Other commentary from the latest labour market data can be found on the following pages:
Annual growth in average employee pay has continued to increase, however this is driven by compositional effects of a fall in the number and proportion of lower-paid employee jobs and because the latest month is now compared with April 2020 when earnings were first affected by the coronavirus (COVID-19) pandemic (the base effect).
Growth in average total pay (including bonuses) and regular pay (excluding bonuses) among employees was 5.6% for the three months February to April 2021.
Current average pay growth rates are being affected upwards by a fall in the number and proportion of lower-paid jobs compared with before the coronavirus pandemic; it is estimated the net impact of recent job losses accounts for approximately 1.5% of average pay growth.
Additionally, pay growth is being affected by the base effect where the latest month is now compared with April 2020 when earnings were first affected by the coronavirus pandemic; April 2021 saw a growth rate of 8.4% for total pay and 7.3% for regular pay which feeds into the strong 5.6% average growth rate for February to April 2021.
The rate of annual pay growth for total and regular pay was 5.6% in February to April 2021. This strong growth is being affected by compositional and base effects. As such, average pay growth rates have been affected upwards by a fall in the number and proportion of lower-paid jobs compared with before the coronavirus (COVID-19) pandemic and by the base effect where the latest month is now compared with the low base period (April 2020) when earnings were first impacted by the coronavirus pandemic.
It is estimated the net impact of recent job losses accounts for approximately 1.5% of annual pay growth (the compositional effect is discussed in more detail in Measuring the data).
The total and regular pay growth are now similar. Last month regular pay growth was higher (4.6%) than total pay growth (4.3%), likely because of some bonus payments being paid in April rather than March. However, the strong April 2021 bonus growth rate will also be affected by the base effect.
In real terms (adjusted for inflation), total and regular pay are now growing at a faster rate than inflation, at positive 4.4%. Average real pay growth rates are also affected by the compositional and base effects in the same way as nominal pay.
This strong pay growth has been affected by a changing composition of employee jobs, which naturally increases average pay and needs to be borne in mind when interpreting average pay growth - this is explained further in Measuring the data and shown in Figure 2.
Latest data show the compositional effect is approximately 2.5% (Figure 2), compared with approximately 1% before the pandemic affected the workforce. To take into account the compositional effect present before the pandemic, this 1% is subtracted from the latest compositional effect of 2.5% to show that the net impact of recent job losses is to increase the estimate of average pay by approximately 1.5%.
Base effect and furlough
In addition to the compositional effect, pay growth is being affected by the base effect where the latest month is now compared with the low base period (April 2020) when earnings were first affected by the coronavirus pandemic and negative pay growth rates were seen for several months. Average total pay growth for April 2021 compared with April 2020 was 8.4% for total pay and 7.3% for regular pay which feeds into the strong 5.6% average growth for February to April 2021.
Looking at levels before the coronavirus pandemic we can compare April 2021 with April 2019 where average total pay growth was 7.1%, so lower than the growth when comparing with April 2020 (8.4%). For regular pay growth comparison with both periods was similar, at 7.2% when comparing April 2021 with April 2019 and 7.3% when comparing with April 2020.
In addition and discussed in previous releases, the pattern of pay growth is affected by the proportion of employees who are furloughed, and the extent to which employees have topped up payments received for those employees under the Coronavirus Job Retention Scheme (CJRS). We have published estimates indicating that 21.8% of the workforce were on furlough leave at the end of April 2020, compared with 10% of employees being furloughed in the last two weeks of April 2021. The lower proportion of workers on furlough has contributed towards the strong growth when comparing pay in April 2021 with April 2020.
Sector and industry
Average total pay growth for the private sector was 5.8% in February to April 2021, whereas for the public sector it was 5.0%. Prior to this month the public sector had stronger growth, but this month the year-on-year comparison with a low base period has meant the private sector now shows stronger growth.
Over the past year all sectors saw positive growth, but within these sectors some industry groups have seen negative pay growth, for example, accommodation and food service activities (negative 2.2%).Nôl i'r tabl cynnwys
Average weekly earnings
Dataset EARN01 | Released 15 June 2021
Headline estimates of earnings growth in Great Britain (seasonally adjusted).
Average weekly earnings by sector
Dataset EARN02 | Released 15 June 2021
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 15 June 2021
Estimates of earnings in Great Britain broken down by detailed industrial sector (not seasonally adjusted).
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 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).
Estimates of pay growth are also published using HM Revenue and Customs' (HMRC's) data in Earnings and employment from Pay As You Earn Real Time Information, UK: May 2021.
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 a Comparison of labour market sources, published 11 December 2020.
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
The survey response rate was 78%, only slightly lower than the 83% target in more typical months.
The change in pay growth has been affected by a changing composition of employee jobs, where we have seen a fall in the number and proportion of lower-paid employee jobs. This changing composition naturally increases average pay and needs to be borne 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.
As such we can consider the compositional effects from three angles:
Labour Force Survey data highlight a decrease in the number of part-time jobs (which have lower pay) and jobs in lower-paying sectors
changing distribution of jobs between industries, provided in Dataset Earn02, impacting average pay growth by 0.7%
HM Revenue and Customs (HMRC) Earnings and employment from Pay As You Earn Real Time Information, UK: November 2020 inflows and outflows data indicate a fall in new entrants to the labour market, who are lower-paid than average
These three compositional analyses are not mutually exclusive, and do not necessarily consider all the compositional effects that impact average pay, but they do indicate that a proportion of estimated pay growth is because of recent changes in employee job profiles. We plan to conduct more detailed analysis on the impact of compositional factors.
More information on the compositional effect the data is available in our previous release.
Sampling variability for average weekly earnings single month growth rates in percentage points is available in our previous release.
For more information on how labour market data sources are affected by the coronavirus (COVID-19) pandemic, see the article published on 6 May 2020, which details some of the challenges that we have faced in producing estimates at this time.
An article published 11 December 2020 compares our labour market data sources and discusses some of the main differences.
More information on measuring the data is available in our previous release.
Office for Statistics Regulation (OSR) publishing review
- The Office for Statistics Regulation (OSR) is undertaking a review into whether the 9:30am release time stated in the Code of Practice for Statistics meets the needs of users. During the pandemic, exemptions were granted to allow the release of market sensitive statistics at 7:00am. OSR welcomes views about the release time of official statistics by Friday 25th June 2021, please send comments to: firstname.lastname@example.org.
Please send any comments about the standard release time to the project team.Nôl i'r tabl cynnwys
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