 1.5% and median weekly pay was unchanged.

In industries such as education, the difference between median weekly pay and number of hours paid for, on one hand, and actual hours worked on the other was more marked, indicating that the majority of employees were either given their usual hours of work or were furloughed.

However, in accommodation and food services and, to a lesser extent, construction, and administrative and support services, there was a more notable fall in paid hours, which would reflect situations such as employers wanting staff to work but being unable to offer them their usual hours. The combination of this, plus the incidence of employees being furloughed without the employer topping up their pay (see Table 1), determines the change in weekly pay. Clearly, the combination of these factors resulted in a large fall in median weekly pay for employees working in accommodation and food services in particular (negative 18.1%).

Average paid hours worked for all workers fell 1.5% (0.5 hours), the largest decrease since 2009.

The largest falls occurred in the age groups 16 to 17 (5.4%) and 18 to 21 years (3.7%), reflecting the sectors and occupations in which they are employed. In 2020, 28% of 16- to 21-year-olds were employed in jobs in the wholesale and retail trade sector with another 16% in the accommodation and food sector, areas of the labour market that saw large falls in actual hours worked (Figure 3) and have a high proportion of zero-hours contracts and employees furloughed. The CJRS did include workers employed on zero hours contracts, but the looser bond between employers and employees in these jobs might have resulted in CJRS applications not being completed.

In 2020, the achieved Annual Survey of Hours and Earnings (ASHE) sample was linked to an extract of the CJRS to allow classification of furloughed jobs receiving reduced pay. Not all jobs could be matched, with a result that the furloughed jobs in the ASHE is an undercount of approximately 20%. However, it still provides valuable insight of differences in effect on pay between different types of employee job.

Table 1 shows the proportion of furloughed employees by working pattern, region, age group, occupation and industry sector who received a reduced rate of pay as reported by employers and recorded as "loss of pay" on the survey.

Proportions of furloughed employees with reduced pay reported in this bulletin are presented as an aid in interpreting the complexities of ASHE pay estimates for 2020 and should not be used in isolation

Over the five years to 2019, occupations with typically lower pay experienced higher growth in earnings, driven by increases in the National Minimum Wage, which increased by more than 20% during the same period. In 2020, negative pay growth was experienced in some of these occupations, notably skilled trades occupations (negative 6.3%, this group containing many employees working in construction and food services) and process, plant and machine operatives (negative 5.3%). Smaller weekly pay falls were seen in associate professional and technical occupations (negative 2.4%) and managers, directors and senior officials (negative 1.1%). Table 1 provides the proportions of employees furloughed by occupation.

The interactive chart in Figure 6 allows you to compare earnings across occupations, in terms of annual pay.

See what the median annual earnings are for your occupation by searching for or selecting your occupation from the drop-down list in the interactive tool.

Figure 6: Annual full-time gross pay by occupation

UK, April 2020

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Notes

  1. Footnotes applicable to this chart are 1, 2, 3 and 7 in Section 6: Measuring these data.

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Estimates for April 2020 show the gross median earnings for the public sector were 2.4% higher than a year ago, whereas pay in the private sector fell 0.6% over the same period. This is a reversal of the pattern seen since 2016 where private sector pay growth had outstripped that in the public sector. This disparity in growth rates can be largely inferred from data presented in Figure 5 and Table 1, where industries that operate predominately in the private sector, such as construction, hospitality and retail, have seen falls in growth and have a higher proportion of furloughed workers, while public administration, education and health have seen modest increases and fewer employees furloughed.

The comparative analysis of private and public sector earnings is complex because of the different structural characteristics of the sectors. The direct comparisons of earnings in the two sectors (using mean or median earnings, such as those in Figure 7) do not consider factors such as job types, employee and employer characteristics, and job location. The factors affecting the differences in earnings of the public and private sectors are discussed in more detail in the article Public and private sector earnings in the UK: 2019 and can be explored using a selection of regression models that include different measures of remuneration, inPublic versus private sector earnings in the UK: 2011 to 2017.

In April 2020, London topped the regional list for median earnings for all employees by place of work, at £640 per week. The median here is £141 more per week than the next highest, the South East (£498), and £161 more than the median for the whole of the UK (£479). The high pay in London reflects a high proportion of its labour force being employed in high-paying industries and occupations and will also be impacted by allowances for some employees working in the capital.

East Midlands and Scotland saw the highest estimated growth, at 2.6% and 2.5% respectively. Six regions saw negative growth, with the North East (negative 1.4%) and South West (negative 1.0%) recording the largest falls.

The interactive chart in Figure 9 allows you to view the median pay levels in all local authorities.

Find what the median gross weekly pay is in your area by searching for or selecting an area from the drop-down list in the interactive chart.

Figure 9: Median gross weekly earnings for full-time employees for all local authorities by place of work

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Notes:

  1. Footnotes applicable to this chart are 1, 2, and 3 in Section 6: Measuring these data.

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4. Employee earnings data

A detailed set of data tabulations containing employee earnings estimates from the Annual Survey of Hours and Earnings (ASHE) broken down by aspects such as age, region, occupation and industry are available.

Annual Survey of Hours and Earnings: 2020 provisional and 2019 revised results
Dataset | Released 3 November 2020
The tables show employee earnings estimates as outlined in the ASHE guide to tables.

