Average weekly earnings in Great Britain: February 2024

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

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Cyswllt:
Email Nicola White

Dyddiad y datganiad:
13 February 2024

Cyhoeddiad nesaf:
12 March 2024

1. Other pages in this release

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

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2. Main points for October to December 2023

  • Annual growth in regular earnings (excluding bonuses) was 6.2% in October to December 2023, and annual growth in employees' average total earnings (including bonuses) was 5.8% in October to December 2023.

  • Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH)) for total pay rose on the year by 1.4% and for regular pay rose on the year by 1.8% in October to December 2023.

  • Annual average regular earnings growth for the public sector was 5.8% in October to December 2023, which is not as high as it has been in recent periods but remains relatively strong; for the private sector this was 6.2%, with growth last lower than this in May to July 2022 (6.0%).

  • The wholesaling, retailing, hotels and restaurants sector saw the largest annual regular growth rate at 7.2%; the manufacturing sector and finance and business services sector both followed at 6.9% and 6.7%, respectively.

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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. Average weekly earnings (AWE) for any given month is the ratio of estimated total pay for the whole economy, divided by the total number of employees. As a result, AWE is not a measure of rates of pay and can be affected by changes in the composition of an enterprise's workforce.

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3. Analysis of average weekly earnings

Average weekly earnings (AWE) were estimated at £669 for total earnings and £626 for regular earnings in December 2023. Figure 1 shows that average weekly earnings have steadily increased over the long term.

The annual growth for regular earnings (excluding bonuses) was 6.2% in October to December 2023. Annual growth in employees' average total earnings (including bonuses) was 5.8% in October to December 2023.

Our headline growth rate is the annual change between the latest three-month period and the same three months one year ago. This means that, in some areas, the latest months are currently compared with low base periods before the high pay rises were given over the last year, which are partly a reaction to high inflation and the cost-of-living crisis. Looking at annualised growth rates over the short term can help assess more recent earnings trends. If we compare the latest three months with the three months that preceded them, and then annualise this growth rate, nominal regular average weekly earnings grew by 2.2%.

This shows that if we look at growth over the short term, it is not as strong as when comparing over a full 12-month period when regular earnings grew by 6.2%. We will continue to publish our headline estimate using the annual year-on-year growth rate, but this provides further context on shorter-term changes for users.

In real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH)), in October to December 2023, total real pay rose by 1.4% on the year, similar to the previous 3-month period. Regular real pay rose by 1.8% on the year; it was last higher in July to September 2021 when it rose by 2.2%.

As inflation has reduced over the past few months, we are now seeing real growth rates increase on the year. Figure 3 shows a comparison of monthly real total and regular pay growth rates and monthly inflation. For October to December 2023, CPIH was an average of 4.4%.

Our headline measure of inflation is CPIH. However, we also publish our supplementary Real average weekly earnings using consumer price inflation (CPI) dataset, excluding owner occupiers' housing costs. Using CPI real earnings, in October to December 2023, total pay rose by 1.6% on the year. Growth was last higher in July to September 2021 when it was 3.0%. Regular pay rose by 1.9% on the year; growth was last higher in July to September 2021 when it was 2.2%.

The Earnings and employment from Pay As You Earn Real Time Information, UK bulletin also provides additional insights into 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 pay is also provided but is subject to revisions.

However, there will be differences between the two data sources because of timing and definitional differences, as set out in our Comparison of labour market data sources methodology.

Sector and industry

Annual average regular earnings growth for the public sector was 5.8% in October to December 2023; not as high as in recent periods but remaining relatively strong (Figure 4). For the private sector this was 6.2%, growth was last lower than this in May to July 2022 (6.0%). Annual average total earnings growth for the private and public sector was 5.8% and 5.9%, respectively, in October to December 2023.

In October to December 2023, the wholesaling, retailing, hotels and restaurants sector saw the largest annual regular pay growth at 7.2%. The manufacturing sector, and finance and business services sector both followed at 6.9% and 6.7%, respectively (Figure 5).

More about economy, business and jobs

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4. Average weekly earnings data

Average weekly earnings
Dataset EARN01 | Released 13 February 2024
Average weekly earnings at sector level headline estimates, Great Britain, monthly, seasonally adjusted. Monthly Wages and Salaries Survey.

Average weekly earnings by sector
Dataset EARN02 | Released 13 February 2024
Average weekly earnings at sector level including manufacturing, finance and services, Great Britain, monthly, non-seasonally adjusted. Monthly Wages and Salaries Survey.

Average weekly earnings by industry
Dataset EARN03 | Released 13 February 2024
Average weekly earnings at industry level including manufacturing, construction and energy, Great Britain, monthly, non-seasonally adjusted. Monthly Wages and Salaries Survey.

Real average weekly earnings using consumer price inflation
Dataset X09 | Released 13 February 2024
Average weekly earnings for the whole economy, for total and regular pay, in real terms (adjusted for consumer price inflation), UK, monthly, seasonally adjusted.

