Employee earnings in the UK: 2021

Commentary on topics covered in the Annual Survey of Hours and Earnings (ASHE) is split between three separate bulletins in 2021. Other commentary from the latest ASHE data can be found on the following pages:

• Low and high pay in the UK: 2021

• Gender pay gap in the UK: 2021

• Interpreting average earnings data is difficult at the moment; in July we published a blog: How COVID-19 has impacted the Average Weekly Earnings data, which explains the complexities of interpreting earnings data in the current climate; compositional and base effects are likely to affect the growth rates, as the data for April 2020 was affected by both the coronavirus (COVID-19) pandemic, in terms of wages and hours worked in the economy, and also disruption to the collection of data from businesses; this means that comparisons with 2020 need to be treated with caution, and we would encourage users to focus on long-term trends rather than year on year changes.

• Median weekly pay for full-time employees was £611 in April 2021, up 4.3% on a year earlier; this growth is the highest since 2008.

• Across all jobs, median weekly earnings in April 2021 increased by 5.3% from a year earlier on a nominal basis; when adjusted for inflation, they increased 3.6% in real terms over the year; between April 2019 and April 2020 they remained unchanged in nominal terms and decreased by 0.9% in real terms.

• Pay increased for most workers in 2021, but particularly those that were most affected by the pandemic in 2020, most notably younger employees, men and the lowest-paid occupations.

• The average number of paid hours increased by 1.5% between 2020 and 2021 after falling 1.4% between 2019 and 2020; employees who lost hours in 2020 are the biggest drivers of the increase in 2021, such as those in the accommodation and food industry, those aged 16 to 17 years, and those in elementary occupations.

• The proportion of employees furloughed with reduced pay fell from 12% in 2020 to 6% in 2021; younger workers and those working in accommodation and food services and arts, entertainment and recreation were more likely to be furloughed with reduced pay when compared with workers in other occupations.

• In 2021 gross weekly earnings for full-time employees increased most in the lower paying occupations such process plant and machine operatives (9.1%) and elementary occupations (7.7%); skilled trades also saw a large increase (9%) after having the largest decrease between 2019 and 2020 (negative 6.5%); the highest paying occupations had the smallest increases between 2020 and 2021.

• Gross weekly earnings for full-time employees increased in the construction industry (16.8%) mainly due to furloughing with loss of pay for this industry decreasing from 27% in 2020 to 5% in 2021; the accommodation and food services industry saw an increase of 4.6% despite high furlough rates with loss of pay in 2021 (45%).

Interpreting average earnings data is difficult at the moment; in July we published a blog: How COVID-19 has impacted the Average Weekly Earnings data, which explains the complexities of interpreting earnings data in the current climate. Compositional and base effects are likely to affect the growth rates, as the data for April 2020 was affected by both the coronavirus (COVID-19) pandemic, in terms of wages and hours worked in the economy, and also disruption to the collection of data from businesses. This means that comparisons with 2020 need to be treated with caution, and we would encourage users to focus on long-term trends rather than year on year changes.

As such, average pay growth rates are likely to be slightly inflated in the latest year because of these complexities. More people were furloughed and on reduced pay in April 2020 than in April 2021, so this will cause a base effect on growth rates, as people moved off furlough in April 2021. In addition, this is also affected by a fall in the number and proportion of lower-paid jobs, compared with before the pandemic (composition effect). The complexity and length of assumptions that need to be made make it difficult to provide an estimate for these effects. Extensive work has been carried out as part of the production of Annual Weekly Earnings, which can provide further insight into the possible scale of the impact of these effects on earnings.

Median weekly pay for full-time employees was £611 in April 2021. This compares with £586 in April 2020, where weekly pay was first affected by the pandemic, and £585 in 2019. The latest estimate continues the upward trend we were seeing before the coronavirus pandemic.

