Official data confirm big real pay squeeze in year to April 2014, but high earners, women and part-timers are squeezed less hard while ‘job stayers’ in continuous employment a enjoy real pay rise

The Office for National Statistics has just published the provisional findings of the 2014 Annual Survey of Hours and Earnings (ASHE).   

While the latest ASHE findings confirm that the big squeeze on real pay continued between spring 2013 and 2014 the detailed figures show relative winners and losers, with employees who remained in continuous employment over the year enjoying a real pay increase and women seeing a narrowing in the gender pay gap.

Growth in median weekly earnings of 0.6% (to £417.90) for all employees (full-time and part-time) is lower than the corresponding figure of 0.8% pay growth indicated by the ONS’ average weekly earnings statistics and adjusted for consumer price inflation represents an annual reduction in real pay of 1.1%. The median annual pay increase for full-timers (0.1%, to £518 per week, i.e. a reduction in real pay of 1.6%) is lower than at any time since comparable records began in 1997 and well below the increase for part-timers (0.6%, to £161.10 per week). However, the underlying pay situation looks better when one strips out the effect of changes in the mix of employment over the course of the year and focuses solely on the majority of employees who have remained in the same job for at least one year. These ‘job stayers’ enjoyed an annual median pay increase of 4.1%, providing a real terms pay rise of 2.4%.

Full-time women employees saw a bigger pay increase (0.6%, to £461.90 per week) than male full-timers (0.3%, to £557.80 per week), though male part-time employees (with an increase of 1.4% to £151.40) did slightly better than women (1.3% to £166.10). This helped the median gender pay gap to narrow from 10% to 9.4%, the smallest gap between male and female pay since 1997.

There was a slight increase in pay inequality, the weekly pay of the top 10% of earners increasing by more than that of both median earners and the bottom 10% of earners. For full-time employees the top 10% of earners saw pay growth of 0.4% (to £1,024.40 per week) compared with just 0.1% for the bottom 10% (to £287.90 per week). The discrepancy was even larger for part-time employees where the increase for the top 10% of earners (1.2%, to £397 per week) easily outstripped that for the bottom 10% (0.2%, to £50 per week).

Overall, the annual pay snapshot at one level provides a familiar picture of a UK workforce still feeling the squeeze and continuing to become more unequal in terms of pay, but also presents a challenge to some well-worn narratives by showing that ‘job stayers’ are faring relatively while women are making some, albeit slow, progress toward closing the pay gap with men.