The latest results from the Annual Survey of Hours and Earnings (ASHE) were released on 3 November 2020. ASHE is the Office for National Statistics’ (ONS) main measure of earnings. The data released this year has been affected by the pandemic. This blog explores some of the challenges with the data, then looks at what impact the pandemic had on wages across the UK and in selected sectors in Scotland.
About the data
The data used to create ASHE is collected in April every year using Pay As You Earn (PAYE) data to identify representative sub groups of employers and employees. This group is then surveyed to get information on employee hours and earnings. As the data is based on PAYE it does not include the self-employed. The Consumer Prices Index including owner occupiers’ housing costs (CPIH), which is the measure used to adjust earnings for inflation, was 0.9% in April.
The ASHE data collected this year includes the pay period for 22 April when approximately 8.8 million employees were furloughed under the Coronavirus Job Retention Scheme (CJRS). This scheme allowed companies to maintain jobs, with the UK Government paying 80% of normal pay, up to a maximum £2,500 a month. The ONS suggest that around half of employers topped up employee wage to 100%.
As well as the furlough scheme, due to the health restrictions in place the survey saw a lower than usual response rate, with almost a quarter fewer responses. The ONS have however has indicated that the smaller sample size would have little impact on their analysis, but the data has a higher level of uncertainty than usual.
The Fraser of Allander Institute explore the problems with this year’s data in more detail.
Pay by region and nation of the UK
Scotland is one of only three areas in the UK which has not seen a real terms fall in gross weekly pay for all employees. It has increased by 1.6% in real terms to £482 and is the fourth highest of the nations and regions of the UK, slightly above the UK wide figure of £479.
It is difficult to unpick why median pay in Scotland has increased. If we look at the Workforce Jobs data, it shows between June 2019 and June 2020, the number of employees in the professional, scientific and technical industries, which tend to have higher pay, increased by 16,000. While in the lower paid hospitality industry there are 21,000 fewer employees. While this alone would not explain the increase it would suggest that the loss of low paid jobs may have pushed up the median.
Pay by selected industry
As discussed above, the data this year is subject to more uncertainty than usual. While the data may be less certain it gives an indication of impact of the pandemic. To provide some context, we have provided data on the change in the number of employees between June 2019 and 2020 and economic output. It is worth considering that because of various business support schemes, notably furlough, changes in employment data do not precisely follow changes in economic activity.
The three sectors we have chosen to look at are:
- Health and social work.
- Wholesale, retail, and motor trade.
- Accommodation and food services.
Each of these industries has seen significant change in the number of employees between June 2019 and June 2020, based on data from Workforce Jobs.
Health and social work
There has been increased demand in the health and social work sector during the pandemic. The number of jobs has increased in Scotland between 2019 and 2020 by 31,000, with 17,600 of this increase being new part time positions. Despite this increase in employees, economic output in the sector fell by 27% between February and April, which is similar to the overall fall in economic output of 24%. This could partly be due to delaying elective and non-urgent procedures, including for dentistry and optometry.
The median gross weekly pay for employees in the health and social work sector is £479. This is similar to the Scottish figure of £482 and has increased by 8% in real terms between 2019 and 2020. Within this sector, pay for residential care activities has increased by 13% in real terms to £394.
Wholesale, retail and motor trade
Economic output in the sector fell by 35% between February and April. Despite this the number of employees in this sector increased by 5,000, with the majority of the increase coming from part-time employees. This is because despite most consumer shops closing due to health restrictions, there was an increased demand for people working in supermarkets. The average number of hours worked has fallen by 3% between 2019 and 2020.
The median gross weekly pay for employees in the wholesale, retail and motor trade sector is £339. This is below the Scottish figure and has fallen by 3% in real terms between 2019 and 2020. Looking further into the sector, pay for jobs related to the sale and maintenance of vehicles fell by around 11% in real terms. However, pay for jobs relating to the sale of consumer goods, such as food and drink, increased by 2% in real terms
Accommodation and food services
The accommodation and food service industry has been hit hard by the pandemic, with economic output falling by 87% between February and April, significantly more than the fall in overall economic activity. This can be seen in the loss of almost 21,000 employees from the sector, the majority of which were full-time jobs. The average number of hours worked in the industry has fallen by 12% between 2019 and 2020.
The median gross weekly pay for employees in the accommodation and food services sector is the lowest of any sector in Scotland at £212. It has fallen by almost 10% in real terms over the year to June 2020. Looking at the sector in more detail, pay for jobs that relate to short-stay accommodation for visitors and other travelers has seen an 11% fall in real terms. Pay for restaurant and bar jobs has fallen by 7% in real terms. The smaller fall in bar and restaurants jobs could be related to business provided takeaway options.
While we must consider the greater uncertainty around this year’s data, it does indicate that some sectors are faring better that others. The ONS have highlighted the importance of the furlough scheme in maintaining pay so the recent extension to March 2021 will be welcomed. But with huge job losses in lower paid industries the headline increase of pay in Scotland may be masking some significant challenges under the surface.
SPICe will be publishing a briefing later this month which looks at the data in more depth.
Andrew Aiton, Data Visualisation Manager