Average weekly earnings in Great Britain: August 2020

Estimates of growth in earnings for employees before tax and other deductions from pay.

Nid hwn yw'r datganiad diweddaraf. Gweld y datganiad diweddaraf

11 August 2020

The effect of the coronavirus (COVID-19) pandemic on our capacity means we have reviewed the existing labour market releases and will be suspending some publications.

This will protect the delivery and quality of our remaining labour market outputs as well as ensuring we can respond to new demands as a direct result of the coronavirus. More details about the impact on labour market outputs can be found in our statement.

This is an accredited National Statistic. Click for information about types of official statistics.

Cyswllt:
Email Roger Smith

Dyddiad y datganiad:
11 August 2020

Cyhoeddiad nesaf:
15 September 2020

1. Other pages in this release

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

Nôl i'r tabl cynnwys

2. Main points for April to June 2020

  • Employee pay growth declined further in June following falls in April and May; growth has been affected by lower pay for furloughed employees since March, and reduced bonuses; nominal regular pay growth for April to June 2020 is negative for the first time since records began in 2001.

  • Growth in average total pay (including bonuses) among employees declined in April to June to negative 1.2%, with annual growth in bonus payments at negative 19.4%; regular pay (excluding bonuses) slowed to negative 0.2%.

  • Single-month growth in average weekly earnings for June 2020 was negative 1.5% for total pay and negative 0.3% for regular pay.

  • For the sectors of wholesaling, retailing, hotels and restaurants, and construction, where the highest percentage of employees returned to work from furlough, there is a slight improvement in pay growth for June 2020 compared with April and May; weaker pay growth in some higher-paying sectors negates this at whole economy level.

  • In real terms, total pay growth for April to June was negative 2.0% (that is, nominal total pay grew more slowly than inflation); regular pay growth was negative 1.0%.

  • Pay estimates are based on all employees on company payrolls, including those who have been furloughed under the Coronavirus Job Retention Scheme (CJRS).

!

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.

Nôl i'r tabl cynnwys

3. Analysis of average weekly earnings

In April to June 2020, the rate of annual pay growth stood at negative 1.2% for total pay and negative 0.2% for regular pay.

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 has slowed sharply.

In real terms, pay is now growing at a slower rate than inflation, at negative 2.0% for total pay, the lowest rate since January to March 2012. Regular pay growth in real terms is also negative, at negative 1.0%. The difference between the two measures is because of subdued bonuses, which fell by an average negative 19.4% (in nominal terms) in the three months April to June 2020.

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: August 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 at 1.1% (seasonally adjusted) 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 June 2020, average regular pay, before tax and other deductions, for employees in Great Britain was estimated at £504 per week in nominal terms. The figure in real terms (constant 2015 prices) fell to £465 per week in June, after reaching £473 per week in December 2019, with pay in real terms back at the same level as it was in December 2018.

Between April to June 2019 and April to June 2020, average pay growth varied by industry sector (Figure 3). The public sector saw the highest estimated growth, at 4.1% for regular pay. Negative growth was seen in the construction sector, estimated at negative 8.7%, the wholesaling, retailing, hotels and restaurants sector, estimated at negative 3.9%, and the manufacturing sector, estimated at negative 2.5%.

Figure 3 also includes estimates of annual growth in regular pay for the single month of June 2020. For the construction, manufacturing, and the wholesaling, retailing, hotels and restaurants sectors, the June 2020 estimate of annual growth shows sign of improvement when compared with April to June 2020.

The 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 22% of employees being furloughed during 15 June to 28 June 2020, with the construction sector reporting the largest proportion of the workforce returning from furlough during that period, at 21%.

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.

Nôl i'r tabl cynnwys

4. Average weekly earnings data

Average weekly earnings
Dataset EARN01 | Released 11 August 2020 Headline estimates of earnings growth in Great Britain (seasonally adjusted).

Average weekly earnings by sector
Dataset EARN02 | Released 11 August 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 11 August 2020 Estimates of earnings in Great Britain broken down by detailed industrial sector (not seasonally adjusted).

Nôl i'r tabl cynnwys

5. Glossary

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).

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.

Nôl i'r tabl cynnwys

6. Measuring the data

Coronavirus

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.

Sampling variability

Nôl i'r tabl cynnwys

7. Strengths and limitations

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.

Further information is available in A guide to labour market statistics and A guide to sources of data on earnings and income.

Nôl i'r tabl cynnwys

Manylion cyswllt ar gyfer y Bwletin ystadegol

Roger Smith
labour.market@ons.gov.uk
Ffôn: +44 (0)1633 456120