Average weekly earnings in Great Britain: March 2022

Estimates of growth in earnings for employees before tax and other deductions from pay.

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Contact:
Email Nicola White

Release date:
15 March 2022

Next release:
12 April 2022

1. Other pages in this release

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

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2. Main points for November 2021 to January 2022

  • Growth in average total pay (including bonuses) was 4.8%, and growth in regular pay (excluding bonuses) was 3.8% among employees in November 2021 to January 2022.

  • Previous months' strong growth rates were affected upwards by base and compositional effects; these initial temporary factors have worked their way out; however, we are now comparing the latest period with a period where certain sectors had increasing numbers of employees on furlough as a result of the winter 2020 to 2021 lockdown; so a small amount of base effect will be present for these sectors but not to the degree we saw when comparing with periods at the start of the pandemic.

  • In real terms (adjusted for inflation), in November 2021 to January 2022, growth in total pay was 0.1% and regular pay fell on the year at negative 1.0%; strong bonus payments over the past six months have kept recent real total pay growth positive.

  • Average total pay growth for the private sector was 5.3% in November 2021 to January 2022, and for the public sector was 2.4% in the same time period.

  • All industry sectors saw pay growth in November 2021 to January 2022, with the finance and business services sector seeing the largest growth rate at 8.6% as well as strong bonus payments.

  • In July 2021, we published a blog post, How COVID-19 has impacted the Average Weekly Earnings data, which explains the complexities of interpreting earnings data.

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The estimates in this bulletin come from a survey of businesses. It is not possible to survey every business each month, so these statistics are estimates based on a sample, not precise figures. Estimates are based on all employees on company payrolls, including those who have been furloughed under the Coronavirus Job Retention Scheme (CJRS).

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3. Analysis of average weekly earnings (AWE)

Average weekly earnings were estimated at £596 for total pay, and £555 for regular pay in January 2022. Figure 1 shows that average weekly earnings have steadily increased, with the exception of the early months of the coronavirus (COVID-19) pandemic.

The rate of annual pay growth for total pay was 4.8%, and the annual pay growth for regular pay was 3.8% in November 2021 to January 2022. Bonus payments since August 2021 have remained strong, especially in the finance and business services sector.

Previous months' strong growth rates were affected upwards by base and compositional effects. These initial temporary factors have worked their way out. However, we are comparing the latest period with a period where certain sectors (accommodation and food service activities, wholesale and retail, and construction) had increasing numbers of employees on furlough as a result of the winter 2020 to 2021 lockdown. So a small amount of base effect will be present for these sectors but not to the degree we saw when comparing with periods at the start of the coronavirus pandemic.

The bulletin titled Earnings and employment from Pay As You Earn Real Time Information, UK: February 2022 also provides additional insights of the estimate of growth in median and mean pay, and the two data sources generally trend well for mean total pay. A more timely estimate of median is also provided, although subject to revisions.

In real terms (adjusted for inflation), in November 2021 to January 2022, growth in total pay was 0.1% and regular pay fell on the year at negative 1.0%. Strong bonus payments over the past six months have kept recent real total pay growth positive. Real regular pay growth last fell on the year to negative 1.0% in May to July 2014 but we did see a fall of negative 0.9% in March to May 2020 during the coronavirus pandemic.

The increasing difference between nominal and real growth rates in recent months is because of increasing consumer price inflation (including owner occupiers’ housing costs, CPIH). For the three months of November 2021 to January 2022, CPIH was an average of 4.8%. Figure 3 shows a comparison of monthly real total, regular pay growth rates, and monthly inflation.

Interpreting average earnings – base and compositional effects

Interpreting average earnings data over the last year has been difficult. In July 2021, we published a blog post: How COVID-19 has impacted the Average Weekly Earnings data, which explains the complexities of interpreting these data. There were temporary factors that we refer to as base and compositional effects.

The base effect refers to comparing two periods with different circumstances. Throughout the coronavirus pandemic we have had differing scenarios that have affected the base effect.

Initially the base period was not affected by furlough, but the most recent period it was compared with was affected by furlough. This resulted in some periods of negative pay growth. For the latest period, this covered the months April 2020 to March 2021.

Then both periods were affected by furlough, but by differing amounts. As such, the latest periods were compared with the very low base periods between April and August 2020. This was when earnings were mostly affected by the coronavirus pandemic and pay growth rates were negative, which resulted in inflated pay growth. This has now worked its way out. For the latest period, this covered the months April 2021 to September 2021.

Now we are seeing a period where the base was affected by furlough, but the most recent period was not. Average weekly earnings for November 2020 to January 2021 included around 4.3 million people on furlough, compared with none in November 2021 to January 2022, as the scheme finished at the end of September 2021. Therefore, those sectors most affected by furlough in November 2020 to January 2021 (accommodation and food service activities, wholesale and retail, and construction) will include a small amount of base effect, but not to the degree we saw when comparing with periods at the start of the coronavirus pandemic.