Median weekly earnings among all employees increased by 5.3% in April 2021, compared with April 2020. They were unchanged in April 2020, compared with a year earlier (Figure 2). When adjusted for inflation using CPIH, median weekly earnings for all jobs were up 3.6% in April 2021, compared with April 2020, after a decrease of 0.9% in real terms between 2019 and 2020. This upturn in growth applies to both full-time and part-time employees.

Median weekly pay for full-time employees was £611 in April 2021, up 4.3% on a year earlier. This growth is the highest since 2008, but reflects changes in the workforce because of furlough and compositional effect.

Median weekly pay among part-time employees increased (by 6.4% in nominal terms and 4.6% in real terms), which is a similar pattern to recent years. Part-time employees tend to be paid less per hour and are more affected by increases in National Minimum Wage rates. However, other factors such as flexible working patterns can change employee job profiles from full-time to part-time, whilst retaining the higher hourly pay rates.

Figure 3 shows the relationship between growth in weekly earnings and growth in hourly earnings, in real terms (adjusted for inflation) for full-time employees.

Hourly earnings are normally calculated as the amount of pay made to the employee, divided by the hours of work that pay relates to. In April 2020 and 2021, employees were furloughed under the Coronavirus Job Retention Scheme (CJRS). The hourly pay comparison between 2020 and 2021 and other years in Figure 1 is still consistent, since it relates to pay per hour that the employee is being paid for, and not pay for hours actually worked.

In 2021 full-time employees, on average, experienced an increase in both hourly pay (positive 1.7% in real terms) and weekly pay (2.6%) compared with 2020. The larger increase in weekly pay compared with hourly pay was mainly because of an increase in hours worked.

The increase in hourly pay and decrease in weekly pay in 2020 was last seen in 2009 during the economic crisis, suggesting that employers are inclined to cut employee hours ahead of pay rates in times of economic challenge.

Between April 2020 and April 2021, median gross weekly earnings for male full-time workers increased from £618 to £652 (5.5%). This follows a decrease of 1.9% the previous year. During this same period, the median gross weekly earnings for full-time women increased from £544 to £558 (2.7% increase); this follows a 3.0% increase last year (Figure 4). This is most likely because of a greater proportion of men returning to full pay after being furloughed with loss of pay in 2020. There are greater increases in gross weekly pay for all younger employers (aged 16 to17 years, up 15.9%, and aged 18 to 21 years, up 10.0%) and older (aged 60 years and over, up 7.9%).

Average paid hours worked for all workers increased by 1.5% (0.5 hours) between 2020 and 2021, after falling 1.4% (0.5 hours) between 2019 and 2020. Employees who lost hours in 2020 are the biggest drivers of the increase in 2021 (Figure 5).

The largest increases occurred in the younger age groups, aged 16 to 17 years (12.5%) and aged 18 to 21 years (3.3%), and the older age group, aged 60 years and older (3.3%). The increase in the younger age groups is a recovery from the pattern between 2019 and 2020, where the largest falls occurred in those aged 16 to 17 years (negative 11.4%), and those aged 18 to 21 years (negative 6.1%). This reflects the sectors and occupations in which they were employed.

Public sector gross median pay for full-time employees has increased 2.5% in 2021, compared with 2020, the same increase as between 2019 and 2020 (Figure 6). The private sector had a larger increase in 2021, compared with 2020 (3.6%), after having decreased between 2019 and 2020 (0.8%).

Industries that operate predominately in the private sector, such as construction, hospitality and retail, have been affected by the coronavirus pandemic, as they have a higher proportion of furloughted workers. Public administration, education and health have continued with steady growth as fewer employees were furloughed. The comparative analysis of private and public sector earnings is complex because of the different structural characteristics of the sectors.

Nearly all of the occupation groups saw an increase in full-time gross weekly pay between 2020 and 2021 (Figure 7). The lower paid occupations saw the largest increases, including elementary occupations, and process, plant and machine operatives. The higher paid occupations such as managers, directors and senior officials, and professional occupations, have seen the smallest increases. The lower paid occupations have been most affected during the coronavirus pandemic in 2020. Seeing people move off furlough, as well as a recovery in hours worked and increases in the National Minimum Wage, affects workers in these occupations.

