Thursday 12 December 2013

Puzzling ASHE data alters the narrative on cost of living crisis, the ‘squeezed middle’, and regional labour market pressures

The Office for National Statistics has just published the provisional findings of the 2013 Annual Survey of Hours and Earnings (ASHE).  There are a number of surprises and puzzles.

The growth in median weekly earnings of 2.6% for all employee jobs (full-time and part-time) between spring 2012 and spring 2013 is considerably higher than the corresponding figure of 1% pay growth indicated by the ONS’ average weekly earnings statistics. The median increase for part-timers (3.1%) was higher than that for full-timers (2.2%), while median hourly earnings increased by 3.4% for part-timers and 2% for full-timers. Although the ASHE findings show pay growing more slowly than CPI inflation (2.4% in April 2013) they therefore suggest a less severe average real pay squeeze and a more limited cost of living crisis than previously thought.

The still very wide hourly pay gap between the top and bottom 10% of earners stabilized last year (both groups seeing a 1.5% pay increase between 2011 and 2012) but middle earners did better, median hourly earnings rising by 2%. The ‘squeezed middle’ were thus less squeezed than higher and lower earners last year. However, the hourly gender pay gap for full-time employees widened again, up from 9.5% to 10%. And median weekly earnings grew by more for private sector (2.3%) than for public sector (1.6%) workers.   

A particularly puzzling feature of the ASHE findings is that they show growth in median weekly pay across the UK regions between 2012 and 2013 to be a mirror image of regional unemployment rates, with unemployment hot spots registering the biggest pay rises. For example, the North East (3.5%), West Midlands (3.3%) and Wales (4.4%) saw much stronger pay growth than regions with less unemployment, with the South East registering no pay growth at all. While the reasons for this require much closer examination – and remember pay levels are higher in low unemployment regions -  the much commented upon post-recession tendency for workers to ‘price themselves into jobs’ does not therefore appear to be evident for all regions in these latest data.

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