Earnings and employment from Pay As You Earn Real Time Information, UK: November 2021

• Early estimates for October 2021 indicate that the number of payrolled employees rose by 4.0% compared with October 2020, a rise of 1,139,000 employees; the number of payrolled employees was up by 0.8% since February 2020, a rise of 235,000.

• There were 160,000 more people were in payrolled employment in October 2021 when compared with September 2021.

• Early estimates for October 2021 indicate that median monthly pay increased by 4.9% compared with October 2020 and increased by 7.8% when compared with February 2020.

• All age groups saw an increase in payrolled employees between October 2020 and October 2021; there was an increase of 501,000 payrolled employees aged under 25 years.

• For Nomenclature of Territorial Units for Statistics (NUTS) 3 regions, annual growth in payrolled employees in October 2021 was the highest in Manchester, with a rise of 9.1%, and was lowest in Swindon, with a rise of 2.0%.

• The increase in payrolled employees between October 2020 and October 2021 was largest in the administrative and support services sector (a rise of 283,000 employees) and smallest in the transportation and storage sector (a fall of 14,000).

• This month NUTS1 regions are further broken down by sectors in the supporting datasets for this bulletin; some sectors show similar growth rates to the region level, while others, such as accommodation and food service activities and transportation and storage, show moderate regional variation.

• Annual growth in median pay for employees in October 2021 was highest in the professional, scientific and technical sector (an increase of 7.9%), and lowest in the arts and entertainment sector (a decrease of 2.9%).

Annual growth rates for October 2021 are compared with October 2020, and so the reduction in employees and median pay seen following the beginning of the coronavirus (COVID-19) pandemic is no longer contributing to the annual growth rate. Annual growth rates are now compared with this lower baseline.

About the data in this release

Early estimates for October 2021 are provided to give an indication of the likely level of employees as well as median pay in the latest period. The figures for October 2021 are based on around 85% of information being available. They are considered of lower quality and may be subject to revision in next month's release when between 98% to 99% of data will be available. This work was introduced in April 2020 in response to coronavirus (COVID-19) and methods will continue to be developed. A revisions triangle is available for employees and median pay at the UK level.

This release covers people paid through the Pay As You Earn (PAYE) system where their pay is reported through the Real Time Information (RTI) system. As employees who are furloughed as part of the Coronavirus Job Retention Scheme (CJRS) should still have their payments reported through this system, they should feature in these data and contribute toward the employment and pay statistics for the relevant periods. Similarly, following the end of the furlough scheme, employees who have been given notice that their employment will end will continue to be included in the RTI data while they work out their notice period. This effect could extend over a few months, given statutory notice periods. This is consistent with how any employee being made redundant would appear in the RTI data.

Statistics in this release are based on people who are employed in at least one job paid through PAYE, and monthly estimates reflect the average of such people for each day of the calendar month. This follows the introduction of a new methodology in December 2019, designed to better align with international guidelines for labour market statistics. This differs from the methodology used before December 2019, which produced statistics based on the total number of people paid in a particular time period.

Early estimates for October 2021 indicate that there were 29.3 million payrolled employees (Figure 1), a rise of 4.0% compared with the same period of the previous year. This was also a rise of 1,139,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees increased by 0.6% in October 2021 – equivalent to 160,000 people.

When comparing the number of payrolled employees in September 2021 with the previous month, the number increased by 0.6% (171,000). This is a small revision from the early estimate of a 0.7% (207,000) increase, reported in the previous bulletin.

Annual growth in the number of employees remained broadly within a range of 1.0% to 1.5% from mid-2016 until 2019. Growth rates before mid-2016 were higher than 1.5% (Figure 2).

Starting around early 2019, employee growth began a slight downward trend. However, employee growth slowed more substantially past March 2020, (becoming negative in April 2020) coinciding with the coronavirus (COVID-19) pandemic.

Since the start of 2021, growth rates have started to recover on the lower rates seen since the start of the pandemic. However, part of this recovery is because of the reduction in employees between March and May 2020 no longer contributing to the annual growth rate.

Early estimates for October 2021 indicate that median monthly pay was £2,005, an increase of 4.9% compared with the same period of the previous year.

Following a general trend of increasing pay growth between mid-2015 and mid-2018, pay growth tended to fluctuate around 3.6%, until 2020 when pay growth became negative. This coincided with the coronavirus (COVID-19) pandemic and related economic and policy responses. From June 2020 median pay growth has been positive and is now above pre-coronavirus (February 2020) levels.

