Real wages slide back to 2003 levels

PAY DATA

Real wages slide back to 2003 levels

Average earnings in the UK have stagnated and are now at 2003 levels in real terms, according to government figures. Data from the Office for National Statistics shows that after “three decades of strong growth”, real wages peaked in 2009. Since then inflation has outstripped wage increases in cash terms.

• Median gross earnings in 2009 were £10.97 an hour in current prices.
• They have since increased slightly to £11.21 in 2012.
• After adjusting for inflation, the 2009 figure is the equivalent of £12.25 an hour in 2012 prices.
• This 2009 figures marks a peak in the real value of pay, with average pay in 2012 prices falling to £11.92 in 2010 and £11.41 in 2011.
• This represents an annual average drop in real pay of nearly 3% in 2010-12.

The ONS said: “Although it is too early to be sure whether there has been a permanent change in the long-term trend, the decline in real wages has now been sustained for three consecutive years.”

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Figures for London

A closer look at the picture of earnings for employees working in London shows a similar pattern:

• Real-terms pay again peaked in 2009 at the equivalent of £17.07 (in 2012 money).
• Bu the subsequent decline was a little less steep than for the country as a whole, with London employees’ earnings averaging £15.70 an hour in 2012.
• As for the UK as a whole, the 2012 level of pay for those who work in London was roughly the same in real terms as it was in 2003.

Background

This analysis is based on the Annual Survey of Hours and Earnings (ASHE), which takes a 1% sample of employee jobs from HM Revenue and Customs PAYE records. The figures presented here refer to employees’ median gross hourly earnings excluding overtime but including bonuses and other incentive payments as well as premium payments for shift work and night or weekend work not treated as overtime.

The analysis uses a deflator based on the UK Consumer Prices Index to convert earnings in cash terms into their equivalents at 2012 prices.

Want to know more?

Title: Changes in Real Earnings in the UK and London 2002-12, by Sarah Levy, Office for National Statistics, February 2013.

Availability: The article can be found at: www.ons.gov.uk/ons/rel/regional-trends/regional-economic-analysis/changes-in-real-earnings-in-the-uk-and-london--2002-to-2012/art-changes-in-real-earnings-in-the-uk-and-london--2002-to-2012.html.

ONS is the UK’s “largest independent producer of official statistics and the recognised national statistical institute of the UK.” For more information visit www.ons.gov.uk.