Category Archives: Bonuses

Average Weekly Earnings – Falls in bonus pay nudge earnings growth down to 2.4%

Falls in bonus pay nudge earnings growth down to 2.4%

The rate of growth of average weekly earnings in the whole economy dropped back again in the latest figures from the ONS, to 2.4% in the year to June 2018, down from 2.5% in the year to May and 2.6% in the year to April. Bonus pay fell across all industrial sectors, especially in finance and business services, and was a major contribution to the drop in total pay growth.

Underlying earnings growth, as measured by the ‘regular pay’ series, which excludes bonuses, was a little higher at 2.7%. While this was also down on the previous month’s headline figure – which is based on a rolling three-month average – the single-month figures for regular pay for June showed a slight rise, from 2.7% to 2.8%, in contrast to the single-month figures for total pay, which fell sharply from 2.5% to 2.1%.

Average weekly earnings by sector at June 2018

 Average weekly earnings - regular pay (£pw)
Average weekly bonuses (£pw)
Finance and business services
582
75
Construction59423
Manufacturing57424
Wholesale, retail, hotels and restaurants33321
Private sector48038
Public sector5181

In last month’s figures, the fall in bonuses was confined to the finance and business services sector. However, this month bonuses fell back across all sectors, reflecting weakness in the economy in the year to June.

In the finance and business services sector, total average earnings grew by 1.5% in the year to June, marginally up on the figure of 1.4% in the year to May. In this sector the rise in earnings growth excluding bonuses was 2.4%.

In manufacturing, average earnings grew by 2.5% in the year to June, down from 2.9% in the year to May. However, a year ago, in June 2017, the rate of growth in manufacturing was much lower, at 1.3%.

In construction, where pay growth has been higher than other sectors recently, the rate of growth in average earnings was 5.3%, down a little from a revised figure of 5.7% in the year to May. However, in June 2017, the rate of growth in earnings in construction was almost zero, at 0.1%.

In the lowest-paying sector of wholesale, retail, hotels and restaurants, which has seen significant job losses over recent months, earnings growth was 3.2% in the year to June, the same as the revised figure for May. In June 2017, the rate of growth was a percentage point lower at 2.2%.


Looking at the private sector overall, average earnings growth was 2.4% in the year to June on the total pay measure and 2.8% on the regular pay measure. Meanwhile in the public sector, pay growth was 2.2% in the year to June, the same as the revised figure for May (both on the total pay measure, since bonuses are not a significant component of public sector pay).

Despite the public sector employing a much greater proportion of graduates and professional staff than the private sector, average weekly earnings are currently lower in the former than in the latter. Actual average earnings in the public sector dropped back from £518 in May to £517 in June, slightly behind the private sector figure of £518. First-stage increases from the recent three-year pay deal in the NHS were only paid in July and as such have yet to appear in the ONS data.

Bonus schemes: a flexible means of linking pay to performance

Bonuses remain an integral – albeit discretionary – element of the reward package on offer at many employers, particularly within the private sector: according to the ONS, the combined value of all bonuses paid in Great Britain reached a record level of £46.4 billion in 2016/17. Our recent survey of 30 mostly large employers across the manufacturing and primary sectors and private sector services looks at the design and typical payout levels of 41 bonus schemes – from comparatively simple all-employee schemes to more complex arrangements covering senior managers (eg Board members or executive team members).

Continue reading Bonus schemes: a flexible means of linking pay to performance

Call centre employers start to see upward pay pressure

This year’s survey of pay and conditions in contact centres has found that median pay settlements have increased slightly this year. Meanwhile, last year’s improvements in recruitment and retention may only have been temporary. Continue reading Call centre employers start to see upward pay pressure

Nuclear construction pay agreement

In this case study we look at the pay agreement covering the civil engineering works currently being undertaken to construct the nuclear power station at Hinkley Point in Somerset, work on which began properly in March. The pay structure’s guiding principle is progression via the acquisition of skills, and as such, may be a model for pay systems in other parts of the economy. Continue reading Nuclear construction pay agreement

Earnings growth drops further to 2.2%

Growth in average earnings weakened further in the year to the end of January, according to the latest data from the Office for National Statistics. Much of the fall is due to lower bonuses, but ‘regular pay’, that is growth excluding bonuses, was also lower than previously in most areas of the economy.

Average weekly earnings rose by 2.2% in the year to January, down from 2.6% in the year to December and 2.8% in the year to November. These figures are for total earnings, including bonuses, across the whole of the economy. Excluding bonuses, the annual rate of increase in the year to January was 2.3%, down from 2.6% in December. Continue reading Earnings growth drops further to 2.2%

Fall in City bonuses pushes average earnings growth down to 1.8%

Average weekly earnings growth in the whole economy dropped back to 1.8% in the three months to February, from 2.1% in January, but this was almost entirely caused by a substantial fall in bonuses in the finance and business services sector. Some commentators have pointed to a shift from bonuses to basic pay in this sector. Continue reading Fall in City bonuses pushes average earnings growth down to 1.8%