ASHE shows rise in proportion of workers earning at or below NLW
Figures from the latest official survey of employee earnings in the UK show that earnings grew by some 6% overall between April 2023 and April 2024. The gender pay gap appears to have narrowed further but remains significant with women earning 13.1% less than men on average. However, the proportion of workers earning at or below the National Living Wage (NLW) at the time the survey was conducted (£11.44) increased slightly. The figures are taken from the Annual Survey of Hours and Earnings (ASHE), conducted each April by the Office for National Statistics (ONS) and released this year on Tuesday 29 October.
Earnings growth
The headline measure of earnings growth in ASHE is the change in median weekly earnings for full-time employees. These went from £687 in April 2023 to £728 in April 2024, a nominal rise of 6.0%. However, in real terms – that is, adjusted for inflation – growth was much lower at just 2.9%. Meanwhile, median hourly earnings increased from £17.52 to £18.64, a nominal rise of 6.4%, and median annual earnings moved from £35,004 to £37,430, a nominal rise of 6.9%. All figures are gross – based on earnings before tax deductions.
By occupation, the largest growth was for sales and customer service occupations and caring, leisure and other service occupations, both of which showed an increase of 7.7%. Next highest was that for managers, directors and senior officials at 7.6%, followed by skilled trades at 7.2%. Professional occupations showed the lowest growth at 5.0%.
By sector, the largest growth was in accommodation and food services, showing at 9.8%, which also happened to be the same as the increase in the NLW in April 2024 when it was increased from £10.42 to £11.44 an hour. Other sectors showing relatively high earnings growth included information and communication, and financial and insurance activities, both at 9.5%. By contrast, growth in manufacturing, education, and health and social work was less robust at just 4.9% in each case. Earnings growth in transportation and storage was weaker still at 4.8%.
Regional analysis indicates that earnings growth was greatest in the Eastern region (which includes Essex) at 7.4%, followed by the North West at 6.7% and London at 6.4%. Earnings growth by region was weakest in Scotland and Northern Ireland, showing at 4.3% each.
Low pay and high pay
The proportion of people earning at or below the NLW increased slightly in April 2024 (see chart below). The highest peak in the distribution is around £11.62, or some 18p above the NLW of £11.44. This is connected to large employers, particularly in food retail, wanting to pay staff above the NLW. In fact the next highest peak – or plateau – occurs around the £12 an hour mark, which has become something of a ‘mezzanine’ level for wages in the same sector, with most of the largest employers paying shopfloor staff at either this level or above it. Because it is skewed towards the left, or lower end of the earnings distribution, the chart below gives some sense of just how many employees are relatively low-paid.
The increase in the proportion earning at or below the NLW could be a function of relatively large increases in the official floor which have doubtless helped workers cope with a higher cost of living than before the pandemic, but also presented labour cost issues for some, mostly smaller employers. Indeed, the ONS analysis highlights that those in the lowest tenth of the earnings distribution saw the greatest earnings growth (8.2% for full-time employees). The next-highest increases, by decile, were in the twentieth and fortieth deciles – the second-lowest and fourth-lowest tenths respectively of the distribution. But earnings growth for the highest-paid employees, those in the top or ninetieth decile, were next at 6.7%.
Gender pay gap
The gender pay gap, which is the difference between men’s and women’s earnings, has narrowed again, to 13.1% in April 2024, down from 14.2% at the same point last year. But the difference between men’s and women’s earnings remains significant, with median gross hourly earnings for men standing at £18.26, while that for women is just £15.87.
The ONS is unusual in basing its estimate of the gender pay gap on the median. Most of the highest earners are men and this is a key factor in the gender pay gap. Using the simple average, or mean, rather than the median, would take better account of this, even if the ASHE survey tends to underestimate earnings at the higher end of the distribution, in part to do with the difficulties involved in collecting data on high earners.
Analysis by occupation shows that gender pay gaps widened in some areas, notably among managers and directors, professional occupations, and associated professional occupations (such as veterinary nurses or higher-level teaching assistants).
The gap is widest among skilled trades and narrowest among caring, leisure and other service occupations, and sales and customer service occupations. By region, it is higher in all English regions than in Scotland, Wales or Northern Ireland.
The latest ASHE survey findings – which are provisional – relate to the pay period that includes 17 April 2024. ASHE is based on employer responses for a 1% sample of employee jobs, using HM Revenue and Customs Pay As You Earn (PAYE) records to identify individuals’ current employer.