Other commentary from the latest labour market data can be found on the following pages:Back to table of contents
Employee pay growth slowed noticeably in April and maintained a similar pattern in May. Pay is now growing slower than inflation, especially in industries where furloughing is most prominent.
Growth in average total pay (including bonuses) among employees slowed sharply in March to May to be negative (at negative 0.3%) for the first time since April to June 2014; regular pay growth (excluding bonuses) slowed to 0.7%.
Single month growth in average weekly earnings for May 2020 was negative 1.2% for total pay and 0% for regular pay.
Pay declined more in industries where furloughing was most prominent, many of these being the lowest-paying industries, in particular accommodation and food service activities.
In real terms, total pay growth for March to May was negative 1.3% (that is, nominal total pay grew slower than inflation); regular pay growth was negative 0.2%, the difference being driven by subdued bonuses in recent months.
Pay estimates are based on all employees on company payrolls, including those who have been furloughed under the Coronavirus Job Retention Scheme (CJRS).
In March to May 2020, the rate of annual pay growth stood at negative 0.3% for total pay and 0.7% for regular pay.
The rate of growth has been slowing since April to June 2019, when it stood at 4.0% for total pay and 3.9% for regular pay, the highest nominal pay growth rates since 2008. It had slowed to 2.9% in December 2019 to February 2020 immediately prior to the coronavirus (COVID-19) pandemic.
In real terms, annual pay growth had been positive between December 2017 to February 2018 and January to March 2020. This means that during that period, pay was growing faster than inflation, with growth in real terms for both total pay and regular pay reaching a recent peak of 2.0% in the three months to June 2019.
Pay is now growing at a slower rate than inflation, at negative 1.3% for total pay, the lowest rate since April to June 2014. Regular pay growth in real terms is also negative, at negative 0.2%. The difference between the two measures is because of subdued bonuses, which fell by an average negative 14.5% (in nominal terms) in the three months March to May 2020.
For May 2020, average regular pay, before tax and other deductions, for employees in Great Britain was estimated at £504 per week in nominal terms. The figure in real terms (constant 2015 prices) fell to £466 per week in May, after reaching £473 per week in December 2019, with pay in real terms back at the same level as it was in March 2019.
Pay in real terms is still below its level before the 2008 economic downturn.
Between March to May 2019 and March to May 2020, average pay growth varied by industry sector (Figure 3). The public sector saw the highest estimated growth, at 3.8% for regular pay, while negative growth was seen in the construction sector, estimated at negative 5.4%, the wholesaling, retailing, hotels and restaurants sector, estimated at negative 2.1%, and the manufacturing sector, estimated at negative 1.6%.
Figure 3 also includes estimates of annual growth in regular pay for the single month of May 2020, with each sector, except for the public sector, showing a weakening pattern of growth when compared with the three months to May 2020.
The pattern of pay growth is closely linked to the proportion of employees who are furloughed (PDF, 199KB), and the extent to which employers have topped-up payments received for these employees under the Coronavirus Job Retention Scheme (CJRS). The Office for National Statistics (ONS) has published estimates of approximately 30% of employees being furloughed in the last two weeks of May, and a little over 40% of furloughed employees having their pay topped-up above the 80% pay received under CJRS. The combined impact of this is a downward drag of a little over 3%. This offsets the pay growth of 2.9% in both total pay and regular pay, in the three months to February 2020 (before lockdown).
A fuller understanding of dynamics of pay change should take into account the number and profiles of employees entering and leaving payroll, as discussed in HM Revenue and Customs's (HMRC's) Earnings and employment from Pay As You Earn Real Time Information, UK: July 2020.
Figure 4: The lowest-paying industries of accommodation and food service activities, retail trade and repairs, and arts, entertainment and recreation continue to experience negative pay growth in May 2020
Average weekly earnings excluding bonuses and annual percentage pay growth in Great Britain by industry, May 2020
While Figure 3 presented figures at sector level, Figure 4 shows, by lower-level industry, average weekly employee pay in May 2020 and the percentage change in pay compared with May 2019. Figure 4 indicates that the three lowest-paid industries: accommodation and food service activities, the retail trade and repairs industry, and the arts, entertainment and recreation industry, all saw falls in pay compared with May 2019.
This is closely linked to differing numbers of employees being furloughed across industries (as indicated by HMRC data published on 11 June (PDF, 199KB) and ONS estimates published fortnightly), affecting the numbers of hours worked (as shown by Labour Force Survey estimates). The decline in pay received by employees, especially those in lower- paid jobs, may contribute to increases in benefits claims caused by decreased household income.
Further detail about changes in pay in May among higher- and lower-paid employees is provided by HMRC in its Earnings and employment from Pay As You Earn Real Time Information publication.Back to table of contents
Average weekly earnings
Dataset EARN01 | Released 16 July 2020
Headline estimates of earnings growth in Great Britain (seasonally adjusted).
Average weekly earnings by sector
Dataset EARN02 | Released 16 July 2020
Estimates of earnings in Great Britain broken down to show the effects of changes in wages and the effects of changes in the composition of employment (not seasonally adjusted).
Average weekly earnings by industry
Dataset EARN03 | Released 16 July 2020
Estimates of earnings in Great Britain broken down by detailed industrial sector (not seasonally adjusted).
