………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

2014, year of the pay rise?

Matthew Whittaker, Resolution Foundation

David Smith, Sunday Times John Philpott, The Jobs Economist

Nicola Smith, TUC

Ian Stewart, Deloitte

Gavin Kelly, Resolution Foundation (chair)

4 February 2014

……………………………………………………………………………………………..

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

• Range of pay measures with sometimes conflicting messages

• Depends in part on coverage. Two key measures are:

– Average Weekly Earnings (monthly release, employer survey, based on aggregate paybill data)

– Annual Survey of Hours and Earnings (annual release, employer survey, directly reported pay)

• Depends also on the inflation rate used. Choices include:

– CPI (excludes mortgage costs)

– RPI (includes mortgage costs, but flawed methodology)

– CPIH (includes estimate of owner occupied housing costs)

– RPIJ (same coverage as RPI, but uses accepted method)

Making sense of pay data ……………………………………………………………………………………………………..

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

Variations on the wage squeeze ……………………………………………………………………………………………………..

According to the ONS Average Weekly Earnings measure, pay has fallen in real terms for most of the past five years

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

Variations on the wage squeeze ……………………………………………………………………………………………………..

Annual snapshot provided by ASHE presents a similar picture, but with some variation Comparison suggests situation has deteriorated since latest ASHE data

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

Variations on the wage squeeze ……………………………………………………………………………………………………..

Under range of alternative wage (LFS, AEI, AWE & ASHE) and inflation (RPI, CPI & CPIH) measures, the spread of outcomes is broad, but the general trend is largely unchanged

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

Variations on the wage squeeze ……………………………………………………………………………………………………..

With less volatility when bonus payments are excluded Reflecting the growing importance of bonuses and reactions to changes in the additional (50p) tax rate

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

Beyond average earnings ……………………………………………………………………………………………………..

But the average can hide variation across the earnings distribution And by worker type

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

Beyond average earnings ……………………………………………………………………………………………………..

But the average can hide variation across the earnings distribution And by worker type

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

Beyond average earnings ……………………………………………………………………………………………………..

But the average can hide variation across the earnings distribution And by worker type

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

Beyond average earnings ……………………………………………………………………………………………………..

But the average can hide variation across the earnings distribution And by worker type

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

Beyond average earnings ……………………………………………………………………………………………………..

And none of the employee data takes account of the growing number of self-employed workers

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

• Measures differ due to coverage, timing and choice of deflator

• Despite differences, basic story is similar: no sign of the wage squeeze ending just yet

• Experiences have varied across the earnings distribution and by worker characteristic

• Main pay data takes no account for growing number of self-employed workers

Making sense of pay data ……………………………………………………………………………………………………..

#ukwages

………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………

2014, year of the pay rise?

Matthew Whittaker, Resolution Foundation

David Smith, Sunday Times John Philpott, The Jobs Economist

Nicola Smith, TUC

Ian Stewart, Deloitte

Gavin Kelly, Resolution Foundation (chair)

4 February 2014

……………………………………………………………………………………………..

#ukwages