Average weekly earnings in Great Britain: October 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:
11 October 2022

Next release:
15 November 2022

1. Other pages in this release

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

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2. Main points for June to August 2022

  • Growth in average total pay (including bonuses) was 6.0% and growth in regular pay (excluding bonuses) was 5.4% among employees in June to August 2022; this is the strongest growth in regular pay seen outside of the coronavirus (COVID-19) pandemic period.

  • Growth in total and regular pay fell in real terms (adjusted for inflation) on the year in June to August 2022, at 2.4% for total pay and 2.9% for regular pay; this is slightly smaller than the record fall in real regular pay we saw April to June 2022 (3.0%) but still remains among the largest falls in growth since comparable records began in 2001.

  • Average regular pay growth for the private sector was 6.2% in June to August 2022, and 2.2% for the public sector; outside of the height of the pandemic period, this is the largest growth seen for the private sector and the largest difference between the private sector and public sector.

  • The wholesaling, retailing, hotels and restaurants sector saw the largest regular growth rate at 7.4%, followed by the finance and business services sector at 5.9%.

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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.

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3. Analysis of average weekly earnings (AWE)

Average weekly earnings were estimated at £617 for total pay and £574 for regular pay in August 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 6.0%, and the annual pay growth for regular pay was 5.4%, in June to August 2022; this is the strongest growth in regular pay seen outside of the pandemic period.

Over the last 12 months, we have continued to see higher levels of bonus payments compared with previous bonus levels, particularly in March 2022 when the non-seasonally adjusted bonus payment was extremely strong. The largest bonus payments are in the finance and business services sector.

Previously we noted that certain sectors were affected by a small amount of base effect because of the winter 2020 to 2021 lockdown. This is now having a minimal impact on the growth rates because the number of employees on furlough dropped from May 2021; however, a number of employees did continue to be on the furlough scheme until it ended on 30 September 2021.

In real terms (adjusted for inflation), in June to August 2022, total pay fell on the year at 2.4%, compared with a slightly larger fall of 2.5% in the previous two periods. Regular pay fell on the year at 2.9%; this is slightly smaller than the record fall we saw in April to June 2022 (3.0%) but still remains among the largest falls we have seen since comparable records began in 2001.

The increasing difference between nominal and real growth rates is because of increasing consumer price inflation, including owner occupiers' housing costs (CPIH). For the three months of June to August 2022, CPIH was an average of 8.5%. Figure 3 shows a comparison of monthly real total and regular pay growth rates and monthly inflation.

Our recommended measure of inflation is CPIH. However, we also publish supplementary real earnings tables using the Consumer Prices Index (CPI) excluding owner occupiers' housing costs. Using CPI real earnings, in June to August 2022, total pay fell on the year at 3.4%, compared with a sightly larger fall of 3.6% in May to July 2022. Regular pay fell on the year at 4.0%. This is slightly smaller than the record fall we saw in April to June 2022 (4.1%) but still remains among the largest falls we have seen since comparable records began in 2001.

The 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.

Sector and industry

Average regular pay growth was 6.2% for the private sector in June to August 2022, and 2.2% for the public sector; this is the largest growth seen for the private sector outside of the pandemic period. As with May to July 2022, this is the largest difference we have seen between the private sector and public sector outside of the height of the pandemic period (Figure 4).

In June to August 2022, the wholesaling, retailing, hotels and restaurants sector saw the largest regular growth rate at 7.4%, followed by the finance and business services sector at 5.9% (Figure 5). The wholesaling, retailing, hotels and restaurants sector includes the accommodation and food industry, which had the highest proportion of employees on furlough during June to August 2021. Therefore, the growth rate of 7.1% for accommodation and food may still have a minimal base effect.

Interpreting average earnings - base and compositional effects

Interpreting average earnings data over the last year has been difficult. Our How COVID-19 has impacted the Average Weekly Earnings data blog post 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. More information on base effects can be found in the May 2022 edition of this bulletin.

The compositional 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 Section 6: Measuring the data. 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. Our How furlough and changes in the employee workforce have affected earnings growth during the coronavirus (COVID-19) pandemic, UK: 2020 to 2021 article looks in more detail at the impact of compositional effects on wage growth.

More about economy, business and jobs

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4. Average weekly earnings data

Average weekly earnings
Dataset EARN01 | Released 11 October 2022
Headline estimates of earnings growth in Great Britain (seasonally adjusted).

Average weekly earnings by sector
Dataset EARN02 | Released 11 October 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 11 October 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 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 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. 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

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 80%. 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 our accompanying dataset EARN02) divided by the Consumer Prices Index including owner occupiers' housing costs (CPIH), which is 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.

This month, we released a new dataset (X09) on real average weekly earnings, using Consumer Price Inflation (CPI) for the whole economy, for both total and regular pay. Our recommended measure of consumer price inflation is CPIH, and our headline estimates using this measure are found in our accompanying dataset EARN01. These data have been compiled using the CPI as a supplementary dataset to view alongside the headline estimates produced using the CPIH.

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 2022, when there were very large bonus payments. 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 February 2007 and February 2008.

Compositional effect

Following the initial impact of the 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.

We recently published an article on How furlough and changes in the employee workforce have affected earnings growth during the coronavirus (COVID-19) pandemic, UK: 2020 to 2021. This article looks in more detail at the impact of compositional effects on wage growth.

More information on the compositional effect on the data is available in the Measuring the data section of the May 2022 edition of this bulletin.

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

More information on how labour market data sources are affected by the coronavirus pandemic and the challenges we have faced in producing estimates at this time can be found in our Coronavirus and the effects on UK labour market statistics article.

Our Comparison of labour market data sources methodology 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 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.

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9. Cite this statistical bulletin

Office for National Statistics (ONS), released 11 October 2022, ONS website, statistical bulletin, Average weekly earnings in Great Britain: October 2022

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Contact details for this Statistical bulletin

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