Earnings and employment from Pay As You Earn Real Time Information, UK: October 2022

• Early estimates for September 2022 indicate that the number of payrolled employees rose by 2.5% compared with September 2021, a rise of 714,000 employees; the number of payrolled employees was up by 2.5% since February 2020, a rise of 730,000.

• Payrolled employment increased by 69,000 employees (0.2%) in September 2022 when compared with August 2022, though this should be treated as a provisional estimate and is likely to be revised when more data are received next month.

• UK payrolled employee growth for August 2022 compared with July 2022 has been revised from an increase of 71,000 reported in the last bulletin to an increase of 31,000, because of the incorporation of additional real time information (RTI) submissions into the statistics, which takes place every publication and reduces the need for imputation.

• Early estimates for September 2022 indicate that median monthly pay increased by 6.3% compared with September 2021, and increased by 14.6% when compared with February 2020.

• All age groups saw an increase in payrolled employees between September 2021 and September 2022; there was an increase of 165,000 payrolled employees aged under 25 years.

• For Nomenclature of Territorial Units for Statistics (NUTS) 3 regions, annual growth in payrolled employees in September 2022 was the highest in Tower Hamlets, with a rise of 7.2%, and was lowest in East Dunbartonshire, West Dunbartonshire and Helensburgh and Lomond, with a rise of 0.6%.

• The increase in payrolled employees between September 2021 and September 2022 was largest in the accommodation and food service activities sector (a rise of 125,000 employees) and smallest in the construction sector (a rise of 3,000).

• Annual growth in median pay for employees in September 2022 was highest in the health and social work sector (an increase of 11.3%), and lowest in the arts, entertainment and recreation sector (an increase of 2.5%).

About the data in this release

Early estimates for September 2022 are provided to give an indication of the likely level of employees as well as median pay in the latest period. These early estimates are, on average, based on around 85% of information being available. They are of lower quality and will be subject to revision in next month's release when between 98% to 99% of data will be available. This work was introduced in April 2020 in response to the coronavirus (COVID-19) pandemic and methods will continue to be developed. A revisions triangle is available for employees and median pay at the UK level.

Statistics in this release are based on people who are employed in at least one job paid through Pay As You Earn (PAYE), and monthly estimates reflect the average of such people for each day of the calendar month. This follows the introduction of a new methodology for monthly earnings and employment estimates in December 2019, designed to better align with international guidelines for labour market statistics. This differs from the methodology used before December 2019, which produced statistics based on the total number of people paid in a particular time period.

Early estimates for September 2022 indicate that there were 29.7 million payrolled employees (Figure 1), a rise of 2.5% compared with the same period of the previous year. This means a rise of 714,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees increased by 0.2% in September 2022, which is equivalent to 69,000 people. The early estimate for September 2022 shows that the annual growth rate continues to fall, but still shows relatively high growth. This fall in the growth rate will be partially caused by the comparison against the increase in employee numbers from March 2021, the first substantial increase since January 2020.

Note, this monthly growth of 69,000 should be treated as provisional, because it is based on an early estimate of September 2022 employees. More information on revisions can be found in Section 11: Strengths and limitations.

When comparing the number of payrolled employees in August 2022 with the previous month, the number increased by 0.1%. This is revised down from the early estimate of a 0.2% increase reported in our previous bulletin, Earnings and employment from Pay As You Earn Real Time Information, UK: September 2022.

Annual growth in the number of employees remained broadly within a range of 1.0% to 1.5% from mid-2016 until 2019. Growth rates before mid-2016 were higher than 1.5% (Figure 2).

Starting around early 2019, employee growth began a slight downward trend. However, employee growth slowed more substantially past March 2020, coinciding with the coronavirus (COVID-19) pandemic, becoming negative in April 2020.

At the start of 2021, growth rates began to recover, and remained high as the labour market continued to recover from the effects of the pandemic. Since April 2022, the annual growth rate has been falling, but as previously discussed, this will be partially caused by the comparison with the high growth seen throughout the previous year.

Early estimates for September 2022 indicate that median monthly pay was £2,131, an increase of 6.3% compared with the same period of the previous year.

Following a general trend of increasing pay growth between mid-2015 and mid-2018, pay growth tended to fluctuate around 3.6%, until 2020 when it became negative. This coincided with the coronavirus (COVID-19) pandemic and related economic and policy responses. From June 2020 median pay growth has been positive and is now above pre-coronavirus pandemic (February 2020) levels.

The relatively high level of pay growth between June and December 2020 is partially explained by lower levels of people entering the labour market than usual during that period. This is explored in our August 2020 earnings and employment bulletin and September 2020 earnings and employment bulletin.

