Average weekly earnings in Great Britain: October 2020

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

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13 October 2020

The effect of the coronavirus (COVID-19) pandemic on our capacity means we have reviewed the existing labour market releases and will be suspending some publications.

This will protect the delivery and quality of our remaining labour market outputs as well as ensuring we can respond to new demands as a direct result of the coronavirus. More details about the impact on labour market outputs can be found in our statement.

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Contact:
Email Roger Smith

Release date:
13 October 2020

Next release:
10 November 2020

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 June to August 2020

  • Annual growth in employee pay strengthened in August 2020 as employees continued to return to work from furlough; this followed strong falls in months since April when growth was affected by lower pay for furloughed employees, and reduced bonuses.

  • Growth in average total pay (including bonuses) among employees for the three months June to August 2020 was unchanged from a year ago, while regular pay (excluding bonuses) growth was positive at 0.8%.

  • Single-month growth in average weekly earnings for August 2020 was 1.9% for total pay and 1.7% for regular pay.

  • For the sectors of wholesaling, retailing, hotels and restaurants, and construction, where the highest percentages of employees returned to work from furlough, there was improvement in pay growth for August 2020, but growth remains negative.

  • Pay growth is affected in part by the composition of the workforce; it is estimated that a net reduction in jobs in lower-paid industries accounted for 0.1% of the 1.9% total pay growth and 0.2% of the 1.7% regular pay growth in August 2020.

  • In real terms, total pay growth for June to August 2020 was negative 0.8% (that is, nominal total pay grew more slowly than inflation); regular pay growth was positive at 0.1%.

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.

Note that pay 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

In June to August 2020, the rate of annual pay growth was unchanged for total pay but positive 0.8% for regular pay. The difference between the two measures is because of subdued bonuses, which fell by an average negative 15.3% (in nominal terms) in the three months June to August 2020.

The rate of growth stood at 2.9% in December 2019 to February 2020 immediately prior to any impact from the coronavirus (COVID-19) pandemic was seen; it then slowed sharply to negative 1.2% for total pay and negative 0.1% for regular pay before some increase in July and August.

In real terms, total pay is growing at a slower rate than inflation, at negative 0.8%. Regular pay growth in real terms is now positive, at 0.1%.

For August 2020, average regular pay, before tax and other deductions, for employees in Great Britain was estimated at £517 per week in nominal terms. When expressed in real terms (constant 2015 prices) the figure in August 2020 was a record £476 per week after falling back to £464 per week in April.

Total pay in real terms was estimated at £507 in August and remains below the £522 seen in February 2008, the highest pay level on record.

Between June to August 2019 and June to August 2020, average pay growth varied by industry sector (Figure 3). The public sector saw the highest estimated growth, at 4.1% for regular pay. Negative growth was seen in the construction sector, estimated at negative 5.3%, the wholesaling, retailing, hotels and restaurants sector, estimated at negative 1.8%, and the manufacturing sector, estimated at negative 0.9%. This is, however, an improvement on the growth rates during May to July 2020.

Figure 3 also includes estimates of annual growth in regular pay for the single month of August 2020. For the construction, manufacturing, and the wholesaling, retailing, hotels and restaurants sectors, the August 2020 estimate of annual growth is notably higher than for the three-month average June to August 2020.

The pattern of pay growth is closely linked to the proportion of employees who are furloughed 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 12% of the workforce on partial or full furlough leave during 24 August to 6 September 2020, with the arts, entertainment and recreation sector, and the accommodation and food service activities sector having the highest proportions of furloughed workers, at 41% and 29% respectively. These industries also showed 10% of the workforce that were still on partial or full furlough leave returned from leave in the last two weeks.

Changes in the numbers of employees across industries can create a compositional effect on pay growth; where a decrease in the employment level of lower than average paying industries can have an upward effect on pay growth for the whole economy and vice versa.

Estimates of employee jobs sourced from Workforce Jobs for June 2020 show the largest estimated quarterly decreases in jobs were in administrative and support service activities, and accommodation and food service activities, both of which attract lower than average weekly earnings.

Employment numbers returned to the Monthly Wages and Salary Survey (MWSS) show falls have continued into July and August and have contributed to a compositional effect of positive 0.1% to 0.2% on whole economy pay growth; that is, if the profile (% within each industry) of employee jobs had not changed between June to August 2019 and June to August 2020, the estimates would have been 0.1% (total pay) and 0.2% (regular pay) lower than reported in this bulletin.  

A fuller understanding of the 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' (HMRC's) Earnings and employment from Pay As You Earn Real Time Information, UK: October 2020.

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4. Average weekly earnings data

Average weekly earnings
Dataset EARN01 | Released 13 October 2020
Headline estimates of earnings growth in Great Britain (seasonally adjusted).

Average weekly earnings by sector
Dataset EARN02 | Released 13 October 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 13 October 2020
Estimates of earnings in Great Britain broken down by detailed industrial sector (not seasonally adjusted).

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5. Glossary

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).

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

Coronavirus

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. Since April, additional data validation has been conducted, and information gathered from responding companies considered in the imputation of non-responding companies.

The survey response rate was 79%, 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.

Sampling variability

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7. Strengths and limitations

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.

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Contact details for this Statistical bulletin

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