The relatively high level of pay growth between June and December 2020 is partially explained by lower levels of inflows than usual during that period. As explored in the August 2020 bulletin and September 2020 bulletin, while the general trend of pay growth is dominated by those continually employed, the mean pay of inflows tends to be around 40% lower than mean pay for those continually employed. This means inflows into payrolled employment tend to bring down average pay and average pay growth. As inflows were relatively low between June 2020 and December 2020, this reduced the downward pressure on pay growth, which in turn increased median pay growth.

The high level of pay growth in April 2021 is attributed to the record high in median pay in April 2021, combined with the suppressed level of median pay in April 2020 at the start of the coronavirus pandemic.

In the three months to September 2021, the 10th percentile of the monthly pay distribution was £670, the 90th percentile was £4,748 and the 99th percentile was £13,600 (Figure 5). This means that:

• 10% of payrolled employees earned equal to or less than £670 per month

• 90% of payrolled employees earned equal to or less than £4,748 per month

• 99% of payrolled employees earned equal to or less than £13,600 per month

The regional figures in this bulletin are based on where employees live and not the location of their place of work. They include data for October 2021, and cover Nomenclature of Territorial Units for Statistics: NUTS1, NUTS2 and NUTS3 regions.

While the UK as a whole has experienced moderate, if declining, payrolled employee growth since January 2017, growth within regions has not been even (Figure 6).

Numbers of payrolled employees in the UK for the regions shown in Figure 6 range from 768,000 in Northern Ireland to 4,132,000 in the South East in October 2021.

All regions except London are now above pre-coronavirus (COVID-19) (February 2020) levels.

Figure 6: Regional employee growth has fallen across the UK over the last year, but has risen more recently

Percentage change on same month in previous year, seasonally adjusted, UK, January 2017 to October 2021

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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London and Northern Ireland experienced higher growth than the UK average between January 2017 and early 2020, while the North East and Scotland experienced lower growth than the UK overall. Since January 2019, Inner London (both West and East) experienced greater volatility in employee growth than both Outer London and the UK average. Employee numbers within NUTS1, NUTS2 and NUTS3 regions are available in the datasets published alongside this bulletin.

Over the course of the coronavirus (COVID-19) pandemic, all regions' growth rates followed a similar pattern: rapidly declining and becoming negative since April 2020, but beginning to improve again in recent months. However, the magnitude of changes varies.

Comparing October 2021 with the same period of the previous year for NUTS1 regions, changes in payrolled employees ranged from a 4.6% increase in London to a 3.5% increase in the East of England.

This month NUTS1 regions are further broken down by sectors in the supporting datasets for this bulletin. Some sectors show similar growth rates to the region level, while others, such as accommodation and food service activities and transportation and storage, show moderate regional variation (Figure 7).

For accommodation and food service activities, all regions saw a drop in growth around the beginning of the pandemic, with London experiencing the steepest decline. Comparing October 2021 with the same period of the previous year, changes in payrolled employees for accommodation and food service activities ranged from a 6.2% increase in London to a 15.1% increase in the South West.

For transportation and storage, employee growth has been very different across regions. The East Midlands and West Midlands have experienced sustained positive growth, while London, South East, South West, North West and Scotland have experienced continued negative growth since April 2020.

Figure 7: Employee growth varies by region for sectors such as accommodation and food service activities and transportation and storage

Percentage change on same month in previous year, seasonally adjusted, UK, January 2017 to October 2021

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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Examining NUTS3 regions, Swindon experienced an increase of 2.0% in payrolled employees in comparison with October 2020, and Manchester experienced an increase of 9.1% (Figure 8).

Figure 8: Growth in payrolled employees varies across the UK

Percentage change on same month in previous year, seasonally adjusted, UK, NUTS3 level, October 2021

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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Median pay across the NUTS3 regions of the UK in October 2021 ranged from £1,684 in Leicester to £3,119 in Wandsworth (Figure 9).

Inner London generally differs from Outer London, with median pay ranging from £2,002 in Enfield to £3,119 in Wandsworth. Median pay in October 2021 for London as a whole was £2,425.

Figure 9: Median pay varies across the UK

Median pay, seasonally adjusted, UK, NUTS3 level, October 2021

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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The industrial sectors in this bulletin are based on the UK Standard Industrial Classification (SIC) codes, as defined by the Office for National Statistics (ONS). These codes have been determined from both the Inter-Departmental Business Register and data from Companies House for each Pay As You Earn (PAYE) enterprise. The findings from the 14 largest sectors are presented. The seven smaller sectors have been removed from the bulletin for presentational purposes, but their estimates are available in the datasets published alongside this bulletin.

