National Minimum Wage
National Minimum Wage
National Minimum Wage
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Chapter 1: The Economic Context to the October 2011 Upratings<br />
1.25 In fact, in the early months of the year the medians did indeed centre on 2.5 per cent, but<br />
from April 2011 they had again widened to 2.0-2.5 per cent, depending on the pay data<br />
provider. There was no prolonged upturn in three-month settlement medians in the year to<br />
September 2011 and no return to anything approaching real growth in basic pay levels.<br />
1.26 Finally, we looked at average earnings trends. We used three official data sources to shed<br />
light on how wages have changed over time – the Average Weekly Earnings (AWE) total and<br />
regular pay measures; the <strong>National</strong> Accounts compensation of employees, and wages and<br />
salaries series; and the Annual Survey of Hours and Earnings (ASHE). AWE is the most timely<br />
earnings series as it is released monthly, two months after the survey date. As such, it is the<br />
preferred measure of short-term earnings movements produced by ONS. Earnings are<br />
measured as the total wage bill divided by the number of employees. The series for<br />
compensation of employees, and wages and salaries are derived from a similar data source<br />
to AWE and are available quarterly. ASHE records the pay of individuals in April each year and<br />
is considered by ONS to provide the best source of structural earnings information. ASHE<br />
provides detailed information on hours and earnings by certain characteristics such as age<br />
and gender. It also has better coverage of small firms than the other earnings series,<br />
however, it is only available annually and is usually released about six months after the<br />
survey date.<br />
1.27 Our focus here is on changes to AWE total pay as the regular pay measure is similar to pay<br />
settlements. AWE total pay is shown for the whole economy and public and private sectors<br />
in Figure 1.5 along with the rate of RPI inflation. The data for the three months to November<br />
2010 showed whole economy total pay growth of 2.1 per cent compared with the same<br />
period a year earlier, with the public and private sector rates of increase closely in line. Again<br />
we noted that these aggregate figures hid a high degree of variation in the rates of earnings<br />
growth in individual sectors and industries. OBR’s 2.2 per cent earnings growth forecast for<br />
2011 as a whole suggested little change in the prevailing whole economy rate, although at<br />
that time the median of independent forecasts was slightly higher at 2.6 per cent. It was our<br />
view that the forecast range indicated a subdued picture for earnings growth in 2011 and, at<br />
least until late in the year, further large falls in real wages. We said, however, that this<br />
outcome depended on the interplay between several factors which, on balance, we judged<br />
might lead to a slightly higher rate of earnings growth than indicated by the forecasts.<br />
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