While the general trend of pay growth is dominated by those continually employed, the mean pay of people entering the labour market (referred to as inflows) tends to be around 40% lower than mean pay for those continually employed. This means that inflows into payrolled employment tend to bring down average pay and average pay growth. As inflows were relatively low between June and December 2020, this reduced the downward pressure on pay growth, which in turn increased median pay growth.

The high level of pay growth in April 2021 is attributed to the relatively high median pay in April 2021, combined with the suppressed level of median pay in April 2020 at the start of the coronavirus pandemic.

In the three months to August 2022, the 10th percentile of the monthly pay distribution was £695, the 90th percentile was £5,022 and the 99th percentile was £14,346 (Figure 5). This means that:

• 10% of payrolled employees earned equal to or less than £695 per month

• 90% of payrolled employees earned equal to or less than £5,022 per month

• 99% of payrolled employees earned equal to or less than £14,346 per month

The regional figures in this bulletin are based on where employees live and not the location of their place of work. They include data for September 2022, and cover Nomenclature of Territorial Units for Statistics (NUTS): NUTS1, NUTS2, and NUTS3 regions.

While the UK as a whole has experienced moderate, if declining, payrolled employee growth since January 2017, growth within regions has not been even (Figure 6).

Numbers of payrolled employees in the UK for the regions shown in Figure 6 range from 781,000 in Northern Ireland to 4,233,000 in London in September 2022.

All regions are now above pre-coronavirus (COVID-19) (February 2020) levels.

Figure 6: Regional employee growth fell across the UK over 2020 and 2021, but has risen more recently

Percentage change on same month in previous year, seasonally adjusted, UK, January 2017 to September 2022

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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London and Northern Ireland experienced higher growth than the UK average between January 2017 and early 2020, while the North East and Scotland experienced lower growth than the UK overall. Employee numbers within NUTS1, NUTS2, and NUTS3 regions are available in the accompanying datasets.

Over the course of the coronavirus pandemic, all regions' growth rates followed a similar pattern. Growth rapidly declined and became negative in April 2020, but from the middle of 2021 began to recover. As regions have caught up with their pre-coronavirus level these high growth rates have started to fall back to rates seen historically before the pandemic.

Comparing September 2022 with the same period of the previous year for NUTS1 regions, changes in payrolled employees ranged from a 3.8% increase in London to a 1.9% increase in the North West.

Examining NUTS3 regions, East Dunbartonshire, West Dunbartonshire and Helensburgh and Lomond experienced an increase of 0.6% in payrolled employees in comparison with September 2021, and Tower Hamlets experienced an increase of 7.2% (Figure 7).

Figure 7: Growth in payrolled employees varies across the UK

Percentage change on same month in previous year, seasonally adjusted, UK, NUTS3 level, September 2022

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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Median pay across the NUTS3 regions of the UK in September 2022 ranged from £1,789 in Leicester to £3,338 in Wandsworth (Figure 8).

Inner London generally differs from Outer London, with median pay ranging from £2,103 in Enfield to £3,338 in Wandsworth. Median pay in September 2022 for London as a whole was £2,574.

Figure 8: Median pay varies across the UK

Median pay, seasonally adjusted, UK, NUTS3 level, September 2022

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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The industrial sectors in this bulletin are based on the UK Standard Industrial Classification (SIC) codes, as defined by the Office for National Statistics (ONS). These codes have been determined from both the Inter-Departmental Business Register (IDBR) and data from Companies House for each Pay As You Earn (PAYE) enterprise. The findings from the 14 largest sectors are presented. The seven smaller sectors have been removed from the bulletin for presentational purposes, but their estimates are available in the accompanying datasets.

The three largest sectors - wholesale and retail, health and social work, and education - account for around 40% of UK employees. These three sectors combined with administrative and support services, manufacturing, professional, scientific and technical, and accommodation and food service activities account for more than 70% of UK employees.

Since January 2017, employee growth has not been even across sectors (Figure 9). Sectors such as construction, transportation and storage, and information and communication experienced higher growth than the UK average between January 2017 and early 2020. Sectors such as manufacturing, and wholesale and retail experienced lower growth than the UK overall.

All sectors highlighted experienced a decrease in employee growth around April 2020, with the smallest decrease being in health and social work.

Public administration and defence, and health and social work saw early recoveries in their growth rates, as did administrative and support services, and education from early 2021 onwards.

When comparing early estimates for September 2022 with the same period of the previous year, percentage changes in payrolled employees range from positive 0.1% in wholesale and retail to positive 9.2% in arts, entertainment and recreation.

Figure 9: Employee growth has been very different across sectors

Percentage change on same month in previous year, seasonally adjusted, UK, January 2017 to September 2022

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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.xlsx

The increase in payrolled employees between September 2021 and September 2022 was largest in the accommodation and food service activities sector (a rise of 125,000 employees) and smallest in the construction sector (a rise of 3,000 employees).

