Other commentary from the latest labour market data can be found on the following pages:Back to table of contents
The rate of decline in employee pay growth slowed in July 2020 following strong falls in the previous three months; growth has been affected by lower pay for furloughed employees, and reduced bonuses; with some employees returning to work, nominal regular pay growth is now positive for May to July 2020 after being negative in the three months to June 2020.
Growth in average total pay (including bonuses) among employees was negative 1.0% in May to July, with annual growth in bonus payments at negative 21.4%; however, regular pay (excluding bonuses) was positive at 0.2%.
Single-month growth in average weekly earnings for July 2020 was negative 0.1% for total pay but was positive at 0.9% 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 is a slight improvement in pay growth for July 2020.
In real terms, total pay growth for May to July was negative 1.8% (that is, nominal total pay grew more slowly than inflation); regular pay growth was negative 0.7%.
Pay estimates are based on all employees on company payrolls, including those who have been furloughed under the Coronavirus Job Retention Scheme (CJRS).
In May to July 2020, the rate of annual pay growth stood at negative 1.0% for total pay but positive 0.2% for regular pay. The difference between the two measures is because of subdued bonuses, which fell by an average negative 21.4% (in nominal terms) in the three months May to July 2020.
The rate of growth has been slowing since April to June 2019, when it stood at 4.0% for total pay and 3.9% for regular pay, the highest nominal pay growth rates since 2008. It had slowed to 2.9% in December 2019 to February 2020 immediately prior to the coronavirus (COVID-19) pandemic, since when it slowed sharply before stabilising in May to July 2020.
In real terms, pay is now growing at a slower rate than inflation, at negative 1.8% for total pay. Regular pay growth in real terms is also negative, at negative 0.7%.
The earnings estimates are not just a measure of pay rises as they also reflect changes in the number of paid hours worked and changes in the structure of the workforce, for example, more high-paid jobs would have an upward effect on earnings growth rates. This Average Weekly Earnings series is able to assess whether changes in number of jobs in specific industries has an impact, and Table Earn02 highlights no notable impact from this. A fuller understanding of 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's (HMRC's) Earnings and employment from Pay As You Earn Real Time Information, UK: September 2020.
The Pay As You Earn (PAYE) Real Time Information (RTI) publication also provides additional insights via its estimate of growth in median pay, which is higher than the estimate of change in mean earnings in this Average Weekly Earnings series. The lower percentage figure for mean pay growth is driven by more downward pressure on pay among both higher- and lower-paid employees, with less impact on those in the middle. Reduced pay for furloughed staff is more likely to impact lower-paid employees, and reduced bonuses have the most impact among the highest paid.
Pay in real terms is still below its level before the 2008 economic downturn.
For July 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) fell to £469 per week in July, after reaching £473 per week in December 2019, with pay in real terms back at the same level as it was in May 2019.
Between May to July 2019 and May to July 2020, average pay growth varied by industry sector (Figure 3). The public sector saw the highest estimated growth, at 4.5% for regular pay. Negative growth was seen in the construction sector, estimated at negative 7.5%, the wholesaling, retailing, hotels and restaurants sector, estimated at negative 3.2%, and the manufacturing sector, estimated at negative 1.7%.
Figure 3 also includes estimates of annual growth in regular pay for the single month of July 2020. For the construction, manufacturing, and the wholesaling, retailing, hotels and restaurants sectors, the July 2020 estimate of annual growth shows sign of improvement when compared with May to July 2020.
This 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 14% of employees being furloughed during 13 July to 26 July 2020, with the arts, entertainment and recreation sector and the accommodation and food service activities sector having the highest proportions of furloughed workers, at 46% and 31% respectively. These industries also showed the highest percentages of employees returning to work in the past two weeks.
The July Average Weekly Earnings publication included analysis of changes in pay within lower-level industries, noting that pay has fallen most strongly in the lowest-paying industries.Back to table of contents
Average weekly earnings
Dataset EARN01 | Released 15 September 2020
Headline estimates of earnings growth in Great Britain (seasonally adjusted).
Average weekly earnings by sector
Dataset EARN02 | Released 15 September 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 15 September 2020
Estimates of earnings in Great Britain broken down by detailed industrial sector (not seasonally adjusted).
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).
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.Back to table of contents
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. In April, additional data validation was conducted, and information gathered from responding companies was used 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.
|Including bonuses |
(Jan to Apr) ¹ ²
|Including bonuses |
(May to Dec) ¹ ²
|Whole Economy||± 0.9||± 0.5||± 0.5|
|Private Sector||± 0.9||± 0.6||± 0.5|
|Public Sector||± 0.9||± 0.5||± 0.5|
|Services||± 1.0||± 0.6||± 0.5|
|Finance and Business Services||± 2.8||± 1.6||± 1.4|
|Public Sector excluding Financial Services||± 0.7||± 0.5||± 0.5|
|Manufacturing||± 1.1||± 1.0||± 0.9|
|Construction||± 2.5||± 2.6||± 2.4|
|Wholesale & retail, hotels & restaurants||± 2.1||± 1.7||± 1.5|
Download this table Table 1: Sampling variability for average weekly earnings single month growth rates in percentage points.xls .csv
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.Back to table of contents
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