Average weekly earnings in Great Britain: March 2020

Other commentary from the latest labour market data can be found on the following pages:

• Labour market overview

• Employment in the UK

• Vacancies and jobs

• Pay continued to grow faster than inflation, but its rate of growth has slowed since mid-2019.

• Estimated annual growth in average weekly earnings for employees in Great Britain in the three months to January 2020 was 3.1% for both total pay (including bonuses) and regular pay (excluding bonuses).

• In real terms (after adjusting for inflation), annual growth in both total pay and regular pay is estimated to be 1.5%; this is down from a recent peak of 2.0% in the three months to June 2019.

• Annual growth in pay remains weakest in the wholesaling, retailing, hotels and restaurants sector, at 2.2% for total pay and 2.0% for regular pay, and strongest in the finance and business services sector (3.6% and 3.5% respectively); however, a comparison of current total pay levels with those from 2008 shows a picture of stronger-than-average pay growth in the wholesaling, retailing, hotels and restaurants sector over the long term.

The rate of pay growth trended upwards from spring 2017. In April to June 2019, it reached 4.0% for total pay and 3.9% for regular pay, the highest nominal pay growth rates since 2008. However, since then growth has slowed. In November 2019 to January 2020, it stood at 3.1% for both total pay and regular pay.

In real terms, annual pay growth has been positive since the three months to February 2018. This means that during that period, pay has been growing faster than inflation. Growth in real terms for both total pay and regular pay reached a recent peak of 2.0% in the three months to June 2019, before decreasing to 1.5% in the three months to January 2020.

For January 2020, average regular pay, before tax and other deductions, for employees in Great Britain was estimated at £512 per week in nominal terms. The figure in real terms (constant 2015 prices) is £471 per week, which is £2 (0.4%) less than the pre-2008 economic downturn peak of £473 per week for March 2008.

The equivalent figures for total pay in real terms are £503 per week in January 2020 and £522 in February 2008, a 3.6% difference.

Between November to January 2019 and November to January 2020, average pay growth varied by industry sector (Figure 3). The finance and business services sector saw the highest estimated growth, at 3.6% for total pay and 3.5% for regular pay. The wholesaling, retailing, hotels and restaurants sector saw the lowest growth, estimated at 2.2% for total pay and 2.0% for regular pay.

As these estimates are based on a sample, they are subject to sampling variability, which in the case of the wholesaling, retailing, hotels and restaurants sector is approximately 1.5%. However, it has been evident since late 2018 that the growth in weekly total pay in this sector is lower than for the whole economy.

Growth in pay within different sectors can be conducted on the Average Weekly Earnings series over any period back to 2000. In Figure 4, we have compared latest pay with the three months to March 2008, which was the peak prior to the 2008 economic downturn.

Despite having lower than average pay recently (as shown in Figure 3), the wholesaling, retailing, hotels and restaurants sector has seen stronger growth in total pay than any other sector since 2008. Average total pay growth in this sector has grown by 29.5% since the three months to March 2008, compared with 23.5% for whole economy. This highlights that the rate of pay growth between different time periods can be very different across sectors.

Growth in total pay since the three months to March 2008 has been lowest within the finance and business services sector , at 22.6%; this is a little below the growth for the whole economy. Growth in that sector (58.6%) had been substantially greater than the growth in the whole economy (44.2%) from 2000 to 2008.

It should be noted that the pay estimates in this bulletin reflect the profile of jobs in each sector at each point in time. This profile can change over time, which might naturally increase or reduce average pay.

Average Weekly Earnings (AWE)

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).

Bonus

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 (CPIH)

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 (MWSS)

The 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.

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.

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.