The three largest sectors – wholesale and retail, health and social work, and education – account for more than 40% of UK employees. These three sectors combined with administrative and support services, manufacturing, professional, scientific and technical, and accommodation and food service activities account for more than 70% of UK employees.

Since January 2017, employee growth has not been even across sectors (Figure 10). Sectors such as construction, transportation and storage, and information and communication experienced higher growth than the UK average between January 2017 and early 2020, while sectors such as manufacturing, and wholesale and retail experienced lower growth than the UK overall.

All sectors highlighted experienced a decrease in employee growth around April 2020, with the smallest decrease being in health and social work.

Public administration and defence, and health and social work saw early recoveries in their growth rates, as did administrative and support services, and education from early 2021 onwards. The majority of sectors have now returned to positive growth with the exception of transportation and storage and finance and insurance.

When compared with the same period of the previous year, percentage changes in payrolled employees range from negative 1.0% in transportation and storage to positive 12.4% in administrative and support services.

Figure 10: Employee growth has been very different across sectors

Percentage change on same month in previous year, seasonally adjusted, UK, January 2017 to October 2021

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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The increase in payrolled employees between October 2020 and October 2021 was largest in the administrative and support services sector (a rise of 283,000 employees) and smallest in the transportation and storage sector (a fall of 14,000 employees).

Median pay in October 2021 across the highlighted sectors ranged from £1,072 in the accommodation and food service activities sector to £3,267 in finance and insurance (Figure 12).

Compared with the same month in the previous year, median pay grew fastest in the professional, scientific and technical sector (positive 7.9%, Figure 13) and slowest in the arts and entertainment sector (negative 2.9%).

Estimates of mean pay for each sector are available in the datasets published alongside this bulletin.

However, care needs to be taken when interpreting median pay growth. As explored in more detail in previous bulletins, mean and median pay growth are influenced by the relative pay of those entering and leaving the labour market. This means if the relative pay of inflows and outflows in particular sectors differ to the UK average, median pay growth could be higher or lower in these sectors. For example, median pay growth could be lower if outflows are higher paid than average, or conversely, could be higher if outflows are lower paid than average.

Similar principles apply for inflows.

The age figures in this bulletin are calculated based on individuals’ age at the time they receive a payment.

Of the 29.3 million payrolled employees in the UK in October 2021, 94.8% are aged 18 to 64 years.

Between October 2020 and October 2021, there was a 501,000 increase in payrolled employees aged under 25 years. During the same period, payrolled employees aged 50 to 64 years increased by 236,000.

The number of payrolled employees aged 50 years and over has increased at a faster rate than the UK as a whole since 2017 (Figure 15). Since 2019, this is particularly true for those aged 65 years and over, among whom employee growth peaked at 10.7% in January 2020.

These periods of higher growth coincide with the phased increase in State Pension age between March 2019 and September 2020, from 65 to 66 years for both men and women. Conversely, growth in payrolled employees aged under 25 years has undergone long-term decline since 2017, particularly compared with the UK as a whole.

Since October 2020, annual employee growth has risen to positive 1.8% for those aged 35 to 49 years, and positive 2.5% for those aged 25 to 34 years. Those aged under 18 years saw a rise in employee growth to 59.1% during this period.

Figure 15: Employee growth fell more sharply in younger age groups, but has risen more recently

Percentage change on same month in previous year, seasonally adjusted, UK, January 2017 to October 2021

Notes:

1. The latest period is based on early data and therefore is more likely to be subject to slightly more significant revisions.

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Median pay in October 2021 ranged from £396 for those under 18 years to £2,361 for those aged 35 to 49 years (Figure 16). Overall, median pay is higher in central age bands, of those studied.

Median monthly pay

Median monthly pay shows what a person in the middle of all employees would earn each month. The median pay is generally considered to be a more accurate reflection of the "average wage" because it discounts the extremes at either end of the scale.

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 payrolled. There are different rates of minimum wage depending on a worker's age and whether they are an apprentice. The NMW applies to employees aged between 16 and 24 years. The government's National Living Wage (NLW) was introduced on 1 April 2016 and applies to employees aged 25 years and over.

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 under 18 years

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

Pay As You Earn

Pay As You Earn (PAYE) is the system employers and pension providers use to take Income Tax and National Insurance contributions before they pay wages or pensions to employees and pensioners. This publication relates to employees only and not pensioners. PAYE was introduced in 1944 and is now the way most employees pay Income Tax in the UK.