The composition effect is where pay growth has been affected by a changing composition of employee jobs, which during the coronavirus pandemic had increased average pay. It needs to be considered when interpreting average pay growth, as explained in the Measuring the data section. The latest data show that the composition effect  is now at more normal levels and we are no longer observing the excessive levels we saw during periods of the pandemic in 2020 and 2021. Following the changes we have seen when looking at compositional effects over the past two years, we plan to develop our methods and conduct more detailed analysis to study the impact of compositional effects in the future.

Sector and industry

Average total pay growth for the private sector was 5.3% in November 2021 to January 2022, while for the public sector it was 2.4%. In November 2021 to January 2022, the finance and business services sector had the largest growth rate (8.6%), partly because of strong bonus payments. Wholesaling, retailing, hotels and restaurants saw a growth rate of 5.9% in November 2021 to January 2022. This sector includes the industry accommodation and food, which had the highest proportion of employees on furlough during November 2020 to January 2021. Therefore, the growth rate of 8.9% will be affected by base effect.

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4. Average weekly earnings data

Average weekly earnings
Dataset EARN01 | Released 15 March 2022
Headline estimates of earnings growth in Great Britain (seasonally adjusted).

Average weekly earnings by sector
Dataset EARN02 | Released 15 March 2022
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 15 March 2022
Estimates of earnings in Great Britain broken down by detailed industrial sector (not seasonally adjusted).

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5. Glossary

Average Weekly Earnings (AWE)

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. 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 bonus payments). Estimates are available in both nominal terms (not adjusted for inflation) and real terms (adjusted for inflation).

Estimates of pay growth are also published using HM Revenue and Customs' (HMRC) data in the bulletin titled Earnings and employment from Pay As You Earn Real Time Information, UK: February 2022.

The HMRC estimates are presented in median pay-terms, but they also include mean pay, as does AWE. There are some differences between the sources, most notably that the HMRC estimates include any redundancy payments that are made through payroll. Further detail is provided in our methodology titled Comparison of labour market sources, published 11 December 2020.

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

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.

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6. Measuring the data

The survey response rate was 76%; this was slightly lower than the 83% target in the months prior to the coronavirus (COVID-19) pandemic.

Real earnings

The real Average Weekly Earnings (AWE) is calculated as the non-seasonally adjusted AWE (shown in Table EARN02) divided by the Consumer Prices Index including owner occupiers' housing costs (CPIH), our preferred measure of consumer price inflation (series identifier L522). The ratio is then referenced as an index with 2015 equals 100, and seasonally adjusted.

Compositional effect

Following the initial impact of the coronavirus pandemic, the change in pay growth was heavily affected by a changing composition of employee jobs, where we saw a fall in the number and proportion of lower-paid employee jobs. This changing composition naturally increased average pay and should be kept in mind when interpreting average pay growth. Changes in the profile of employee jobs in the economy will affect average pay growth. A decrease in employee numbers in jobs that have lower pay can have an upward effect on average pay, and the other way around.

When looking at the compositional effect following the initial impact of the coronavirus pandemic, so from the end of 2020 to mid-2021, we can consider the compositional effects from three angles:

These three compositional analyses are not mutually exclusive and do not necessarily consider all the compositional effects that have an impact on average pay. Following the changes we have seen when looking at compositional effects over the past two years, we plan to develop our methods and conduct more detailed analysis to study the impact of compositional factors in the future.

More information on the compositional effect on the data is available in the April 2021 edition of this release.

Sampling variability for average weekly earnings single month growth rates in percentage points is also available in the April 2021 edition of this release.

For more information on how labour market data sources are affected by the coronavirus pandemic, see our article titled Coronavirus and the effects on UK labour market statistics, published 6 May 2020. This article details some of the challenges that we have faced in producing estimates at this time.

You can also view our methodology titled Comparison of labour market data sources, published 11 December 2020, which discusses some of the main differences between our data sources.

More information on measuring the data is available in the April 2021 edition of this release.

Making our published spreadsheets accessible

Following the Government Statistical Service (GSS) guidance on releasing statistics in spreadsheets we will be amending our published tables over the coming months to improve usability, accessibility and machine readability of our published statistics. To help users change to the new formats we will be publishing sample versions of a selection of our tables, and where practical, initially publish the tables in both the new and current formats. If you have any questions or comments, please email labour.market@ons.gov.uk.

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Contact details for this Statistical bulletin

Nicola White
labour.market@ons.gov.uk
Telephone: +44 1633 456120