Yahoo Finance Weekly UK earnings rose 2% last year in biggest increase since crash
Gender pay gap also shrinks to lowest level in nearly two decades, as low inflation and ‘national living wage’ boost pay
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Britons’ real weekly earnings went up by nearly 2% last year in the biggest increase since the financial crisis, as low inflation and the introduction of the “national living wage” boosted take-home pay.
The official figures also showed that the gender pay gap had shrunk to the lowest level in nearly two decades, although the TUC said the divide was closing “at a snail’s pace” and that it would take decades for women to reach parity with men.
Workers received an average increase of 1.9% in weekly earnings in the year to April, according to the Office for National Statistics’ latest annual survey of hours and earnings. The figures were adjusted for inflation. Gross average earnings rose by 2.2% to £539 a week, from £527 in 2015.
The statistics office said the increase was due to a combination of earnings growth – boosted by the new national living wage of £7.20 for employees aged 25 and over from 1 April 2016 – and a low level of inflation at that time. It also reflects rises in the national minimum wage for younger workers from last October.
Full-time workers received a 2.2% increase in earnings while part-time workers enjoyed 6.6% growth. Those at the bottom end of the pay scale got the biggest pay rises, of 6.2%.
The CBI business lobby group said the data confirmed a “picture of low but robust wage growth across the UK economy before the EU referendum”. Its director of people and skills, Neil Carberry, said: “It’s clear that the introduction of the national living wage has supported lower earners’ incomes, building on several years of higher than average increases in the old national minimum wage.”
He said the ONS figures showed a higher level of “non-compliance” than seen previously but said this was likely to be due to the survey being completed in the month that the national living wage was introduced.
The TUC was concerned that 362,000 people were paid below the minimum wage in the year to April – a 73% increase from the previous year. The ONS said the figure was not comparable with 2015 and also noted that there were legal exemptions, such as for employees who get accommodation as part of their pay package, which can be offset against their pay rate.
The survey, the most comprehensive of hours worked and earnings in the UK, also showed that the gender pay gap for full-time employees fell to 9.4% from 9.6% in 2015. This is the lowest since the survey began in 1997, although the gap has changed relatively little over the past six years, the ONS noted.
The TUC general secretary, Frances O’Grady, said: “We need a labour market that works better for women. This means helping mums get back into well-paid jobs after they have kids. And encouraging dads to take on more caring responsibilities. The government should also scrap tribunal fees, which stop women getting justice from bad employers who have discriminated against them.”
People working full-time in the private sector earned £517 a week on average, up 3.4%, while those in the public sector were paid £594, up 0.7% on the previous year.
Men working full-time in April earned an average of £578 per week, up 1.9% on the previous year, while women were paid £480, up 2.2%. The gap between men and women’s pay has remained relatively consistent from 1997 to 2016, at about £100, the ONS said.
At a regional level, London came top, at £671 per week for full-time workers. This compares with a UK average of £539 per week.
In percentage growth, the regions with the biggest earnings growth in the past year were the West Midlands (up 3.7%), the north-west (up 3%) and Wales (up 2.9%), while those with the slowest growth were the north-east (up 0.7%), the East Midlands (up 0.9%) and Scotland (up 1.5%).
The business minister, Margot James, said: “The government is determined to build an economy that works for all and it’s encouraging that earnings have grown over the last year, with the national living wage driving up the wages of the lowest paid.”
James said she was pleased the gender pay gap was closing but admitted there was “still more to be done to make sure women are treated equally”.
Laura Hinton, head of people at consultancy firm PricewaterhouseCoopers, said: “It’s encouraging to see the gender pay gap reducing, but the underlying reasons for the gap remain the same. Women are still more likely to work part-time, have lower paid jobs and leave the workforce after having children. Until we tackle these underlying causes it will be hard to reach true equality in the workplace.
She said that at PwC, because the firm is now legally required to publish the gender pay gap, “we know that when senior women leave us they are more likely to be replaced by a male. We are challenging ourselves on this by testing our recruitment processes, making more senior jobs available as flexible or part-time and targeting women who have been out of the workplace for a number of years via our return to work programme.”