Data source and collection

The data for this release come from HM Revenue and Customs’ (HMRC’s) Pay As You Earn (PAYE) Real Time Information (RTI) system. They cover the whole population rather than a sample of people or companies, and allow for more detailed estimates of the population. The release is classed as Experimental Statistics as the methodologies used to produce the statistics are still in their development phase. As a result, the series is subject to revisions.

Coverage

This publication covers employees payrolled by employers only. It does not cover self-employment income or income from other sources such as pensions, property rental and investments. Where individuals have multiple sources of income, only income from employers is included.

The figures in this release are for the period July 2014 to October 2021 and are seasonally adjusted.

Upcoming changes

Future bulletins are planned to include additional statistics, such as more detailed geographic breakdowns, industry and demographic breakdowns. The focus and timing of these will be informed by user feedback. Please email rtistatistics.enquiries@hmrc.gov.uk if you would like to offer feedback on how the contents can be improved in the future.

Methodology

An accompanying article contains more information on the calendarisation and imputation methodologies used in this bulletin, alongside comparisons with other earnings and employment statistics and possible quality improvements in the future.

Pre-release data

HM Revenue and Customs (HMRC) grants pre-release access to official statistics publications. As this is a joint release, and in accordance with the HMRC policy, pre-release access has been granted to a number of people to enable the preparation of statistical publications and ministerial briefing. Further details, including a list of those granted access, can be found on HMRC's website.

Experimental Statistics status

This is a joint experimental release between HMRC and the Office for National Statistics (ONS). The existing monthly publications produced by the ONS remain the primary National Statistics for the labour market. The intention is that these new statistics will also be updated on a monthly basis.

The release is classed as Experimental Statistics as the methodologies used to produce the statistics are still in their development phase. This does not mean that the statistics are of low quality, but it does signify that the statistics are new and still being developed. As the methodologies are refined and improved, there may be revisions to these statistics.

Rather than waiting until the development work has been completed, the statistics are being published now to involve potential users in developing the statistics. We hope that this encourages users to provide us with their thoughts and suggestions on how useful the statistics are and what can be done to improve them. Comments can be sent by email to rtistatistics.enquiries@hmrc.gov.uk.

More information about Experimental Statistics, including when they should be used and the differences between them and National Statistics, is available.

Strengths of the data

As Pay As You Earn (PAYE) Real Time Information (RTI) data cover the whole population, rather than a sample of people or companies, we are able to use these to produce estimates for geographic areas and other more detailed breakdowns of the population. The methods for producing such breakdowns are under development and we expect to include further statistics in a future release. These statistics can help inform decision-making across the country. They also have the potential to provide more timely estimates than existing measures.

These statistics also have the potential to replace some of those based on surveys, which could reduce the burden on businesses needing to fill in statistical surveys.

Imputation and revisions

A limitation of the calendarisation used is that the figures for pay and numbers of employees in month t depend on payments made in month t plus 1. This means only around 80% of the data used in the calculation on month t statistics are available at the end of each month.

Rather than wait until all those remaining payment returns have been received, we have decided to produce a timelier measure of numbers of employees and median pay by imputing the values for missing returns. The data on which the statistics are based were extracted at the beginning of November 2021, which means around 1% to 2% of the data for September 2021 are imputed, while around 15% of the data for the "flash" October 2021 data are imputed. As a result, the figures in future releases will be updated as new payment returns are received, and the imputation payments can be replaced with actual data.

Starting with the December 2020 publication, we introduced a revisions policy. For each publication, we incorporate new input data only for the latest two tax years. In May of each year, new input data will be incorporated for the whole data time series. The benefit of introducing this revisions policy is that we are able to use the processing time saved to produce and publish more detailed breakdowns.

Seasonal adjustment

The seasonal adjustment applied in this bulletin follows established best practice. This approach assumes that any seasonal patterns remain broadly consistent over time. If the seasonal pattern changes in strength, this will be represented as greater volatility in the seasonally adjusted figures. Both the seasonal and non-seasonally adjusted data sets are released alongside this bulletin.

Differences compared with the Labour Force Survey and Average Weekly Earnings statistics

Further information about the methodology used and comparisons with the ONS's Labour Force Survey (LFS) and Average Weekly Earnings can be found in New methods for monthly earnings and employment estimates from Pay As You Earn Real Time Information (PAYE RTI) data: December 2019.

Comparison of labour market data sources shows the strengths and weaknesses of these sources and other labour market data sources, including the advantages of new administrative data sources and limitations of some of our published figures.