Pay growth between April 2015 and April 2016 was fastest at the bottom end of the earnings scale, according to the 2016 Annual Survey of Hours and Earnings (ASHE), published today by the Office for National Statistics (ONS).
Commenting on the findings, ONS statistician James Scruton said:
“The reason for growth being fastest at the bottom end of the pay scale is likely to be the result of the introduction of the National Living Wage shortly before the mid-April 2016 pay period covered by the survey, as we saw a definite boost in pay for those previously paid just below the new rate of £7.20 an hour. We saw a similar pattern back in 1999 when the National Minimum Wage came into force.”
When looking at weekly pay across the earnings distribution, that is, ranking all employees by their weekly wage received from lowest to highest, the strongest growth in 2016 was among the lowest earners. For full-time employees the weekly wage below which the lowest earning 5% of workers were paid (the fifth percentile”) was 6.2% higher in 2016 than in 2015. In contrast, the weekly wage above which the highest earning 5% were paid (the “95th percentile”) was just 2.5% higher. This is closer to the growth in the median weekly pay, which was 2.2%.
While the median weekly pay for full-time employees grew by 2.2%, the median weekly pay for part-time staff, generally those working 30 hours per week or less, increased by 6.6%. As for full-time employees, the weekly pay distribution for part-time employees showed stronger growth for the lowest earners than for the highest earners. Generally, though, pay for part-time employees increased more strongly at all points of the pay distribution than that for full-time employees.
ASHE is also the main measure of the gender pay gap. The headline figure – the difference between men’s and women’s full-time median hourly pay excluding overtime – fell from a revised 9.6% in 2015 to 9.4% in 2016. This is the lowest it has been since the series began in 1997, when the gap was 17.4%, though the gap has narrowed relatively little in recent years.
For higher earners, the gap between men and women for full-time employees has remained largely consistent over time, fluctuating around 20%. For the lowest earners, however, the gap has narrowed over the long term, to 4.9% in April 2016. This was the largest year-on-year decrease in the gender pay gap for the bottom tenth of earners since records began in 1997. This is likely to be connected to the introduction of the National Living Wage, as women tend to work in lower-paid occupations.
London and the South East have consistently topped the list of the highest-earning regions since the series began in 1997. However, below that, other parts of the country have seen more change in their relative rankings, with Scotland up from sixth in 1997 to third in 2016 and the South West up from tenth to sixth. The biggest rank decreases were the East Midlands, from seventh to twelfth, and the North West, from fourth to seventh. At the local authority level, the highest earnings for full-timers in 2016 were for those working in the City of London (£958 a week) and the lowest were for those working in Rossendale (£392). When looking at earnings by the place where the employee lives, those living in the City of London also had highest median gross weekly earnings (£1,034), while those living in Craven had the lowest (£413).
The ONS has published a statistical bulletin on the Annual Survey of Hours and Earnings. There is also a statistical bulletin on the number of workers on low pay; an article analysing the distribution of earnings across the UK; and another giving analysis of factors affecting earnings.
The National Living Wage was introduced on 1 April 2016, at a rate of £7.20 an hour for employees aged 25 or over. Since the previous year’s survey there have also been changes to National Minimum Wage rates for other age groups.
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