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5. Glossary

Full-time and part-time

Full-time is defined as employees working more than 30 paid hours per week (or 25 or more for the teaching professions). Part-time is defined as employees working less than or equal to 30 paid hours per week (or less than 25 hours for the teaching professions).

Median

A measure of the average. The median is calculated by identifying the exact middle point in a set of observations. When the observations are ranked from lowest to highest, the median is the value in the exact middle of the observed values. It is the Office for National Statistics' preferred measure of average earnings as it is less affected by a relatively small number of very high earners than is the mean.

National Minimum Wage and National Living Wage

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. There are different rates of minimum wage depending on a worker's age and whether they are an apprentice. The NMW applies to employees aged between 16 and 24 years. The government's National Living Wage (NLW) was introduced on 1 April 2016 and applies to employees aged 25 years and over.

On the ASHE reference date in April 2020, the NMW and NLW rates were:

  • £8.72 for employees aged 25 years and over

  • £8.20 for employees aged 21 to 24 years

  • £6.45 for employees aged 18 to 20 years

  • £4.55 for employees aged 16 to 17 years

  • £4.15 for apprentices aged 16 to 18 years and those aged 19 years or over who are in the first year of their apprenticeship.

Real earnings

Real earnings (earnings adjusted for inflation) are calculated by adjusting nominal (unadjusted) earnings using the CPIH (Consumer Prices Index including owner occupiers' housing costs). The CPIH is the most comprehensive measure of inflation. It extends the Consumer Prices Index (CPI) to include a measure of the costs associated with owning, maintaining and living in one's own home, known as owner occupiers' housing costs (OOH), along with Council Tax.

Standard Occupational Classification (SOC)

The Standard Occupational Classification (SOC) is a common classification of occupational information for the UK.

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6. Measuring the data

The estimates in this bulletin are based on information gathered from a sample of 1% of employees in the UK.

All estimates for 2020 are provisional and relate to the pay period that includes 22 April 2020, at which time approximately 8.8 million employees were furloughed under the Coronavirus Job Retention Scheme (CJRS). Furloughed employee jobs received 80% of normal pay from the scheme, to a maximum £2,500 a month. Employers were able to top up employees' pay, but they were not required to; the Office for National Statistics (ONS) has estimated that approximately a half of employees had their pay topped up.

The Annual Survey of Hours and Earnings (ASHE) collected actual payments made to the employee and the hours on which this pay was calculated, which in the case of furloughed employees would be their usual hours (as included in the CJRS claim).

The survey includes a question "Did the employee earn less in the pay period due to absence from work?" for which, in most years, approximately 5% of employees are recorded as "yes". The ASHE datasets exclude these employees on the basis of them being temporarily on the margins of the labour market. In 2020 the weighted percentage recorded as "yes" was over 17%, reflecting numerous furloughed employees whose pay was not topped up. These employees are more likely to be employed in lower-paid jobs and if we were to exclude them from our estimates, we would be falsely inflating pay estimates. Given this, we have revised the exclusion criteria for the 2020 datasets to be "those employees who were not furloughed but whose pay was affected by absence". This results in the ASHE datasets excluding 6% of employee jobs in 2020 (compared with approximately 5% in previous years); the profile of jobs excluded in 2020 is similar to 2019, in that in both years these jobs have a mean pay of less than two-thirds of that among all jobs, are more likely to be held by women, employees aged 20 to 39 years, and have a similar profile of occupations.

The achieved sample size on ASHE is approximately 180,000 each year. In 2020, there were challenges to data collection, centering on lower response from companies and challenges in validating returns in the time available. The final achieved sample size is 136,000. Given the smaller sample size and potential skew to companies with stronger financial basis, the ONS investigated whether industry should be added to the weighting strata. However, analysis indicated that this would have little impact, and could produce instability because of smaller achieved sample sizes within the numerous calibration strata that would be created. Therefore, the standard ASHE weighting approach has been retained, calibrating to occupation, age, sex and region strata. However, ASHE estimates for 2020 are subject to more uncertainty than usual as a result of the challenges we faced in collecting the data under government-imposed public health restrictions.

Estimates from the 2019 Annual Survey of Hours and Earnings (ASHE) survey have been subject to small revisions since the provisional estimates were published on 29 October 2019.

For the charts in this bulletin, the following notes apply:

1 Estimates for 2020 data are provisional.

2 Employees are on adult rates, pay is unaffected by absence (in 2020 employees are on adult rates, pay is unaffected by absence unless furloughed).

3 Full-time is defined as employees working more than 30 paid hours per week (or 25 or more for the teaching professions).

4 The data have been adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH). The CPIH figures are based on the All Items Consumer Prices Index (including owner occupiers' housing costs) of inflation for April.

5 Dashed lines represent discontinuities in 2004, 2006 and 2011.

6 For each growth rate on the horizontal axis, the curve indicates the cumulative proportion of employees who experienced real earnings growth at that rate.

7 Occupations as defined by the Standard Occupational Classification 2010.

A guide to interpreting ASHE estimates is available and addresses common questions about the data. Further information about ASHE can be found in quality and methodology on our Guidance and methodology page and in the Quality and Methodology Information (QMI) report.

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7. Strengths and limitations

The strengths and limitations of the Annual Survey of Hours and Earnings (ASHE) can be found in the Quality and Methodology Information (QMI) report and the Guide to sources of data of earnings and income.

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Contact details for this Statistical bulletin

Roger Smith
earnings@ons.gov.uk
Telephone: +44 (0)1633 456120