Average Weekly Earnings
Average Weekly Earnings (AWE) is the lead monthly measure of average weekly earnings per employee. It is calculated using information based on the Monthly Wages and Salaries Survey (MWSS), which samples around 9,000 employers in Great Britain.
The estimates are not just a measure of pay rises as they do not, for example, adjust for changes in the proportion of the workforce who work full-time or part-time or other compositional changes within the workforce. The estimates do not include earnings of self-employed people.
Estimates are available for both total pay (which includes bonus payments) and regular pay (which excludes bonuses). Estimates are available in both nominal terms (not adjusted for inflation) and real terms (adjusted for inflation).
A bonus is a form of reward or recognition granted by an employer. When an employee receives a bonus payment, there is no expectation or assumption that the bonus will be used to cover any specific expense. The value and timing of a bonus payment can be at the discretion of the employer or stipulated in workplace agreements.
Consumer Prices Index including owner occupiers' housing costs
As of 21 March 2017, the Consumer Prices Index including owner occupiers' housing costs (CPIH) became our lead measure of inflation. It is our most comprehensive measure of UK consumer price inflation.
Monthly Wages and Salaries Survey
The Monthly Wages and Salaries Survey (MWSS) is a survey through which we collect information on wages and salaries. It is distributed monthly to around 9,000 employers covering around 12.8 million employees.
A more detailed glossary is available.Back to table of contents
In response to the developing coronavirus (COVID-19) pandemic, we are working to ensure that we continue to publish economic statistics. For more information, please see COVID-19 and the production of statistics.
We have reviewed all publications and data published as part of the labour market release in response to the coronavirus pandemic. This has led to the postponement of some publications and datasets to ensure that we can continue to publish our main labour market data. This will protect the delivery and quality of our remaining outputs as well as ensuring we can respond to new demands as a direct result of the coronavirus.
For more information on how labour market data sources, among others, will be affected by the coronavirus pandemic, see the statement published on 27 March 2020. A further article published on 6 May 2020, detailed some of the challenges that we have faced in producing estimates at this time.
Our latest data and analysis on the impact of the coronavirus on the UK economy and population is now available on our dedicated COVID-19 webpage.
In April, potentially significant changes in employee pay, associated with social distancing measures, made it necessary to change some aspects of the processing of average weekly earnings (AWE) data. The normal approach to processing both non-responding companies and those whose pay shows sharp unconfirmed changes from historical returns, is to roll forward (impute) employee and pay details from the most recent responding month. In April, additional data validation was conducted, and information gathered from responding companies was used in the imputation of non-responding companies.
The survey response rate was 77%, only slightly lower than the 83% target in more typical months.
In line with international guidance, the seasonal adjustment process has been reviewed and revised this month, with all periods in the AWE series open to revision.
After EU withdrawal
As the UK leaves the EU, it is important that our statistics continue to be of high quality and are internationally comparable. During the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 31 January 2020.
After the transition period, we will continue to produce our labour market statistics in line with the UK Statistics Authority's Code of Practice for Statistics and in accordance with International Labour Organization (ILO) definitions and agreed international statistical guidance.
This bulletin relies on data collected from the Monthly Wages and Salaries Survey (MWSS), a survey of employers in Great Britain, excluding small businesses employing fewer than 20 people.
More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Average weekly earnings QMI.
|Including bonuses (Jan to Apr)¹ ²||Including bonuses (May to Dec)¹ ²||Excluding bonuses¹|
|Whole economy||± 0.9||± 0.5||± 0.5|
|Private sector||± 0.9||± 0.6||± 0.5|
|Public sector||± 0.9||± 0.5||± 0.5|
|Services||± 1.0||± 0.6||± 0.5|
|Finance and business services||± 2.8||± 1.6||± 1.4|
|Public sector excluding financial services||± 0.7||± 0.5||± 0.5|
|Manufacturing||± 1.1||± 1.0||± 0.9|
|Construction||± 2.5||± 2.6||± 2.4|
|Wholesale and retail, hotels and restaurants||± 2.1||± 1.7||± 1.5|
Download this table Table 1: Sampling variability for average weekly earnings single month growth rates in percentage points.xls .csv
The figures in this bulletin come from a survey of businesses that gathers information from a sample rather than from the whole population. The sample is designed to be as accurate as possible given practical limitations such as time and cost constraints. Results from sample surveys are always estimates, not precise figures. This can have an impact on how changes in the estimates should be interpreted, especially for short-term comparisons.
As the number of people available in the sample gets smaller, the variability of the estimates that we can make from that sample size gets larger. Estimates for small groups (for example, earnings for the construction sector), which are based on small subsets of the Monthly Wages and Salaries Survey (MWSS) sample, are less reliable and tend to be more volatile than for larger aggregated groups (for example, earnings for the private sector).
In general, short-term changes in the growth rates reported in this bulletin are not usually greater than the level that can be explained by sampling variability. Short-term movements in reported rates should be considered alongside longer-term patterns in the series and corresponding movements in other sources to give a fuller picture.
Further information is available in A guide to labour market statistics and A guide to sources of data on earnings and income.Back to table of contents
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