Average weekly earnings in Great Britain: July 2022

• 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

• Growth in average total pay (including bonuses) was 6.2%, and growth in regular pay (excluding bonuses) was 4.3% among employees in March to May 2022.

• In real terms (adjusted for inflation) in March to May 2022, growth in total and regular pay both fell on the year, at 0.9% for total pay and 2.8% for regular pay; this was a record fall for regular pay.

• Average total pay growth for the private sector was 7.2% in March to May 2022, and for the public sector it was 1.5%.

• The finance and business services sector and construction sector showed the largest growth rates at 8.2% and 8.1%, respectively, partly because of strong bonus payments.

• Note, we are comparing the latest period with a period where certain sectors (accommodation and food service activities, and wholesale and retail) had employees on furlough as a result of the winter 2020 to 2021 lockdown. Therefore a small amount of base effect will be present for these sectors but not to the degree we saw when comparing with periods at the start of the coronavirus (COVID-19) pandemic.

Average weekly earnings were estimated at £601 for total pay, and £565 for regular pay, in May 2022. Figure 1 shows that average weekly earnings have steadily increased, with the exception of the early months of the coronavirus (COVID-19) pandemic.

The rate of annual pay growth for total pay was 6.2%, and the annual pay growth for regular pay was 4.3%, in March to May 2022. Increasing regular pay and high bonus payments, particularly in March 2022, meant that total pay growth has remained strong.

After a period of strong bonus payments, May 2022 has returned to a bonus level we previously saw in early 2021. Since August 2021 we have seen strong bonus payments, and in particular in March 2022 when the non-seasonally adjusted bonus payment was extremely high. The largest bonus payments are in the finance and business services sector.

Note, we are comparing the latest period with a period where certain sectors (accommodation and food service activities, and wholesale and retail) had employees on furlough as a result of the winter 2020 to 2021 lockdown. Therefore a small amount of base effect will be present for these sectors but not to the degree we saw when comparing with periods at the start of the coronavirus (COVID-19) pandemic.

In real terms (adjusted for inflation), in March to May 2022, total pay fell on the year at 0.9% – a fall on the year was last seen in mid-2020 which was when the data were affected by furlough. Regular pay fell on the year at 2.8%, which is a record fall.

The increasing difference between nominal and real growth rates in recent months is because of increasing consumer price inflation, including owner occupiers’ housing costs (CPIH). For the three months of March to May 2022, CPIH was an average of 7.3%. Figure 3 shows a comparison of monthly real total, regular pay growth rates and monthly inflation.

The bulletin Earnings and employment from Pay As You Earn Real Time Information, UK: July 2022 also provides additional insights of 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 is also provided, although subject to revisions.

Sector and industry

Average total pay growth for the private sector was 7.2% in March to May 2022, while for the public sector it was 1.5% (Figure 4). Private sector total pay growth rate, although down slightly on the previous periods, is still high. Such strong growth rates have only been seen during mid-2021, when the growth rates were affected by base effects, and in December 2006 to February 2007. Public sector total pay growth was last lower than 1.5% in April to June 2017 when it was 1.3%. The difference in total pay growth where the private sector is higher than the public sector is among the largest we have seen, the previous time being mid-2021, but this was when the data were being strongly affected by base effect. This is driven by stronger regular pay growth and higher bonus payments in the private sector.

In March to May 2022, the finance and business services sector and construction sector had the largest growth rates at 8.2% and 8.1%, respectively, partly because of strong bonus payments (Figure 5). Wholesaling, retailing, hotels and restaurants saw a growth rate of 7.6% in March to May 2022. This sector includes the accommodation and food industry, which had the highest proportion of employees on furlough during March to May 2021. Therefore, the growth rate of 14.2% for accommodation and food will be affected by base effect.

Interpreting average earnings – base and compositional effects

Interpreting average earnings data over the last year has been difficult. In July 2021, we published a blog post: How COVID-19 has impacted the Average Weekly Earnings data, which 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 pandemic we have had differing scenarios that have affected the base effect; for more information on base effects, see our previous release.

The compositional effect is where pay growth has been affected by a changing composition of employee jobs, which during the coronavirus pandemic had increased average pay. It needs to be considered when interpreting average pay growth, as explained in Section 6: Measuring the data. The latest data show that the composition effect is now at more normal levels, and we are no longer observing the excessive levels we saw during periods of the coronavirus pandemic in 2020 and 2021. We recently published an article looking at How furlough and changes in the employee workforce have affected earnings growth during the conronavirus (COVID-19) pandemic, UK, 2020 to 2021, which looks in more detail at the impact of compositional effects on wage growth.

Average Weekly Earnings (AWE)

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 bulletin titled Earnings and employment from Pay As You Earn Real Time Information, UK: March 2022.

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 any redundancy payments that are made through payroll. Further detail is provided in our methodology titled Comparison of labour market sources, published 11 December 2020.

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.

This section provides more detail around the methodology of the survey. Further information on this is available in the Average weekly earnings quality and methodology information (QMI).

The survey response rate was 81%; this was slightly lower than the 83% target in the months prior to the coronavirus (COVID-19) pandemic.

Real earnings

The real Average Weekly Earnings (AWE) is calculated as the non-seasonally adjusted AWE (shown in Table EARN02) divided by the Consumer Prices Index including owner occupiers’ housing costs (CPIH), our preferred measure of consumer price inflation (series identifier L522). The ratio is then referenced as an index with 2015 equals 100, and seasonally adjusted.

This month, we have release a new dataset (X09) on Real Average Weekly Earnings using Consumer Price Inflation (CPI) for the whole economy, for both total and regular pay. Our recommended measure of consumer price inflation is the Consumer Prices Index including owner occupiers’ housing costs (CPIH), and our headline estimates using this measure are found in EARN01. These data have been compiled using the CPI as a supplementary dataset to view alongside the headline estimates produced using the CPIH.

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 and total pay. We saw this in March 2022 when there were very large bonus payments, and 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 back in February 2007 and February 2008.

Compositional effect

Following the initial impact of the coronavirus (COVID-19) 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.

We recently published an article looking at How furlough and changes in the employee workforce have affected earnings growth during the conronavirus (COVID-19) pandemic, UK, 2020 to 2021. This article looks in more detail at the impact of compositional effects on wage growth.

More information on the compositional effect on the data is available in the the Measuring the data section of the May 2022 release.

Sampling variability for average weekly earnings single-month growth rates in percentage points is also available in the April 2021 edition of this release.

For more information on how labour market data sources are affected by the coronavirus pandemic, see our article titled Coronavirus and the effects on UK labour market statistics, published 6 May 2020. This article details some of the challenges that we have faced in producing estimates at this time.

You can also view our methodology titled Comparison of labour market data sources, published 11 December 2020, which discusses some of the main differences between our data sources.

More information on measuring the data is available in the April 2021 edition of this release.

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, and where practical, 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 the April 2021 edition of this release, in our methodology titled A guide to labour market statistics and in our methodology titled Income and earnings statistics guide and the The Government Statistical Service Income and earnings interactive dashboard.