Average weekly earnings in Great Britain: November 2023

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

• Labour market overview, UK

• Vacancies and jobs in the UK

• Earnings and employment from Pay As You Earn Real Time Information, UK

• Annual growth in regular pay (excluding bonuses) was 7.7% in July to September 2023, this is slightly down on the previous periods but is still among the highest annual growth rates since comparable records began in 2001.

• Annual growth in employees’ average total pay (including bonuses) was 7.9% in July to September 2023; this total growth rate is affected by the civil service one-off payments made in July and August 2023.

• Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH)) for total pay rose on the year by 1.4% in July to September 2023, and for regular pay rose on the year by 1.3%.

• Annual average regular pay growth for the public sector was 7.3% in July to September 2023 and is the highest regular annual growth rate since comparable records began in 2001; for the private sector this was 7.8% and among the largest annual growth rates seen outside of the coronavirus (COVID-19) pandemic period.

• The finance and business services sector saw the largest annual regular growth rate at 9.4%, followed by the manufacturing sector at 7.7%.

Average weekly earnings (AWE) were estimated at £673 for total pay and £621 for regular pay in September 2023. Figure 1 shows that average weekly earnings have steadily increased, with the exception of the early months of the coronavirus (COVID-19) pandemic.

The annual growth for regular pay (excluding bonuses) was 7.7% in July to September 2023. This is slightly down on the previous periods but is still among the highest annual growth rates since comparable records began in 2001.

Annual growth in employees’ average total pay (including bonuses) was 7.9% in July to September 2023. This is one of the largest annual growth rates seen outside of the coronavirus pandemic period. However, this total pay annual growth rate is affected by the civil service one-off non-consolidated payments made in July and August 2023. For further details, see the Sector and industry subsection of this bulletin.

Our headline growth rate is the annual change between the latest three month period and the same three months one year ago. This means that, in some areas, the latest months are currently compared with low base periods before the high pay rises were given over the last year, which in part are in reaction to high inflation and the cost of living crisis. Looking at annualised growth rates over the short term can help assess more recent earnings trends. If we compare the latest three months with the three months which preceded them, and then annualise this growth rate, nominal regular average weekly earnings grew by 6.3%.

This shows that if you look at growth over the short-term, it is still strong, but not as strong as when comparing over a full 12-month period when regular earnings grew by 7.7%. We will continue to publish our headline estimate using the annual year-on-year growth rate, but this provides further context on shorter-term changes for users.

In real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH)), in July to September 2023, total real pay rose by 1.4% on the year. It was last higher in August to October 2021 when it was 1.6%. Regular real pay rose by 1.3% on the year; it was last higher in July to September 2021 when it rose by 2.2%.

Given higher CPIH inflation over the past 18 months, real pay has fallen on the year as inflation has started to reduce. We are now seeing real growth return to increasing on the year. Figure 3 shows a comparison of monthly real total and regular pay growth rates and monthly inflation. For July to September 2023, CPIH was an average of 6.3%.

Our headline measure of inflation is CPIH. However, we also publish our supplementary Real average weekly earnings using consumer price inflation (CPI) dataset, excluding owner occupiers' housing costs. Using CPI real earnings, in July to September 2023, total pay rose by 1.1% on the year and regular pay rose by 1.0% on the year.

The Earnings and employment from Pay As You Earn Real Time Information, UK bulletin also provides additional insights into 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 pay is also provided but is subject to revisions.

However, there will be differences between the two data sources because of timing and definitional differences, as set out in our Comparison of labour market data sources methodology. Other reasons for the larger differences this month are because of:

• the Real Time Information (RTI) including arrears payments: in September 2022 the NHS implemented a pay rise and large back pay (arrears), which will be in the comparator year for the RTI, therefore reducing the growth rate for September 2023; when looking at AWE including arrears (non-seasonally adjusted) the growth rate for September 2023 is 7.4%, so lower than when arrears are excluded

• RTI’s calendarisation method affecting the periods pay is recorded in

• the latest month's AWE estimate being provisional and subject to revisions

Sector and industry

Annual average regular pay growth for the public sector was 7.3% in July to September 2023 and is the highest regular pay annual growth rate since comparable records began in 2001 (Figure 4). For the private sector this was 7.8%. This is one of the largest annual regular growth rates seen outside of the coronavirus pandemic period, when the growth rate peaked at 8.4% in April to June 2021 because the data were affected by compositional and base effects.

Annual average total pay growth for the private sector was 7.7% in July to September 2023. For the public sector, this was 8.6%. However, this is affected by the civil service one-off non-consolidated payments made in July and August 2023.

The civil service announced a one-off non-consolidated pay award for 2023 to 2024, which was mainly paid out in July 2023. This will account for a large bonus being present in total pay in the public sector in July and August 2023 for the public administration industry and the public sector.

In July to September 2023, the finance and business services sector saw the largest annual regular pay growth rate at 9.4%. The manufacturing sector followed at 7.7% (Figure 5).

