Average weekly earnings in Great Britain: September 2023

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

• Labour market overview

• Employment in the UK

• Vacancies and jobs in the UK

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

• In May to July 2023, annual growth in regular pay (excluding bonuses) was 7.8%, the same as the previous three-month period and the highest regular annual growth rate since comparable records began in 2001.

• Annual growth in employees’ average total pay (including bonuses) was 8.5% in May to July 2023; this total growth rate is affected by the NHS and civil service one-off payments made in June and July 2023.

• In May to July 2023, annual growth in real terms (adjusted for inflation using Consumer Prices Index including owner occupiers’ housing costs (CPIH)) for total pay rose on the year by 1.2% and for regular pay rose on the year by 0.6%.

• Annual average regular pay growth for the public sector was 6.6% in May to July 2023 and is the highest regular annual growth rate since comparable records began in 2001; for the private sector this was 8.1% and one of 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 9.5%, followed by the manufacturing sector at 8.1%; this is one of the highest annual regular growth rates for the manufacturing sector since comparable records began in 2001.

Average weekly earnings (AWE) were estimated at £664 for total pay and £617 for regular pay in July 2023. Figure 1 shows that average weekly earnings have steadily increased, with the exception of the early months of the coronavirus (COVID-19) pandemic.

In May to July 2023, the annual growth for regular pay (excluding bonuses) was 7.8%. This is the same as the previous three-month period and the highest annual growth rate since comparable records began in 2001.

Annual growth in employees’ average total pay (including bonuses) was 8.5% in May to July 2023. This is the largest annual growth rate seen outside the coronavirus pandemic period. However, this total pay annual growth rate is affected by the NHS and civil service one-off non-consolidated payments made in June and July 2023. See the sector and industry section for further details.

In real terms (adjusted for inflation using Consumer Prices Index including owner occupiers’ housing costs (CPIH)), in May to July 2023, total real pay rose by 1.2% on the year. It was last higher in January to March 2022 when it was 1.4%. Regular real pay rose by 0.6% on the year; it was last higher in August to October 2021 when it rose by 1.0%.

Given higher Consumer Prices Index including owner occupiers’ housing costs (CPIH) 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 May to July 2023, CPIH was an average of 7.2%.

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 May to July 2023, total pay rose by 0.6% on the year and regular pay growth was 0.0% 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.

Sector and industry

Annual average regular pay growth for the public sector was 6.6% in May to July 2023 and the highest regular pay annual growth rate since comparable records began in 2001 (Figure 4). For the private sector this was 8.1% and 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 7.6% in May to July 2023. For the public sector, this was 12.2% and the highest total pay annual growth rate since comparable records began in 2001. However, this is affected by the NHS and civil service one-off non-consolidated payments made in June and July 2023.

In June 2023, the NHS pay deal in England was announced. This set out that NHS workers were to be given a pay award for 2023 to 2024 and two one-off non-consolidated bonus pay awards. In addition, the civil service announced a one-off non-consolidated pay award for 2023 to 2024, which was mainly paid out in July 2023. This, alongside the NHS pay deal in June 2023, will account for a large bonus being present in total pay in June 2023 for the health and social industry and the public sector, and in July 2023 for the public administration industry and the public sector. These all show a spike in bonus payments, which has never been seen before. The 2023 to 2024 NHS pay award arrears are also collected but our headline estimates exclude arrears payments.

AWE estimates for the latest month are published on a provisional basis and finalised the following month, as we receive more or updated survey returns from businesses (referred to as revisions). June 2023 saw slightly larger than usual revisions for the public sector, because of receiving updated or late data after the provisional publication and this reflects the pay deals for the NHS being implemented. This is also likely to occur for July 2023, because of the pay deals for the majority of the civil service being implemented. See the Measuring the data section for further details.

In May to July 2023, the finance and business services sector saw the largest annual regular pay growth rate at 9.5%. This is the largest we have seen outside of the coronavirus pandemic period. The manufacturing sector followed at 8.1%. This is one of the highest annual growth rates we have seen for the manufacturing sector since comparable records began in 2001 (Figure 5).

Average Weekly Earnings (AWE)

As explained in Section 2 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 July 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 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.

Annually, we review the seasonal adjustment parameters and open up the whole time series for revision.

Seasonal adjustment changes this month

In line with international guidance, the seasonal adjustment process has been reviewed this month, with all periods in the AWE series open to revision. This is an annual process, as outlined in our Average weekly earnings QMI. The review leads 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 Revisions Policy in our Average weekly earnings QMI).

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 (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. 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.

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.

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