Today saw the release of the Annual Survey of Hours and Earnings (ASHE). ASHE, which is released every October, provides the most comprehensive insight into pay in the UK.
The message of this year’s pay figures is that, despite a few positive changes, the wider context remains the same. We’ve seen some positive news, but all of this is set against a bleak backdrop.
Real median weekly wages have seen a 2 per cent increase on last year, but they remain £14 (3%) below 2008 levels.
This means that real median pay still hasn’t recovered from the recession, keeping us in a real pay squeeze that looks set to be the longest in centuries.
If we compare changes in real pay in the 11 years since the crisis to how real pay changed in the 11 years leading up to the financial crisis, the contrast is stark.
Since 2008, median real weekly pay has fallen across the UK, and the same is true in every region except Wales (where pay is stagnant, but not negative).
In the 11 years leading up to 2008, real weekly pay grew by 24 per cent in the UK. That’s equivalent to £92 per week.
There’s some good news around who’s getting pay rises. Real pay for the lowest earners increased by almost 4 per cent between 2018 and 2019.
The chart below shows how pay at each decile has changed across different time periods. The deciles work by splitting the employee pay data into ten even groups and looking at the level of pay at each point. So if we talk about earnings at the 10th percentile, that means the pay that someone at the 10th percentile is earning, rather than the average for everyone within that decile. Each decile is made up of just under 3 million employees.
At each decile, real weekly pay grew between 2018 and 2019, with the highest growth seen among the lowest paid. As we can see, there’s been growth over the past year at each decile, yet most deciles are still down on where they were in 2008.
Given the above, there’s been a lot of talk about the past year of real wage growth being progressive, with the lowest earners enjoying higher pay rises than the highest earners.
But two words of warning. Firstly, it’s important to consider the cash amounts. If we look at hourly pay data, it’s clear that despite this pay growth, those at the tenth percentile are earning below a real living wage.
Pay growth for the lowest earners is clearly a good thing, but this means that millions of people still aren’t earning enough to live on.
Secondly, decile data doesn’t necessarily tell us much about the very highest earners.
As we found out when we looked at last year’s percentile data, what’s happening at the 90th percentile isn’t always indicative of what’s happening to the pay of those at the 95th to 99th
In keeping with a trend of some minor improvements backdropped by a depressing bigger picture, the gender pay gap has narrowed slightly.
The pay gap among all employees is 17.3 per cent, a 0.5 percentage point fall on last year. At this rate, the gender pay gap won’t close until the 2058. The gender pay gap for full-time employees has increased slightly from last year, from 8.6 per cent to 8.9 per cent.
All of this tells us nothing we didn’t already know. Our economic system is broken.
We remain in an historically long pay squeeze. Millions of working people aren’t earning enough to live on.
There’s still a gender pay gap that isn’t set to disappear for decades. And this is all happening at a time of record high household debt and record high levels of in-work poverty.
It’s time to demand genuine and substantial change that addresses the deep lying problems in our economy and pushes the power balance between workers and employers back towards working people.
We need a new deal for workers, that provides people with reliable jobs that pay enough to live on. We need a decent floor of rights for all workers from the day they start work, and the return of protection from unfair dismissal to millions of working people.
Alongside this, we need a £10 per hour minimum wage to guarantee that everyone is being paid enough to live on as well as new rights for workers to bargain through their unions for fair pay and conditions across industries.
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