Average Weekly Earnings (AWE)

As explained in Section 2: Earnings of our Guide to labour market statistics methodology, 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 Earnings and employment from Pay As You Earn Real Time Information, UK bulletin.

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 arrears payments and any redundancy payments that are made through payroll. Further detail is provided in our Comparison of labour market data sources methodology.

Bonus

A bonus is a form of reward or recognition granted by an employer in addition to basic pay. 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), as detailed in our quality and methodology information (QMI) 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.

This section provides more detail around the methodology of the survey. Further information on this is available in our Average weekly earnings quality and methodology information (QMI).

The survey response rate was 84% in September 2023.

Real earnings

Real average weekly earnings (AWE) are calculated as non-seasonally adjusted AWE (shown in our accompanying EARN02: Average weekly earnings by sector dataset) divided by the Consumer Prices Index including owner occupiers' housing costs (CPIH), which is our preferred measure of consumer price inflation (as shown in our CPIH Index time series L522). The ratio is then referenced as an index with 2015 equals 100, and seasonally adjusted.

We also publish our accompanying X09: Real average weekly earnings using consumer price inflation (CPI) dataset for the whole economy and for both total and regular pay. Our recommended measure of CPI is CPIH, and our headline estimates using this measure are found in our accompanying EARN01: Average weekly earnings dataset. These data have been compiled using the CPI as a supplementary dataset to view alongside the headline estimates produced using the CPIH.

Arrears payment

Pay award arrears are collected separately on the questionnaire; this specifically covers earnings arising from a backdated pay increase, not late payment of overtime or bonuses. Arrears payments are reflected in estimates at the time they were paid, and not in the period they are awarded for. Therefore, backseries are not revised. The AWE headline estimates exclude arrears payments.

Seasonal adjustment

Total pay, bonus pay and regular pay (excluding bonuses) for each sector (a total of 27 series) are seasonally adjusted using X13-ARIMA. Percentage changes are then derived from the seasonally adjusted average pay series.

Each of the 27 series is seasonally adjusted separately, to ensure the optimum seasonal adjustment of each series. The result of this is that relationships that hold in the unadjusted series do not necessarily hold for the seasonally adjusted series. For example, before seasonal adjustment, regular pay plus bonus pay equalled total pay, whereas after seasonal adjustment, they are not necessarily equal.

When there is an exceptionally large change in the series, this can lead to larger differences between regular pay plus bonus pay, and total pay. We saw this in March 2021 and 2020, when the bonus payments pattern changed during the coronavirus (COVID-19) pandemic. Consequently, the direct seasonal adjustment method, which allows for evolving seasonality, caused a larger than normal difference. This is supported by other similar instances, such as in January and February 2009.

Where one-off shocks are present in the data, these are taken into account during the seasonal adjustment process. This was applied in June 2023 to the public sector bonus payments.

In line with international guidance, we annually review the seasonal adjustment parameters and open up the whole time series for revision, as outlined in our Average weekly earnings QMI. This was last reviewed in September 2023 and led to revisions to the historical AWE time series, extending back throughout the entire time series.

Revisions

AWE are generally published on a provisional basis around six to seven weeks after the end of the month in question, although sometimes a week later in the months following Christmas and Easter. The unadjusted estimates are finalised the following month (10 to 11 weeks after the end of the reference period). Seasonally adjusted estimates are subject to further revisions at later dates (see the Revisions Policy subsection of our Average weekly earnings QMI).

Interpreting average earnings: base and compositional effects

Interpreting average earnings data over the last year has been difficult. We explain the complexities of interpreting these data in our How COVID-19 has impacted the Average Weekly Earnings data blog post. 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 (COVID-19) pandemic, different scenarios have affected the base effect. More information on base effects can be found in our Average weekly earnings in Great Britain: May 2022 bulletin.

The compositional effect means pay growth has been affected by a changing composition of employee jobs, which during the coronavirus pandemic had increased average pay. The latest data show that the composition effect is now at more normal levels, and we are no longer seeing the excessive levels we saw during periods of the coronavirus pandemic in 2020 and 2021. For more details on the impact of compositional effects on wage growth, see our How furlough and changes in the employee workforce have affected earnings growth during the coronavirus (COVID-19) pandemic, UK: 2020 to 2021 article.

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 taken into consideration 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.

More information on the compositional effect on the data is available in Section 10: Measuring the data of the Earnings and employment from Pay As You Earn Real Time Information, UK: May 2022 bulletin.

Sampling variability for average weekly earnings single-month growth rates in percentage points is also available in our previous release, Average weekly earnings in Great Britain: April 2022.

For more information about some of the main differences between our data sources, see our Comparison of labour market data sources methodology.

For more information on measuring the data, see our Average weekly earnings in Great Britain: April 2021 bulletin.

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. Where practical, we will 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.

Information on the strengths and limitations of this bulletin is available in:

• our Average weekly earnings in Great Britain: April 2021 bulletin

• our A guide to labour market statistics methodology

• our Income and earnings statistics guide methodology

• the Government Statistical Service Income and earnings interactive dashboard