The increase in full-time gross weekly pay between 2020 and 2021 (4.3%) has been driven by a number of industries, such as construction (increased 16.8%) and manufacturing (8.3%). Construction saw those on furlough with a reduction in pay decrease from 27% in 2020 to 5% in 2021, whereas accommodation and food still saw the highest level of furlough, with loss of pay at 45% in 2021 and a weekly pay increase of 4.6% in 2021, compared with 2020 (Figure 8).

Northern Ireland saw the highest growth (8.8%) in April 2021, compared with April 2020 (Figure 9). This large growth has been driven by a change in the composition of the workforce, where there has been an increase in higher paid jobs and a decrease in the number of lower paid jobs. This is alongside Northern Ireland having a large fall in the number of jobs that were furloughed with loss of pay (16% in 2020 and 7% in 2021). London had the smallest growth, which is linked to having a higher proportion of higher paid jobs, compared with the rest of the UK. In 2020, London had the lowest rate of furlough with reduced pay.

The interactive chart in Figure 10 allows you to view the median pay levels in all local authorities.

Find what the median gross weekly pay is in your area by searching for or selecting an area from the drop-down list in the interactive chart.

Figure 10: Median gross weekly earnings for full-time employees for all local authorities by place of work

UK, April 2021

Notes:

1. Estimates for 2021 data are provisional.
2. Employees are on adult rates, pay is unaffected by absence unless furloughed.
3. Full-time is defined as employees working more than 30 paid hours per week (or 25 or more for the teaching professions).

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Median annual pay for full-time employees was £31,285 for the tax year ending 5 April 2021, down 0.6% on the previous year. Annual pay for the year ending April 2021 will be more affected by the coronavirus pandemic as only two months of pay for the year ending April 2020 would have been affected..

The interactive chart in Figure 11 allows you to compare earnings across occupations, in terms of annual pay.

See what the median annual earnings are for your occupation by searching for or selecting your occupation from the drop-down list in the interactive tool.

Figure 11: Annual full-time gross pay by occupation

UK, April 2021

Notes:

1. Estimates for 2021 data are provisional.
2. Employees are on adult rates, pay is unaffected by absence unless furloughed.
3. Full-time is defined as employees working more than 30 paid hours per week (or 25 or more for the teaching professions).
4. Occupations as defined by the Standard Occupational Classification 2010.

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In 2021, the Annual Survey for Hours and Earnings (ASHE) questionnaire asked employers whether an employee was on furlough during the pay period of 21 April 2021 to allow classification of furloughed jobs receiving reduced pay. For 2020, this information was supplemented with the Coronavirus Job Retention Scheme (CJRS) data to identify if an employee was furloughed; however this resulted in an undercount of approximately 20% against the CJRS. Therefore, the estimates of furlough will be on a slightly different basis.

Table 1 shows the proportion of furloughed employees who received a reduced rate of pay as reported by employers and recorded as “loss of pay” on the survey by working pattern, region, age group, occupation and industry sector.

Proportions of furloughed employees with reduced pay should not be used in isolation. CJRS statistics published monthly by HMRC, with analysis by scheme size, sector, geography, gender and flexible furlough are considered the official statistics.

The proportion of employees furloughed with loss of pay has decreased from 12% to 6% between April 2020 and April 2021. Men have seen a bigger decrease (13% to 5%) than women (10% to 6%). This is reflected by larger decreases in industries where men make up a greater proportion of employees, such as construction, where the furlough with loss of pay rate has decreased from 27% to 5%. Accommodation and food (45%) and arts, entertainment and recreation (32%) remain high. For 2021, the younger age groups were still the most likely to be furloughed with loss of pay, but this decreased between 2020 and 2021.