Median pay in September 2022 across the highlighted sectors ranged from £1,120 in the accommodation and food service activities sector to £3,495 in finance and insurance (Figure 11).

Compared with the same month in the previous year, median pay grew fastest in the health and social work sector (positive 11.3%, Figure 12) and slowest in the arts, entertainment and recreation sector (positive 2.5%). In July 2022 the government accepted recommendations from the independent NHS pay review bodies for over one million NHS staff to receive pay rises. It was also agreed that this would be backdated to April 2022. The high annual growth in the health and social work sector could therefore include this backdated pay rise as it began to be paid out in August and September, and may therefore over-estimate the actual annual pay growth of this sector.

Estimates of mean pay for each sector are available in the accompanying datasets.

The age figures in this bulletin are calculated based on individuals' age at the time they receive a payment.

Of the 29.7 million payrolled employees in the UK in September 2022, 95% are aged 18 to 64 years.

Between September 2021 and September 2022, there was an increase of 165,000 payrolled employees aged under 25 years. During the same period, payrolled employees aged 35 to 49 years increased by 170,000.

Since 2019, the number of payrolled employees aged 65 years and over has increased at a faster rate than the UK as a whole, with employee growth peaking at 10.8% in January 2020 (Figure 14). This higher growth coincides with the phased increase in State Pension age between March 2019 and September 2020, for men and women aged 65 to 66 years. While growth rates fell in this age group during 2020, coinciding with the coronavirus (COVID-19) pandemic, they have now returned to above the UK average.

Conversely, growth in payrolled employees aged under 25 years has undergone long-term decline since 2017. These age groups saw large declines in growth rates during 2020, much steeper than those seen in the UK as a whole. Both groups have since seen positive growth rates, with employee growth peaking in those aged under 18 years at 76.7% in March 2022. However, this growth has declined in recent months.

Figure 14: Employee growth fell more sharply in younger age groups, but has risen more recently

Percentage change on same month in previous year, seasonally adjusted, UK, January 2017 to September 2022

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

Download the data

.xlsx

Median pay in September 2022 ranged from £418 for those aged under 18 years to £2,514 for those aged 35 to 49 years (Figure 15). Overall, median pay is higher in the central age bands, of those studied.

Median monthly pay

Median monthly pay shows what a person in the middle of all employees would earn each month. The median pay is generally considered to be a more accurate reflection of the "average wage" because it discounts the extremes at either end of the scale.

National Minimum Wage and National Living Wage

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be payrolled. There are different rates of minimum wage depending on a worker's age and whether they are an apprentice. The NMW applies to employees aged 16 to 24 years. The government's National Living Wage (NLW) was introduced on 1 April 2016 and applies to employees aged 25 years and over. See current and previous rates for the NMW and NLW on the government website.

Pay As You Earn

Pay As You Earn (PAYE) is the system employers and pension providers use to take Income Tax and National Insurance contributions before they pay wages or pensions to employees and pensioners. It was introduced in 1944 and is now the way most employees pay Income Tax in the UK. This publication relates to employees only and not pensioners.

Data source and collection

The data for this release come from HM Revenue and Customs' (HMRC's) Pay As You Earn (PAYE) Real Time Information (RTI) system. They cover the whole population rather than a sample of people or companies, and they will allow for more detailed estimates of the population. The release is classed as Experimental Statistics as the methodologies used to produce the statistics are still in their development phase. As a result, the series are subject to revisions.

Coverage

This publication covers employees payrolled by employers only. It does not cover self-employment income or income from other sources such as pensions, property rental and investments. Where individuals have multiple sources of income, only income from employers is included.

The figures in this release are for the period July 2014 to September 2022 and are seasonally adjusted.

Upcoming changes

Last month we reported that in our October 2022 release we would be making a change to update the seasonal adjustment model used in the publication and supporting datasets. In updating the model, we have found issues within some of the series preventing the seasonal adjustment model being applied. To ensure consistency throughout the publication we have delayed the update across all series until this issue can be resolved. We hope to implement the updated model in full in future publications.

This month we have removed early estimates of inflows and outflows from the supporting datasets. After investigation we have found these to be subject to higher revisions than other estimates within the publication, and therefore not to the standard of quality necessary to be published. We welcome any feedback on this decision and whether it would be helpful to investigate new methods to give an early estimate of inflows and outflows to RTI.

Please contact us by email if you would like to offer feedback on how the contents can be improved in the future.

Methodology

An accompanying article contains more information on the calendarisation and imputation methodologies used in this bulletin, alongside comparisons with other earnings and employment statistics and possible quality improvements in the future.