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5. Glossary

Average Weekly Earnings (AWE)

As explained in Section 2: Earnings of our Guide to labour market statistics methodology, 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.

Average weekly earnings for any given month is the ratio of estimated total pay for the whole economy, divided by the total number of employees. As a result, AWE is not a measure of rates of pay and can be affected by changes in the composition of an enterprise's workforce. 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 Earnings and employment from Pay As You Earn Real Time Information, UK bulletin.

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 arrears payments and any redundancy payments that are made through payroll. Further detail is provided in our Comparison of labour market data sources methodology.

Bonus

A bonus is a form of reward or recognition granted by an employer in addition to basic pay. 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), as detailed in our Consumer Price Inflation quality and methodology information (QMI) 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.

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6. Measuring the data

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

The survey response rate was 84% in December 2023.

Real earnings

Real average weekly earnings (AWE) are calculated as non-seasonally adjusted AWE (shown in our accompanying EARN02: Average weekly earnings by sector dataset) divided by the Consumer Prices Index including owner occupiers' housing costs (CPIH), which is our preferred measure of consumer price inflation (as shown in our CPIH Index time series L522). The ratio is then referenced as an index with 2015 equals 100, and seasonally adjusted.

We also publish our accompanying X09: Real average weekly earnings using consumer price inflation (CPI) dataset for the whole economy and for both total and regular pay. Our recommended measure of CPI is CPIH, and our headline estimates using this measure are found in our accompanying EARN01: Average weekly earnings dataset. These data have been compiled using the CPI as a supplementary dataset to view alongside the headline estimates produced using the CPIH.

Arrears payment

Pay award arrears are collected separately on the questionnaire; this specifically covers earnings arising from a backdated pay increase, not late payment of overtime or bonuses. Arrears payments are reflected in estimates at the time they were paid, and not in the period they are awarded for. Therefore, backseries are not revised. The AWE headline estimates exclude arrears payments.

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 pay, and total pay. We saw this in March 2021 and 2020, when the bonus payments pattern changed during the coronavirus (COVID-19) pandemic. 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 in January and February 2009.

Where one-off shocks are present in the data, these are taken into account during the seasonal adjustment process. This was applied in June 2023 to the public sector bonus payments.

In line with international guidance, we annually review the seasonal adjustment parameters and open up the whole time series for revision, as outlined in our Average weekly earnings QMI. This was last reviewed in September 2023 and led to revisions to the historical AWE time series, extending back throughout the entire time series.

Revisions

AWE are generally published on a provisional basis around six to seven weeks after the end of the month in question, although sometimes a week later in the months following Christmas and Easter. The unadjusted estimates are finalised the following month (10 to 11 weeks after the end of the reference period). Seasonally adjusted estimates are subject to further revisions at later dates (see the Revisions Policy subsection of our Average weekly earnings QMI).

Composition of the workforce

The AWE reflects changes to the composition of the workforce. In AWE, all other things being equal, an increase in the relative number of employees in a high-paying industry will cause average earnings to rise. This is because the mix of jobs would have changed so that there are more high-paying jobs. Conversely, an increase in the relative number of employees in low-paying industries would cause average earnings to fall.

This effect is sometimes called the employment contribution to earnings growth, as opposed to the wages contribution, which reflects changes in earnings at individual companies, such as pay rises, promotions and changes in the composition of individual company workforces. In addition to AWE growth, we publish separate estimates of the wage and employment contributions to AWE growth in supplementary tables called the AWE decomposition.

Base and compositional effects during the coronavirus (COVID-19) pandemic period

During the pandemic period, interpreting average earnings data was difficult. We explain the complexities of interpreting these data in our How COVID-19 has impacted the Average Weekly Earnings data blog post. 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 (COVID-19) pandemic, different scenarios have affected the base effect. More information on base effects can be found in our Average weekly earnings in Great Britain: May 2022 bulletin.

The compositional effect means pay growth has been affected by a changing composition of employee jobs, which during the coronavirus pandemic had increased average pay. The latest data show that the composition effect is now at more normal levels, and we are no longer seeing the excessive levels we saw during periods of the coronavirus pandemic in 2020 and 2021. For more details on the impact of compositional effects on wage growth, see our How furlough and changes in the employee workforce have affected earnings growth during the coronavirus (COVID-19) pandemic, UK: 2020 to 2021 article.

Following the initial impact of the coronavirus 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 taken into consideration 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.

More information on the compositional effect on the data is available in Section 10: Measuring the data of the Earnings and employment from Pay As You Earn Real Time Information, UK: May 2022 bulletin.

Other

For more information about some of the main differences between our data sources, see ourComparison of labour market data sources methodology.

Sampling variability for average weekly earnings single-month growth rates in percentage points is also available in our previous release, Average weekly earnings in Great Britain: April 2021 bulletin.

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9. Cite this statistical bulletin

Office for National Statistics (ONS), released 13 February 2024, ONS website, statistical bulletin, Average weekly earnings in Great Britain: February 2024

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Nicola White
labour.market@ons.gov.uk
Ffôn: +44 1633 456120