Full-time and part-time

Full-time is defined as employees working more than 30 paid hours per week (or 25 or more for the teaching professions). Part-time is defined as employees working less than or equal to 30 paid hours per week (or less than 25 hours for the teaching professions).

Median

A measure of the average. The median is calculated by identifying the exact middle point in a set of observations. When the observations are ranked from lowest to highest, the median is the value in the exact middle of the observed values. It is the Office for National Statistics’ preferred measure of average earnings as it is less affected by a relatively small number of very high earners than the mean is.

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 paid. There are different rates of minimum wage depending on workers’ ages and whether they are apprentices. The NMW applies to employees aged 16 and 22 years. The government’s National Living Wage (NLW) was introduced on 1 April 2016 and applies to employees aged 23 years and over.

On the ASHE reference date in April 2021, the NMW and NLW rates were:

• £8.91 for employees aged 23 years and over

• £8.36 for employees aged 21 to 22 years

• £6.56 for employees aged 18 to 20 years

• £4.62 for employees aged 16 to 17 years

• £4.30 for apprentices aged 16 to 18 years and those aged 19 years or over who are in the first year of their apprenticeship

Real earnings

Real earnings (earnings adjusted for inflation) are calculated by adjusting nominal (unadjusted) earnings using the CPIH (Consumer Prices Index including owner occupiers' housing costs). The CPIH is the most comprehensive measure of inflation. It extends the Consumer Prices Index (CPI) to include a measure of the costs associated with owning, maintaining and living in one's own home, known as owner occupiers' housing costs (OOH), along with Council Tax.

Standard Occupational Classification (SOC)

The Standard Occupational Classification (SOC) is a common classification of occupational information for the UK.

The analysis in this bulletin is based mainly on weekly pay, which is affected by both hourly rates of pay and hours worked/paid for (and the incidence of being furloughed in 2020/21). The accompanying Low and high paid jobs bulletin looks in more detail at the distribution of pay based on hourly rates, and is of particular use when considering policy around the National Minimum Wage and National Living Wage rates.

The estimates in this bulletin are based on information gathered from a sample of 1% of employees in the UK. Prior to the coronavirus pandemic, the achieved sample size on ASHE was approximately 180,000 each year. However, given the challenges to data collection during the coronavirus pandemic and response rates not recovering, the final achieved sample size was 144,000 for 2020 and 140,000 for 2021. As such, ASHE estimates for 2020 and 2021 are subject to more uncertainty than usual.

All estimates for 2021 are provisional and relate to the pay period that includes 21 April 2021, at which time 3.7 million employees were furloughed under the Coronavirus Job Retention Scheme (CJRS). For 2020 this was 8.8 million. Furloughed employee jobs received 80% of normal pay from the scheme, to a maximum £2,500 a month. Employers were able to top up employees’ pay, but they were not required to; the Office for National Statistics (ONS) has estimated that approximately a half of employees had their pay topped up for both years.

The Annual Survey of Hours and Earnings (ASHE) collected actual payments made to the employee and the hours on which this pay were calculated, which in the case of furloughed employees would be their usual hours.

As with 2020, we have revised the exclusion criteria for the 2020 and 2021 data tables to be ”those employees who were not furloughed but whose pay was affected by absence”. This results in the ASHE data tables excluding 4.4% of employee jobs in 2021 and 6.0% in 2020 (compared with approximately 5% in previous years).

The 2020 and 2021 ASHE estimates have been weighted using the new reweighted Labour Force Survey (LFS) weights from July 2021. You can find out more about the latest reweighting of the LFS in our article.

Our Guide to interpreting ASHE estimates addresses common questions about the data. Further information about ASHE can be found in quality and methodology on our Guidance and methodology page and in the Quality and Methodology Information (QMI) report.

The strengths and limitations of the Annual Survey of Hours and Earnings (ASHE) can be found in the Quality and Methodology Information (QMI) report and the Guide to sources of data of earnings and income.