Pre-release data

HM Revenue and Customs (HMRC) grants pre-release access to official statistics publications. As this is a joint release, and in accordance with the HMRC policy, pre-release access has been granted to a number of people to enable the preparation of statistical publications and ministerial briefing. Further details, including a list of those granted access to official statistics by HMRC, can be found on their website.

Experimental Statistics status

This is a joint experimental release between HMRC and the Office for National Statistics (ONS). The existing monthly publications produced by the ONS remain the primary National Statistics for the labour market. The intention is that these new statistics will also be updated on a monthly basis.

The release is classed as Experimental Statistics as the methodologies used to produce the statistics are still in their development phase. This does not mean that the statistics are of low quality, but it does signify that the statistics are new and still being developed. As the methodologies are refined and improved, there may be revisions to these statistics.

Rather than waiting until the development work has been completed, the statistics are being published now to involve potential users in developing the statistics. We hope that this encourages users to provide us with their thoughts and suggestions on how useful the statistics are and how we can improve them. You can send us your comments by email.

More information about Experimental Statistics, including when they should be used and the differences between them and National Statistics, is available.

Strengths of the data

As Pay As You Earn (PAYE) Real Time Information (RTI) data cover the whole population, rather than a sample of people or companies, we are able to use these to produce estimates for geographic areas and other more detailed breakdowns of the population. The methods for producing such breakdowns are under development and we expect to include further statistics in a future release. These statistics can help inform decision making across the country. They also have the potential to provide more timely estimates than existing measures.

These statistics also have the potential to replace some of those based on surveys, which could reduce the burden on businesses needing to fill in statistical surveys.

Imputation and revisions

RTI data used in this release are extracted in the weeks following the end of the latest reference month. For some individuals this means payments relating to work done in recent reference months are yet to be received. Rather than wait until all payment returns have been received, we produce timelier measures by imputing the values for missing returns.

For the latest reference month around 15% of the data are imputed. We refer to this as the "flash" or "early" estimate in the bulletin, as this figure is the most subject to revision as payment returns are received and the imputed payments replaced with actual data.

From our July 2022 publication, two changes were made to the imputation model. A seasonal factor was incorporated into the imputation model. The model was also made more responsive to recent changes to the labour market that would affect the likelihood of a payment existing. The latter change in particular should reduce the scale of revisions seen to the "flash" estimate, but cannot eliminate revisions completely.

Earlier months also contain some imputed data. Some payment frequencies mean that we have not received the relevant payment data more than a month after the reference period. Also, in some circumstances, returns might be submitted late. Therefore, earlier months are also subject to revision, but these revisions are likely to be much smaller because the level of imputation is smaller. The proportion of imputed data for a reference month two months before data extraction is around 1% to 2% of the data.

For the majority of months, post-flash revisions will occur in small amounts gradually each month as more submissions are received. However, all RTI submissions must be received before the end of the tax year. Therefore, for months close to the end of the tax year these submissions and associated minor revisions that would have accumulated through the year instead need to be received all at once in the final submissions of the tax year. The months of January and February will be most affected by this and see sharper non-flash revisions at the end of the tax year if the imputed submissions are not received by that point. From July 2022, changes were incorporated into the imputation model to try to control for these seasonal differences, as well as other seasonal factors which might affect whether submissions are received through different points of the year.

The seasonal adjustment model will also update each month as the model is refined on the latest data available. These adjustments will appear as revisions in the seasonally adjusted data, and in the supporting seasonally adjusted revisions triangle.

Starting with the December 2020 publication, we introduced a new revisions policy. For each publication, we incorporate new input data only for the current tax year and the previous tax year. Revisions to estimates can potentially be made for up to the last two years as data can continue to be received, though updates to data outside of the most recent tax year are minimal. Changes to the seasonally adjusted data also occur earlier than this limit, as the seasonal adjustment model is refined. In May of each year, new input data will be incorporated for the whole data time series. The benefit of introducing this revisions policy is that we can use the processing time saved to produce and publish more detailed breakdowns.

Seasonal adjustment

The seasonal adjustment applied in this bulletin follows established best practice. This approach assumes that any seasonal patterns remain broadly consistent over time. If the seasonal pattern changes in strength, this will be represented as greater volatility in the seasonally adjusted figures. Both the seasonal and non-seasonally adjusted datasets are released alongside this bulletin.

Differences compared with the Labour Force Survey and Average Weekly Earnings statistics

Further information about the methodology used and comparisons with the ONS's Labour Force Survey (LFS) and Average Weekly Earnings can be found in our New methods for monthly earnings and employment estimates from Pay As You Earn Real Time Information (PAYE RTI) data: December 2019 article.

The strengths and weaknesses of these sources and other labour market data sources are shown in our Comparison of labour market data sources methodology, including the advantages of new administrative data sources and limitations of some of our published figures.